News

August 03, 2012

Cabinet Office comes to rescue of small firms facing late payment

The Cabinet Office is investigating procurement issues in the public sector on behalf of small businesses as part of its SME Mystery Shopper scheme and the results of 67 new investigations have been published online.

The scheme allows small businesses to report late payment problems to the Cabinet Office and it will investigate and intervene on their behalf. By publishing the results, the scheme helps public sector bodies to improve their procurement processes.

Mystery Shopper uses feedback from SMEs to promote best practice across the whole public sector. SMEs are encouraged to use the service wherever they feel that there is an issue that disadvantages smaller players or best practice is not being followed.

Minister for the Cabinet Office, Francis Maude, has revealed the results of two new investigations. One involves an SME working on a contract for NHS North West London hospitals that raised concerns about payment made purely on a “contingency fee” basis. This meant payment would take longer than usual and would be made on an erratic basis. The small firm contacted Mystery Shopper and the Cabinet Office intervened. The NHS trust has since reviewed its approach and plans to introduce a new fee system where contingency fees play a smaller role.

Another case involved HMRC. Although it was paying its prime contractor on time, a small business in the supply chain complained that this wasn’t being passed down. Francis Maude wrote to the local MP warning that the case would be referred to Mystery Shopper. The prime contractor subsequently agreed to pay the SME more promptly.

Francis Maude, said: “SMEs are crucial to the future of this country and to building a more diverse and rigorous economy. Timely access to cash is critical for these businesses. It is already a condition of every government contract that sub-contractors are paid within 30 days and we want to know where money is not passed down the supply chain, whatever the reason. Mystery Shopper lets us find out about procurement problems and the cases published today show that our actions are having real results for businesses out there.”