A number of local government chief executives and procurement chiefs have said that being an SME won’t give you an advantage in winning contracts with councils.

The comments of business leaders at Luton Borough Council and Gloucester City Council contrast to an agenda being driven out of central government to move away from using traditional, large IT suppliers towards SMEs, in a bid to introduce agility and innovation.

The supply of SME business to government is even being investigated by the Office of Fair Trading, which is assessing the state of competition in the sector following concerns about the domination of larger suppliers in the public sector. 

The Cabinet Office and the Government Digital Service have introduced a number of frameworks and procurement initiatives to boost the use of SMEs in central government, as well as set an ambitious target of procuring 25 percent of business through smaller enterprises by 2015.

However, speaking at a roundtable event this week in London, hosted by Civica, the council executives told Computerworld UK that SMEs, particularly local SMEs, are important, but this doesn’t mean that they are always the right option.

Trevor Holden, Chief Executive of Luton Borough Council, said that whilst keeping procurement spend in the local areas is on the agenda, it conflicts with other quality requirements.

“If you look at most of the procurement strategies in local authorities, they will address the local pound because actually it is really key that you keep the local pound local,” said Holden.

“That runs counter intuitive to some of your procurement requirements - take adult social care for example, there is a real friction between value, quality, and national vs. local providers, I don’t think it’s as straight forward as going for an SME.”

Holden said that more useful initiatives outside of procurement could be used to promote the local economy, such as requiring that vendors taking on projects hire local apprentices in order to drive the skills agenda.

His colleague, William Clapp, Head of Procurement & Shared Services at Luton Borough Council, agreed and said that one of the key drivers in picking a vendor to work with comes down to resiliency and assurance.

“From our perspective probably the size of the enterprise is the least of our concerns, the quality and the cost are the front runners. Locality is important to us to drive the local economy - whether the business is small, medium, or large, do we mind really? Not particularly,” he said. 

“A large enterprise in Luton that can deliver quality and price is the dream solution for us. Small to medium size - bottom of the pile."

Local and small doesn’t mean good

Julian Wain, Chief Executive of Gloucester City Council, told Computerworld UK that just because a company is local or an SME, doesn’t mean that it is good or right for the job. He said that the most important thing for local government is maintaining relevant quality thresholds.

“I think locally there is a great deal of interest, from the point of view of seeing local businesses thrive in the local economy. But I think a degree of care is required, because the bigger contracts can give you the economies of scale,” said Wain.

“Larger contractors give you the opportunity of investment, which the use of local contractors doesn’t necessarily.”

Nonetheless, local government is streaks ahead

Despite the comments coming from local government chiefs, Graeme McDonald, director of Solace, Scotland’s representative body for senior strategic managers working in local government, said that in his experience central government has actually led the way with regard to SME adoption.

He said that councils are “streaks ahead” in terms of using commissioning to engage SMEs.

“Some of the changes that the government is suggesting would actually be a backward step for local government, not a forward step,” said McDonald.

“It is in the local government’s interests, political interests in particular, to have SMEs involved within procurement processes – something that hasn’t been the case for central government until relatively recently.”

Simon Downing, Chief Executive of Civica, a specialist IT systems provider for the public sector, agreed with McDonald and said that central government should be looking to local councils for examples of how to correct some of the public sector IT failings that Whitehall departments have seen in the past.

“The evidence to date of large scale transformation programmes in government, provided by large international suppliers, is that none of them have worked. What we are excited about is that local government is the benchmark for how things should be done, not the other way around,” said Downing.

“You’re asking what is being driven out of central government into local government, but you’re looking in the wrong direction. It’s the other way around,” he told Computerworld UK.

“We as a supplier to local government think there’s a great opportunity to take our experience of working with local government and transfer that skill and experience to help deliver a significant change in the cost, timeliness and outcome of projects that central government deliver.”

Chief execs are the key drivers of change

Civica has also released some research this week, carried out by Localis, which found that 65 percent of local councils see chief executives as the key drivers in re-thinking the way they design and deliver public services. Over half (58 percent) cite time and capacity as the biggest barrier to making improvements to service delivery and efficiency.

Respondents to the survey found that the most efficient technologies to help meet efficiency goals are those which support agile working (86 percent) and moving customer services online (83 percent).