Olympic Gold for London’s small businesses?

23 April 2008

Whether or not the 2012 London Olympics proves to be a triumph for British athletes, it may be an important milestone on the obstacle course that small and medium size businesses (SMEs) have to tackle each time they try to land a public sector contract. Successive governments have encouraged SMEs to win government business, but in spite of this, only 2% of government spending actually ends up with them.

With the Olympic torch continuing its tortuous journey around the world, the organisers of the London Olympics (LOCOG) must be relieved that the spotlight is now shifting away from political and budgetary controversies to the practicalities of the event. Progress, it seems, is being made. The current “Demolish, Dig and Design” phase is coming to an end, and approximately four years before the event is scheduled to open, “the Big Build” starts this summer.

There are some impressive statistics about the scale of the work underway. Around 1.5 million cubic metres of earth will be excavated, and 600,000 tonnes of soil moved around to change the levels of the Olympic site – going up five metres in some areas, and down by nine metres in others.

While the main contracts for building the stadia and the infrastructure have already been awarded, there’s still up to £6.5 billion of business available for smaller companies, both as prime contractors and as sub contractors. It’s hoped that much of this work will go to London companies, although companies from outside the capital will bid as well.

What’s refreshing to see is that LOCOG has grasped the opportunity to cast the net for contractors as wide as possible, using a web tool called ‘competefor’ both to advertise contracts for work, and to receive details of companies that want to bid for it. As a first step, companies register their interest here and suppliers are then alerted about tenders relevant to them here. Firms looking to subcontract work can also contact them. In effect, the Supplier Activity Centre and the Buyer Activity Centre should work as a sort of clearing system to match opportunities with suitable firms.

A small percentage of contracts are available now, but the main work starts in 2009 and onwards. And the contracts available aren’t all in the construction field – there will be opportunities for creative, merchandising and design companies as well as the earth movers, chippies and sparkies.

It’s a more ambitious tender and supplier project than anything previously done for any Olympic Games – or for any other major event for that matter. And while the competefor program is still in its infancy, it’s already received some compliments. Certainly, matching over 70,000 contracts with more than 7,000 suppliers will be quite a feat.

Shadow chancellor George Osborne aspires to have 25% of all public spending going to SMEs, but that still seems a long way off. But at the very least, competefor could be the initiative that finally allows small companies to compete on a level playing field for public sector projects. As with everything to do with the London Olympics, time will tell.

By George Fletcher, Webster Buchanan Research