IT pros contracting as Umbrella Company Employees or as freelancers stand a significantly better chance of securing government IT contracts, thanks to a new Cabinet Office objective doubling the previous spending target reserved for SMEs.

In its latest progress report on attempts to shift IT spending toward SMEs, the Cabinet Office states:

“Our ambition is that at least 50% of spend on new government IT flows to SMEs directly and in the supply chain. In exceptional cases where large IT contracts are required, we will expect at least 25% of the supply chain of those contracts to go to SMEs.”

National Audit Office figures show that, prior to the recent shift in procurement culture promoted by the Cabinet Office, just 18 big suppliers scooped 80% of central government IT work. The picture is already beginning to change, however, with smaller suppliers winning more contracts through initiatives such as the G-Cloud framework. So far, SMEs have attracted 60% of G-Cloud’s £31 million sales.

It is not only individual contracts that are being diverted to smaller suppliers, as the big players in the government’s supply chain are also being encouraged to subcontract more of their work to SMEs. HP, for example, will be increasing the value of services and goods purchased from SMEs in the UK by the end of the year, and will also expand the number of SMEs it engages as partners by an extra 150.

The Cabinet Office report also confirms that when most of the largest outsourcing deals expire in 2015, they will not be extended: multiple smaller suppliers will be offered new deals instead.

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