As cities confront the economic devastation wrought by the Covid-19 crisis, the need to rebuild local economies that are strong, resilient and inclusive is evident. SMEs will have a critical role to play in this process but will need support to access the opportunities public procurement will offer.
Pre-Covid-19 many cities were already rethinking how they can make public procurement processes more SME friendly. In June 2019, Making Spend Matter partners met in Kavala (Greece) to examine the barriers SMEs may confront in public procurement and what can be done to create more supportive procurement eco-systems.
As Rethinking public procurement for SMEs: Making Spend Matter partners explore why business size does in fact matter outlined in June 2019, rethinking public procurement to make it more accessible to SMEs demands a critical evaluation of procurement requirements and processes, alongside putting in place mechanisms to support SMEs engagement.
It is also necessary to consider the way in which internal features of public administrations, such as procurement-related skills, and organisational culture, can contribute to successfully engaging with SMEs.
Nor should the importance of communication and messaging – both within public administrations, and between public administrations and SMEs be overlooked.
In February 2020, Making Spend Matter partners met again in Kavala to examine these issues in more depth.
Procurement skills
Ensuring that procurement staff have the necessary skills is an essential part of improving public procurement. And shifting from procurement as an ‘ordering function’ to one with a strategic role, often with more complex contract management, requires appropriate skills. Despite this skills development and training is too often overlooked.
Competency models are one tool that have been used at an individual and/or organisational level to help identify the gaps and limitations that exist. Whether it be via self-assessment or by an external assessor, competency models can be linked to e-learning and/or other training opportunities in order to enable individuals to develop skills and close organisational skills’ gaps.
Cultural Change
Creating cultural change is neither a quick process nor an easy one to achieve. Nevertheless, changing the perception of the role of SMEs within public administrations is important in order to make spend matter for stronger local economies and local communities.
Generating ‘buy-in’ within an organisation from key political and administrative staff can help to promote the changes needed. Central to achieving this is effective internal messaging in order to gain support and promote success.
Internal messaging
Seeing procurement, and SME engagement in procurement, as an ‘investment’ rather than as a transaction for goods and services, can require a significant organisational shift in thinking and approach.
This is not only about procurement staff themselves but also about ensuring that there is leadership, both political and administrative, buy-in and support. Critical to this is that the economic, social and community value of such a shift is fully understood across an organisation.
It is important to consider what will convince different (internal) audiences – is it the wider economic value – or the positive impact on individuals and communities – or a mixture of both? Identifying the most effective and relevant messages for different audiences, and embedding it in the evidence and good practice that is available, is essential to generating support.
Communicating with SMEs
Messaging is also important for SMEs.
The economic benefits of engaging in public procurement for an SME are undoubtedly important. However, a narrow focus on those benefits can overlook the way in which SMEs may also be motivated by other factors, such as contributing to their local community or wider social and environmental impacts.
At the same time, the messages cities ‘send’ around the role and contribution of SMEs can influence their responses. For example, if SME engagement is focused predominantly on SMEs being contract owners or holders, that can create a self-exclusion dynamic for those SMEs for whom being a sub-contractor may be a more desirable outcome.
SMEs are not an homogenous group and developing a stronger understanding of the diversity of SMEs and their motivations can help to create effective messaging as to the value they bring to public procurement.
Getting the messaging ‘right’ is clearly important, however the message also needs to reach SMEs. No single approach is likely to communicate effectively with a wide-range of SMEs from different sectors. Cities need to understand what communication tools are being used – and by whom – and how the city can harness them to reach SMEs.
Change takes time
Creating a positive, supportive eco-system for SME engagement in public procurement takes time and the lag between making such changes and a positive SME response should not be overlooked. SMEs may take time to respond to the changes that have taken place and an ongoing and consistent effort to engage with SMEs will be necessary.
The absence of a speedy change is not necessarily evidence of failure. Nevertheless, understanding whether change is contributing to a more positive procurement eco-system requires timely and effective communication with SMEs and SME representative bodies.
It is also important to recognise that even after changes to the procurement eco-system within cities, and appropriate and effective outreach to SMEs, not all SMEs will be interested in, or willing to, participate in public procurement activities.
What is clear is that understanding SMEs within an area is critical. Changing procurement processes and the way in which public administrations engage with SMEs needs to be done with an understanding of the needs of SMEs, and their diversity. This needs to be the starting point for any attempt to support SMEs to engage in public procurement and make spend matter.
This article has been written by Emma Clarence.
