Supply chain · 4 October 2017

Government cuts red tape to turn more small businesses into aid suppliers

In 2016, DfID spent £1.24bn on aid contractors to support international relief projects
In 2016, DfID spent £1.24bn on aid contractors to support international relief projects

The government has announced a series of reforms to change the way its contracted aid suppliers operate, pledging more opportunities for small UK businesses to enter the procurement process.

Following a review into the management of aid contractors, the Department for International Development (DfID) claimed it would bring current suppliers into line with new standards and help more small business owners gain access to aid contracts.

A new code of conduct has been sent to all existing contractors supplying aid via government outlining new standards of “ethical and professional behaviour”, such as legal sanctions for those ending contracts early.

DfID also announced its commitment to ending so-called “bid candy” – where larger aid suppliers include smaller businesses within contracts to win bids, but drop them once the tender has been secured.

Read more: Spend Network founder explains why small business procurement opportunities could be on the rise

Similarly to new payment practice reporting rules introduced by small business minister Margot James to tackle late payments, DfID is set to publish annual league tables of supplier performance to incentivise ethical practices and value for taxpayers’ money.

DfID claimed each measure would boost market competition and cut red tape to help small businesses become aid suppliers and support some of the world’s poorest countries. It marks a further step towards reaching the official target of handing a third of all public sector contracts to smaller firms by 2020.

Commenting on the reforms, international development secretary Priti Patel said a “clear message” had been sent to larger firms abusing the procurement process.

“We will make the supplier market we work with more competitive and transparent, providing greater opportunities for new and smaller businesses in the UK and ensuring we work with those who can achieve the best results that UK taxpayers and the world’s poorest deserve,” Patel said in a statement.

Welcoming the measures, Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said the government would benefit by handing more contracts to small companies.

“When more small businesses win contracts, they bring innovation to the public sector, which creates better value for the taxpayer,” he said.

Previous FSB research showed that small business owners had won almost a fifth of all public sector contracts awarded over the last 12 months, and Cherry suggested DfID’s aid supplier reforms represented a step in the right direction to achieve the government’s long-term procurement targets.

He added: “Two of the biggest barriers facing smaller firms, when bidding for government contracts, are the size of contracts and awareness of what contracts they can bid on. Hopefully DfID’s plans will help smaller firms overcome these barriers.”

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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