By Marcus Leach

News that the Government will implement ‘radical reform’ to the public procurement system — essentially how it does business with UK firms — has been welcomed by the Forum of Private Business.

Ministers say the changes will make the process less legalistic and it should be easier for small to medium sized enterprises (SMEs) to access lucrative state-funded contracts, worth in the region of £230 billion a year.

Changes announced by cabinet minister Francis Maude this week include the publication of £50 billion in contracts via a new website and improved collaboration with businesses at a much earlier stage in the procurement process. The Government is also pledging to make it 40% faster for firms to do business with Whitehall, reducing all but the most complex procurement processes to a maximum of 120 days — a reduction of 80 — from January 2012.

“With a budget of around £230 billion a year, the state remains the single biggest source of work for UK business,” said the Forum’s Chief Executive, Phil Orford.

“Encouraging smaller firms to compete for access to Government contracts is something we have long campaigned for, and, if successful, should provide a vital source of new income for smaller firms in to the future as the UK economy grows. This should also encourage and hopefully speed up economic recovery next year.

“Competing for public procurement contracts has traditionally been a complicated, time-consuming process, making it an unattractive, remote prospect for small business. Any reform which simplifies the procurement process, demands fewer man hours and less financial outlay is clearly welcome.”

News of the development comes on the eve of next week’s Autumn Statement by George Osborne, in which a raft of large public infrastructure projects are expected to be announced. The Government is set to announce funding for some 40 projects across the UK, which are likely to be the first real opportunity for small firms to sound out the reformed public procurement process.

“This will be an important announcement as it could well help create the business growth and jobs in the new year to allow a real private-sector-led recovery which the Government has been calling for," added Mr Orford.

“It will be a real test of how streamlined the new procurement system is and if it will actually make any difference to SMEs. Less red tape, less form filling, and a quicker decision on the actual outcome of tendering should also drive down costs and should mean the public are getting better value for money at a time when Government is demanding best value as part of its austerity measures.

“The Forum does hope, however, that if government increases the number of small business on their books they prioritise the need to pay promptly. Big business may well be able to absorb late payments weeks past the invoice date, in some cases months, but for small business it can be a terminal blow.”

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