SMEs Winning More Government Contracts Than Ever
Cabinet Office data shows that small and medium-sized businesses won a record amount of Government work in 2021/22. The figures released last week underpin the Government’s ambition to support SMEs within the Public Sector.
Historically, Government contracts were primarily the domain of large corporations due to their extensive resources, established track record, and capacity to manage complex projects. However, the tide has been turning in favour of SMEs.
Over the 2021/22 period, SMEs received £21 billion worth of work, according to Government data. This equates to around £3.8k per British small business. The figure is an increase of £1.7bn on the previous year, and the highest since records began, representing the fifth consecutive year that Government work won by small businesses has increased.
The amount of work won by SMEs has increased in all sectors. This includes: defence, public infrastructure, technology and healthcare.
Reasons behind the SME shift
The SME Agenda mandates that for every £3 that is spent from the public purse, £1 will be spent with SMEs. This is a result of the government seeking to greater support and acknowledge small to medium-sized enterprises, which make up 99% of the UK economy.
Since SME champions were embedded in UK Government departments back in 2012, the ambition for better engagement and a fairer procurement landscape has been a key strategy for procurement bodies like Crown Commercial Service and NHS Shared Business Services
Minister for the Cabinet Office Jeremy Quin said: “Today’s record-breaking figures demonstrate our commitment to ensure more small businesses benefit from public sector spending, by reducing barriers to entry and encouraging a more diverse market.
“One in three pounds of public money is spent on public procurement, which is why through the Procurement Bill we are improving the way it is regulated to save the taxpayer money and drive benefits across every region of the country.”
Implications for SMEs and Beyond
The surge of SMEs winning government contracts in record amounts during 2021/22 has far-reaching implications:
Economic Resilience: SMEs diversify the government supplier base, reducing dependency on a handful of large corporations. This enhances economic resilience by distributing contracts among a broader spectrum of enterprises.
Innovation Acceleration: SMEs are hotbeds of innovation, often spearheading breakthrough technologies and novel approaches. Their involvement in government projects accelerates innovation across sectors, fostering progress and competitiveness.
Ripple Effect on Local Economies: As SMEs expand and grow due to increased government work, they inject capital and jobs into local economies, creating a ripple effect of prosperity.
Shift in Industry Landscape: The trend of SMEs winning government contracts could lead to a gradual shift in the hierarchy of industry players, ushering in a more dynamic and inclusive business environment.
GovData’s pledge to SMEs
GovData is proud to champion smaller businesses, and support their path into Public Sector work. That is why we choose to predominantly work with British SMEs, and often businesses who are yet to break into the Public Sector.
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