The changes will help the MOD drive towards its target of 25% of all procurement spending – both direct and indirect – going to SMEs by 2020.
The final set of published figures for the last parliament showed the MOD as achieving a total of 19.4%, or £3.8 billion, with SMEs in 2014-15. In order to achieve the spend target of 25% by 2019-20 this figure will need to increase to around £4.9 billion, and the refreshed SME policy is designed to help achieve this.
The revised policy has been developed in partnership with SMEs, trade associations and other government departments.
It will see:
- A new Supply Chain Champion and a supply-chain advocate network, to provide single points of contact for suppliers;
- A fresh assault on red tape with unnecessary bureaucracy amended or scrapped by the middle of 2016. We are exploring ways of simplifying our procurement processes, for example by investigating the use of purchase order templates for the simplest low value and low volume contracts.
- A new online tool for suppliers that highlights opportunities, explains our policy and advises how they can target funding streams.
Minister of State for Defence Procurement Philip Dunne said:
We spend £4 billion a year with small firms, and this new policy is a signal of our intent to do more to tap into the innovation of SMEs in our supply chain.
This new approach will harness UK brainpower so that our Armed Forces get the best possible equipment, deliver better value for money, and boost exciting new companies.
The changes are all underpinned by wider MOD commitments to encourage competition and make it easier for companies to innovate within the Defence supply chain. These include:
- Competing as much MOD procurement as possible and ensuring all contract opportunities which arise as part of large, MOD-funded programmes are better advertised and competed;
- Working with prime contractors on voluntary reporting of their supply chain plans, so that supply chain information is more transparent and consider whether to set hard targets in contracts;
- Removing turnover threshold requirements from the procurement selection process, wherever appropriate, to give smaller companies a fairer chance.
The policy refresh is just one of the ways that the MOD is making it easier for SMEs to work with the Defence sector, and it follows the announcement by the Government of a £800 million Innovation Fund, aimed at harnessing the entrepreneurship and ingenuity of the private sector and in turn helping the UK to maintain an operational edge over adversaries.
Hugh Griffiths is the CEO of SME Inzpire, a provider of consultancy and training services, as well as a developer of software applications for military customer. He said:
Inzpire is an SME that has been working closely with MoD for 10 years now and we are proud to support the UK Armed Forces as an integral part of the new Whole Force Approach. We find that the MoD is an excellent partner for SMEs to work with and our relationship with them has got ever stronger over time. With the imminent launch of MoD’s new SME policy, it is encouraging to see that even greater advances in MoD’s support for SME’s will now be made. This is fabulous news for all SME’s in the Defence Sector
The MOD has also invested £10 million in a series of Defence Growth Partnership Innovation Challenges, with a high percentage of SME winners, and Defence Science and Technology Laboratory’s Centre for Defence Enterprise (CDE) funds innovative research that could lead to a cost-effective capability advantage for UK Armed Forces and national security.