Supporting SMEs through Government Purchasing Activity

Abstract

<jats:p> As major consumers of goods and services, governments have an opportunity to support SMEs directly through their purchasing policies. This study examines the experience of SMEs in the north-east of England in their attempt to supply UK public sector organizations, and finds that, despite recent initiatives, barriers are being experienced by the majority of SMEs surveyed. The findings suggest that both government and small business sectors face challenges, such as resolving policy conflicts, managing resource demands and facilitating organizational change, in overcoming these barriers. Further investigation is required to inform the resolution of these demands. </jats:p>

The rhetoric and reality of SME-friendly procurement

“…While policies of this type are not new -Promoting SME Participation in Public Procurement in The Community was adopted by the European Commission in 1990 -the agenda for SME involvement in public procurement has become more salient in recent years. Increased appreciation of the SMEs' value as suppliers to public sector organizations (Loader, 2005), greater awareness of how public procurement can be leveraged in the interests of SME growth (Preuss, 2011) and the impact of the 2007 financial crisis (Murray, 2009) explain this effect. While policy has sought to tackle the main barriers facing SMEs, it has not gone so far as to discriminate in their favour (Kidalov and Snider, 2011).…”

“…These challenges include bureaucracy, inaccessible public buyers, too much weighting on cost (Cabras, 2011), lack of knowledge over how to source opportunities or navigate tendering procedures (Greer, 1999;Loader, 2005Loader, , 2007, onerous tender documentation and unprofessional procurement staff , time demands and financial costs of tendering and requirements for previous relevant experience (Flynn et al 2013), slow payments, narrow bid specifications, difficulties in engaging with end users (McManus, 1991) and large contract sizes and information asymmetries (Bovis, 1996). The evidence suggests that the very nature of public sector tendering and SME resource limitations combine to stymie SMEs (Loader, 2013).…”

“…The objective of this paper is to examine SME-friendly policy in practice. SMEs' experiences of barriers in public sector tendering have been documented across many jurisdictions, including Ireland (Flynn et al 2013), the United Kingdom (Loader, 2005), the United States (McManus, 1991) and Australia (Purchase et al 2009). We build on this line of inquiry by capturing SMEs' experiences of policy measures designed to lessen these same barriers.…”

The impact of size on small and medium-sized enterprise public sector tendering

“…It also provided the backdrop for renewed policy efforts to reduce, if not eliminate, the administrative and procedural barriers believed to inhibit SME participation in the marketplace for public sector contracts, most recently enunciated in the Single Market Act IP/11/469 (European Commission, 2011). These barriers include bureaucracy, lack of communication between SMEs and public procurers, and too much weighting on cost (Cabras, 2011), SMEs' lack of knowledge over how to source opportunities or engage with the procedural aspects of tendering (Greer, 1999;Loader, 2005Loader, , 2007, onerous tender documentation and unprofessional procurement staff (Fee, Erridge and Hennigan, 2002), the time demands of completing tender documentation, requirements for previous relevant experience, and the financial costs of tendering (Flynn et al, 2013) and large contract sizes and information asymmetries (Bovis, 1996). The evidence from across a range of jurisdictions suggests that the very nature of public sector tendering and SME resource limitations work in combination to stymie SME participation and reduce their chances of success.…”

“…Among the traits said to make SMEs particularly attractive as public sector suppliers include a strong entrepreneurial orientation, flexibility and customer responsiveness (Woldesenbet, Ram and Jones, 2012). SMEs, for their part, are shown to be interested in contracting with public sector organisations and perceive benefits in the form of certainty of payment, prompt payment, long-term opportunities for growth, and reputation enhancement (Bovis, 1996;Fee, Erridge and Hennigan, 2002;Loader, 2005). Mutually beneficial though it may be for SMEs and public sector organisations to interact, the reality of everyday procurement practice paints a different picture.…”