
Across the public sector, the government spends around £140bn on goods and £80bn on services annually. But as swingeing public sector cuts get deeper, how can SMEs who supply to the public sector protect themselves?
At present, the government is only in active discussions with its 20 largest suppliers, but this is likely to spread to the majority of suppliers, which could affect a number of enterprising businesses. Francis Maude, the Cabinet Office minister, has already been reported as saying that he expects public sector suppliers to reduce margins, cutting their prices in order to help lower the public deficit.- breaking down offers into different components with multiple price points, to allow low value, low price options to be introduced
- developing total cost of ownership tools to help evaluate the lifetime cost of the contract to the government – and offering longer term contracts in exchange for lower annual costs
- introducing value pricing models, which have a gain share element to reward the suppliers for successful delivery – either ahead of schedule or under budget
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