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Why we should let G-Cloud lead by example

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This month saw G-Cloud sales officially hit the £1billion mark. Despite press reporting the milestone months earlier, sales previous to January were just under the £1billion mark. This landmark sales figure highlights the genuine success of the framework in ensuring cloud is at the forefront of innovation in the public sector. Given its success in opening up public sector procurement to the wider market place and to specifically encouraging more sales to SMEs, just how is the framework benefiting these smaller vendors?

52% of G-Cloud’s total sales by value, and 62% of its sales by volume, has been awarded to SMEs to date. However, you have to remember that SMEs still have to give a portion of those sales to the large companies that they have procured services from, like BT. In light of this, the National Audit Office recently criticised the government’s claim that it had reached its SME spending target, saying that the SMEs that it surveyed each year differed by size, and that it therefore isn’t comparing like for like.

With that said, G-Cloud is a worthwhile framework. When you compare it to several other Crown Commercial Service (CCS) frameworks, you can see how G-Cloud takes a skilful approach to spurring SME sales. Take the RM1045 as an example: a CCS framework for network services, which caps the amount of suppliers who can sell over the framework to around 20 per lot, and contracts take four years to expire. This means that only large companies that have the dedicated internal resources to apply and win a place on the framework can do so: SMEs are often held back from participating due to their lack of resources. SMEs simply can’t jump through the necessary hoops to win a place on the framework like the big players can. G-Cloud on the other hand has around 1,900 suppliers and doesn’t tie buyers into long contracts, helping to drive innovation and competition. G-Cloud provides a much leveller playing field with better opportunities for SMEs to win a place. Not only that, G-Cloud has stopped the government from being tied into long contracts, meaning that participating SMEs are able to adequately compete and innovate over the framework.

G-Cloud has a £300 million annual sales turnover, which is undoubtedly a lot, but compare this to some of the other purchasing frameworks and it’s a drop in the ocean: CCS’ network services, RM1045 for example, has a £2 billion turnover. With the government’s annual spend at £40 billion, this framework alone comprises 5% of its expenditure, whereas G-Cloud is only 0.83%. There’s potential for the SMEs to generate more business by being on these alternative frameworks, but the cap on suppliers means that there’s stiff competition to win a place, and only large organisations can afford to bid. Essentially, SMEs are held back when it comes to being able to supply where the big bucks are.

A few years back, I attended a meeting led by Sally Collier, CCS’ chief executive, where we discussed alternative methods in running government frameworks, and reviewed the approach that the US takes. Instead of dictating a set amount of contracts that should go to SMEs, the US makes it a legal requirement for a large organisation that wins a contract for public services to subcontract 25% of the project to small and local companies. The UK taking the same approach would mean instead of encouraging government departments to procure from SMEs, the responsibility is on our large organisations who by law have to ensure a level of business to smaller companies. But of course, implementing this would mean a long and onerous legislative process, which is probably the reason for its absence.

Instead of hoping for a new law, it’s a more realistic step forward to let G-Cloud lead by example for other government frameworks. If CCS frameworks lifted its supplier cap and shortened contract lengths, more SMEs would have a chance of supplying innovative and agile technology to the public sector; effectively boosting business for SMEs, the lifeblood of the British economy, and creating a better digital experience for the citizen.

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