British MPs criticise Government approach to SMEs
The UK House of Commons Trade and Industry Select Committee has attacked the UK Government’s procurement policy for excluding small and medium sized businesses (SMEs) and for late payments to firms.
It noted that Government had committed officially to “improve small business access to public sector procurement”. But the broad sweep of Government policy effectively discriminated against SMEs in favour of large multinational corporations (MNCs). The Committee singled out the Government’s drive for procurement efficiency, which it claimed disadvantaged smaller firms through the systematic employment of large framework contracts.
The NHS National Programme for IT (NPfIT) in England has been repeatedly criticised by – amongst others – UK software vendors association Intellect for effectively excluding from the NHS software market existing British healthcare software vendors, in favour of large US multinational firms, with little experience or knowledge of NHS clinical practices or existing installed NHS software systems. Most existing British healthcare software vendors at the launch of the National Programme were SMEs, and the procurement policy adopted by the NHS subsequently forced many of them into liquidation or merger with larger firms.
The first director of NHS IT, Richard Granger, commissioned a report from US management consultancy firm McKinsey and Company. This report has never been published. But it is believed that it found that no existing British healthcare software vendor had the capabilities or the size to deliver the National Programme. McKinsey is believed to have recommended creating a large scale procurement framework that would attract large multinational vendors, such as Accenture, Cerner, Microsoft and CSC. This is certainly the procurement approach that was adopted by Commissioning for Health, the NHS agency in charge of the National Programme for IT.
To date, five years on, the NHS NPfIT is widely seen as having stalled and failed to deliver any of the promised centralised software services.
In its report, the Trade and Industry Select Committee states: “Centralising procurement, bundling tenders and seeking economies of scale appear to conflict with the government’s aim of increasing SMEs’ access to public procurement contracts.”
The committee called for greater powers to be given to the Office of Government Commerce to force departments to increase SME involvement in government contracts. It also called for better trained and more experienced procurement personnel.
Government departments are also condemned for “consistently failing” to pay SMEs on time, which creates significant barriers to public sector market entry for smaller firms in the UK. The committee called on the Treasury “to adopt a more vigorous approach and it could start by giving a better example itself”.
Trade and Industry – Thirteenth Report
“Information technology in the NHS: What Next?” by Richard Bacon MP and John Pugh MP
