Identifying opportunities for small and medium enterprises (“SME Flagging”)
Procurement Lincolnshire has adopted a new practice of indicating those contract opportunities which are thought to be particularly suitable for small and medium enterprises (SMEs).
Background
This practice is a result of the Glover Review commissioned by the Government. One of the recommendations made by the report was that the public sector should indicate or “flag” during the advertising process those contracts which are thought particularly appropriate for SMEs.
Flagging
Procurement Lincolnshire and the partner authorities use the following aspects to assess whether a contract may be of particular interest to SMEs and where flagging is appropriate.
| SME positive | SME negative | |
|---|---|---|
| Strong SME market presence | ←→ | Weak SME market presence |
| Low contract value/volume | ←→ | High contract value/volume |
| Innovation required | ←→ | Routine required |
| Tailored product/service | ←→ | Standardised product/service |
| Local delivery | ←→ | National delivery |
| Limited scale economies | ←→ | Major scale economies |
| Unregulated market | ←→ | Regulated market |
Once a contract seems particularly suitable for SMEs, we indicate this in the contract notice which is used to advertise the contract opportunity. Below is the wording we have adopted for those larger contracts which we are required to advertise in the Official Journal of European Union (OJEU):
“The contracting authority considers that this contract may be suitable for economic operators that are small or medium enterprises (SMEs). For avoidance of doubt , the contracting authority points out that no weight will be attached to whether or not an economic operator is an SME in selecting economic operators to [submit tenders, participate in dialogue or negotiate*] or in assessing the most economically advantageous tender.”
*Select whichever is appropriate
The wording we have adopted for non-OJEU advertisements is as follows:
“The contracting authority considers that this contract may be suitable for economic operators that are small or medium enterprises (SMEs). However, any selection of tenderers will be based solely on the criteria set out for the procurement, and the contract will be awarded on the basis of the most economically advantageous tender.”
If SMEs see either of these statements, they should be particularly alert to the possibility of bidding for the contract. Flagging is a part of a wider initiative where the Government has recognised the need to better support SMEs during the procurement process and make it easier for them to supply to the public sector.
Procurement Lincolnshire supports usage of SMEs flagging as an example of good practice. SME’s are encouraged to bid for any contract which they believe they can adequately compete for, however, flagging allows SMEs to prioritise the contract opportunities they pursue.
