12 The government has introduced initiatives to reduce the barriers faced by SMEs when bidding for public sector work. In 2011, the Cabinet Office launched a package of measures aiming to make sure that SMEs were better able to compete for government contracts. The Cabinet Office identified barriers such as the poor visibility of opportunities and burdensome pre-qualification requirements. It has launched initiatives aimed at reducing these barriers. For example, government has abolished pre-qualification questionnaires for low-value contracts and departments are now required to use Contracts Finder (a portal for advertising government tenders, first launched in 2011). Furthermore, the Social Value Act 2012 requires commissioners to consider wider social, economic and environmental benefits in procurement processes, which is often thought to benefit VCSEs in particular (paragraphs 2.2 to 2.21 and Appendix Three).
13 But SMEs still face barriers. SMEs told us the government initiatives had resulted in positive changes but, in practice, are still not sufficient to ensure that more work flows to SMEs. For example, the centrally-led initiatives depend on individual commissioning teams in departments choosing to implement them. The barriers most commonly cited by SMEs - and echoed by government departments - have not significantly changed. They include:
• Transparency of information: SMEs struggle to find contracting opportunities and have difficulty identifying where to go to for support.
• Departmental appetite for risk: Commissioners may be wary of using SMEs that have no financial track record or parent company guarantee.
• Disproportionate bidding requirements: SMEs often do not have the resources to complete lengthy tender documentation.
• Capability of commissioners: Commissioners who lack commercial expertise can be more risk averse. They are less likely to seek out innovative approaches or take social value into account.
• Delays in payments: SMEs are less likely to have the financial capacity to absorb delays in payment and may struggle to manage their cash flow (paragraphs 2.26, 2.27, Figure 6 and Appendix Three).