Procurement Initiative
20 RESEARCH
Procurement Initiative
The mantra of‘ think small first’ is evident across Whitehall, Regional Development Agencies and local authorities. Often as a response to criticism from small business owners and lobby groups, the public sector is grappling with the challenging task of rendering its procurement processes more accessible to small firms.
Says Professor Monder Ram
There has been a flurry of initiatives in recent years, including: two Office of Government and Commerce – sponsored pilot projects in Haringey and the West Midlands; the establishment of regional centres of excellence to promote good practice in public sector procurement; and many ICT – related projects to publicise contracts.
Welcome though these and related activities are, there are two crucial absentees within the increasing crowded platform of procurement initiatives: ethnic minority businesses( EMBs) and the corporate sector.
Ethnic minority firms comprise 10 % of the small business population, and are not far short of 50 % mark in cities like Birmingham, Leicester and London. Data from the Global Entrepreneurship Monitor consistently reports higher than average entrepreneurial activity within ethnic minority groups. A recent study by Barclays Bank suggested that ethnic minority business owners are diversifying from traditional economic niches; are extremely well – qualified; and are intent on growing their businesses. In short, they
seem to be well placed to capitalise upon new procurement opportunities. But there is little or no evidence on their experiences of securing public or private sector contracts. No systematic data exists on the proportion of ethnic minority suppliers to the public( or private) sector. And the extent to which EMBs have benefited from the welter of initiatives noted above is far from clear( although results from the Haringey pilot are encouraging)
A key obstacle is the lack of reliable information on the ethnicity of suppliers. Routine ethnic monitoring of supply chains is rare in the public sector( and probably rarer still amongst UK – based corporations). Exhortations by the Department of Trade Industry’ s advisory Ethnic Minority Business Forum to move in this direction have yet to influence practice in this key area. Opponents of monitoring raise a number of objections, including cost, relevance and the contention that current procedures are designed to secure the best suppliers. But similar caveats were entered against equality legislation in the field of employment. Monitoring needs to be seen as an aid to better procurement, not an impediment.
Turning now to the corporate sector, it is necessary to begin with a basic question:“ Where are you?” Policy discussions on procurement rarely extend their gaze to the large firms that dominate the economy. How does the private sector view supplier diversity? Of course, it is well known that cost is a key driver of corporate behaviour; and for many, this imperative has necessitated an emphasis on supplier reduction rather than supplier diversity. However, under the aegis of‘ Corporate Social Responsibility’ these same companies are also under increasing pressure to be good corporate citizens. Closer engagement with small firms, particularly EMBs, can be seen as an expression of social responsibility. Moreover, smaller firms can also add real value to corporate supply chains by being flexible, innovative and cost – effective.
The US experience is particularly instructive. In the last few years, the Centre for Research in Ethnic Minority Entrepreneurship( CREME) has worked with a number of senior
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Making it Happen
engage ISSUE TWO 2006