NAO questions Whitehall’s 25% SMB spend claim

Watchdog is also sceptical of government’s aim to spend 33% with SMBs by 2020

The National Audit Office (NAO) has aired doubts over whether the government really hit its 25 per cent SMB spend target last year.

Whitehall claimed it had met the target, set in 2010, a year early when it said last year that it had spent 26 per cent of its outlay on SMBs between 2013-14, equating to 11.4 billion.

The Crown Commercial Service (CCS) has since said it spent 27 per cent of its 2015 outlay on SMBs.

However, the spending watchdog criticised the range of methods the Cabinet Office used to measure its spending, saying the various approaches meant they were not comparable while they came at a time when the government was trying harder to understand its SMB outlay. 

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"We cannot be certain that the amount government spends with SMEs has increased over the last Parliament," its report on the matter read. "We do not know how much of the reported increase is due to the changes in approach and how much is an actual increase in SME activity."

It added: "For indirect spending, the Cabinet Office has surveyed a larger group of providers each year since 2011-12 so annual figures are not comparable."

The body also warned that the government's new target to spend 33 per cent with SMBs by 2020 is overly reliant on the Ministry of Defence (MoD), whose spend comprises 44 per cent of central government procurement.

The MoD has signed contracts with huge companies such as Hewlett Packard Enterprise, and its SMB expenditure stood at 19 per cent in 2014-15, compared to an average of 33 per cent for the other departments.

It is also not confident about raising its SMB expenditure, the NAO said.

"The MoD told us it will be challenging to increase its SME spending further by 2020. It has already committed large proportions of its annual spending and is unlikely to be letting many further large contracts during the current parliament," the report said.

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While the NAO recognised that the government is tackling barriers to SMBs winning more public sector work, it said that many obstacles remain.

These include a lack of transparency of information, departments trying to avoid what they see as risky procurements, and delays in payments.

NAO head Amyas Morse said: "If the government is serious about increasing its use of SMBs, it will need to focus on those areas where SMBs can deliver real benefits.

"Government will need to think carefully about the full range of risks and opportunities that contracting with SMBs presents, compared to working with larger providers."

It recommended that the government institute an "integrated digital platform for procurement" to improve its outlay, and to settle on one way of measuring SMB spending.

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