Ministers have launched a package of measures designed to ‘level the playing field’ for smaller businesses bidding to win a share of billions of pounds worth of government contracts.
Cabinet Office minister Oliver Dowden announced moves to exclude suppliers from major government procurements if they cannot demonstrate fair and effective payment practices with their subcontractors.
The issue of main contractors withholding money from subcontractors came into focus earlier this year following the collapse of Carillion.
The new rules are being brought in by the Cabinet Office
Suppliers will also have to advertise subcontracting opportunities via the Contracts Finder website, and provide the government with data showing how businesses in their supply chain, including small businesses, are benefiting from supplying to central government.
Other measures include allowing subcontractors to have greater access to buying authorities to report poor payment performance,
Mr Dowden said: ‘This Government is listening to the business community and is committed to levelling the playing field for smaller suppliers to win work in the public sector.
‘We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 - and are doing more than ever to break down barriers for smaller firms.
‘Small businesses are the backbone of the UK economy, and play a key role in helping us to build a strong, viable private sector that delivers value for taxpayers and jobs for millions all over the UK.’
Federation of Small Businesses national chairman, Mike Cherry, said: 'Each year, the UK public sector spends over £200 billion on goods and services from third parties. As such a large and prominent customer in the economy, the government has a pivotal role to play in demonstrating what it is to be a good client.’
In 2015/16, government spent £5.6bn directly with small businesses but when sub-contracts to small businesses from larger are taken into account, total spend rises to £12.2bn.