The government has announced a requirement for its largest suppliers to report on their spend with charity subcontractors.
From 1 May, suppliers with government contracts worth over £5m per annum will have to report to government on the type and value of all subcontracts over £25,000 they advertise and award.
They will have to report on how much they spend on subcontracting, and how much they spend directly with SME or voluntary, community and social enterprise (VCSE) organisations in the delivery of the original contract.
Suppliers will be required to advertise all subcontracting opportunities on a government website. There are separate websites for contracts being tendered in Scotland, Wales and Northern Ireland.
However, suppliers will only have to report subcontracts worth over £100,000 if they consider the £25,000 threshold “overly burdensome” for a particular contract.
Cabinet Office minister Oliver Dowden said suppliers will be excluded from major government procurements if they cannot demonstrate fair and effective payment practices with their subcontractors.
He 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 per cent 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.”
Sector response
Michael Birtwistle, Public Services Manager at NCVO, said: “The problematic supply chain management by prime contractors is pretty well documented and the voluntary sector has been particularly affected by so called bid candy practices, which I think were most prominent as part of the Transforming Rehabilitation programme.
“We very much welcome efforts to improve the longstanding situation around subcontracting supply chain management.
"I think the compulsion to advertise subcontracting opportunities through Contract Finder is a very practical proposal that is also going to help improve the data on how much contract spend is going to VCSE and SME organisations.”
However, Birtwistle said the new requirements should be supported by a push from Cabinet Office to improve how commissioners advertise tenders on Contracts Finder.
Nick Davies, associate director at the Institute for Government, and former public service manager at NCVO, tweeted a thread on the impact of these new measures.
[THREAD] Govt has today announced a package of measures to increase the transparency of its supply chains.
— Nick Davies (@NJ_Davies) 10 April 2018
This is good news as, believe it or not, the govt currently has very little idea about which orgs ultimately deliver the services it pays for 1/https://t.co/pQltNqigJf
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