1 We carried out fieldwork for our independent review of the actions taken by the government to make the public sector marketplace more accessible to SMEs between August 2015 and October 2015. Our audit approach is outlined in Appendix One.
2 We examined the government's reasons for using SMEs:
• We conducted semi-structured interviews with officials in the Cabinet Office's Crown Commercial Service (CCS) and Office for Civil Society (OCS) to understand the government's objectives for making greater use of SMEs and how it monitors whether the benefits of this are realised.
• We conducted semi-structured interviews with officials responsible for compiling data on spending with SMEs for the Cabinet Office at six departments/arm's-length bodies. We asked them about their views on the benefits of procuring from SMEs. We selected departments/arm's-length bodies to provide a range of different sizes of contracting authority, proportions of direct SME business and the progress made against the SME spending target. The departments/arm's-length bodies selected were the Ministry of Defence, the Department for Transport (DfT) and Highways England (a government-owned company within the DfT group), the Nuclear Decommissioning Authority (part of the Department of Energy & Climate Change), the Department for Culture, Media & Sport, and the Home Office.
• We completed a document review of key Cabinet Office SME policy announcements and documents and progress reports on spending with SMEs to understand the government's objectives for making greater use of SMEs (including VCSEs). We also reviewed departmental SME action plans on gov.uk to understand the benefits departments aim to achieve by spending more with SMEs.
3 We analysed the progress in increasing the government's use of SMEs:
• We analysed data on direct and indirect SME spend since reporting began in 2010 to understand: how much the government is spending with SMEs; which areas of government spend the most with SMEs; progress against the government's aspiration to spend more with SMEs; and the impact of known errors or inconsistencies in the data.
• We conducted semi-structured interviews with officials at the CCS to understand the method for measuring and reporting progress against the government's aspiration and target to spend more with SMEs and to understand the definitions of direct and indirect spend used in the methodology.
• We completed a document review of CCS guidance for departments to measure SME spend.
4 We assessed the progress in addressing the barriers SMEs face when bidding for government contracts. We also examined the government's remaining challenges in delivering the 2020 SME target:
• We conducted semi-structured interviews with CCS and OCS officials to understand the barriers the government has identified to SMEs bidding for and winning public sector work. We also sought to understand the Cabinet Office's strategy, initiatives and reforms to remove these barriers and its views on meeting the 2020 SME spend target. We sought to understand the level of support that the CCS gives to departments. We also met key officials in the Department for Business, Innovation & Skills to understand its role in supporting the overall policy aim for government to make greater use of SMEs.
• We conducted semi-structured interviews with SME champions and key procurement officials at six departments/arm's-length bodies (see Appendix Two, paragraph 2) to understand: the barriers to SMEs accessing the public sector marketplace; their plans and initiatives to remove these barriers; and the challenges of meeting the government's 2020 SME spend target.
• We conducted semi-structured interviews with SME and VCSE stakeholders including the Federation of Small Businesses (FSB), representatives of the Cabinet Office's SME panel, and the National Council for Voluntary Organisations (NCVO). This was to get providers' perspectives on the challenges of accessing government contracts and their awareness of and views on the effectiveness of government initiatives to remove the challenges.
• Working with the FSB and NCVO, we held two focus groups with senior representatives from SMEs - one with private sector SMEs and one with VCSEs - to understand in greater depth the barriers these organisations face when bidding for government work and their views on what the government is doing to remove these barriers.
• We completed a document review of published reports and relevant government initiative/reform documents to understand the barriers, and the extent and effectiveness of government initiatives since 2010.
• We analysed complaints data in the Cabinet Office's mystery shopper service reports for 2011 and 2015 to identify the number of complaints commonly raised by SMEs. We analysed data on the Contracts Finder online portal to understand the number of SME contract opportunities and the level of information on contract award notices. We analysed data on CCS frameworks spend to understand the proportion of spend going to SMEs.