Unsupported browser

For a better experience please update your browser to its latest version.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Contractors' SME spending on government contracts revealed

The Cabinet Office has revealed what some of the government’s main contractors spend with SME subcontractors on central government projects, with Interserve topping the list by awarding the highest proportion of work to SMEs.

Details of how much subcontract money goes to SMEs was published as the government revealed overall direct SME spend increased to £4.5bn last year, up from £3bn in 2009/10, reported RAC sister publication Construction News.

Interserve headed the roster of main contractors cited in the Cabinet Office’s Making government business more accessible to SMEs: Two years on report, with almost 70 per cent of its supply chain spending going to SMEs when delivering work for central government clients.

It was closely followed by Laing O’Rourke, which awards over 63 per cent of its supply chain spend to SMEs on government projects.

Bam Nuttall and Lend Lease each give more than 55 per cent of their work to smaller subcontractors, while Galliford Try awards just over 45 per cent of its spend.

The information was supplied by main contractors for the report, which also claimed that the government has now delivered £2bn-worth of work through project bank accounts.

Despite SMEs accounting for just over 10 per cent of spend at present, the Cabinet Office said the government is ‘on target’ to ensure 25 per cent of its procurement spend goes to SMEs - firms with fewer than 250 employees and a turnover of less than £43m - directly and through the supply chain by 2015.

Overall spending with SMEs in 2012/13 was down in percentage terms at the Department for Culture, Media & Sport, Department for Work and Pensions, the Home Office and Ministry of Justice compared with 2011/12.

It remained level at the Treasury but rose in all other departments, most notably at the Department of Health (indicative percentage increase of 4.8 per cent based on indirect spend for the period October 2012 to March 2013) and HM Revenue and Customs (6.1 per cent).

Other companies cited in the report included Emcor, which spent 52.8 per cent of its supply chain spend with SMEs; Wates, on 50.6 per cent; Jackson Civil Engineering, with 50.4 per cent; and Appleyards Professional Services, on 57.8 per cent.

Interserve executive director Bruce Melizan said: “Where possible, Interserve has modified its procurement systems to allow the future identification and tracking of activity with SMEs.”

Mr Melizan added that Interserve’s standard tendering process asks subcontractors to provide examples of using SMEs in their own supply chains, which has enabled the contractor to increase its spend with SMEs.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.