ODI startup reveals UK businesses starved of £22bn in cash flow by government inefficiencies

ODI start-up, Spend Network has revealed that up to £22bn of government cash, intended for the UK economy, is being delayed by an inefficient tendering system. The company’s analysis of over £1tr of EU procurement data shows that UK’s tendering process is 45% slower than the EU average, and that up to £734m of the stalled funds could be delayed to UK SMEs each year.

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Spend Network, is one of the companies on the ODI's startup programme. In its analysis of tender processes across Europe, the company found that the UK public sector is third slowest in the EU for completing tenders, behind only Greece and Ireland. UK Government took 45% (53 days) longer than the EU average to complete an EU compliant tender in 2013.

Cost to small businesses

In particular, Spend Network estimates that a delay of 53 days starves the UK’s SMEs of £734m of cash flow each year as they wait for the Government to award contracts.

Ian Makgill, Managing Director of Spend Network said:

Delays such as this not only create an unnecessarily challenging environment for SMEs, but also dissuade SMEs from engaging with government in the first place. Having to wait nine months to know if you’ve won a contract is really only feasible for larger companies, SMEs simply can’t operate with a nine month delay on cash flow”.

Gavin Starks, CEO, Open Data Institute said:

Access to data such at this is critical to an open economy. We applaud the steps that the European Union has already taken to open up datasets but there is more that they can do. Too many EU datasets, including the data that this research is based on, is still not provided in a truly open and useful manner. Doing so would enable us all to understand what the causes and solutions may be to help grow our SME economy.”

Spend Network is calling on governments in the UK and EU to release specific information as open data:

  1. Details about the closure of all EU tenders including information on whether they have been cancelled or awarded (at the moment only about 30% of UK tenders get a contract award notice specifying who won the work).

  2. Information on contracts, including where work has been awarded through government frameworks. Frameworks are short-lists of suppliers that are can be approached about specific pieces of work. There are many thousands of these across the EU and at the moment, there is no information about where a contract might have originated.

  3. Details of all government spending, with no monetary threshold (currently, most departments only publish their spending data over £25k). This should then be clearly linked to specific contracts, so it is possible to trace what money is being spent on which products and services from each supplier.

  4. A dataset with unique identifiers for every public sector body in the UK. Currently, there is no way to clearly identify every public body and so it is impossible to accurately link each organisation to specific contracts.