Procurement and supplier diversity in the London 2012 Olympic Games

Abstract

This paper is concerned with the access of SMEs to public procurement contracts connected to the provision of infrastructure for the London 2012 Olympic Games. The Olympic Delivery Authority (ODA) has a budget of more than £7 billion to deliver the new venues and infrastructure required for the 2012 Olympics. As well as creating an infrastructure for the Games themselves, spending this budget offers considerable potential economic and social benefits through the regeneration associated with building the infrastructure of the Olympic Park and associated venues. This is particularly important in terms of the five boroughs in the East End of London (i.e. Greenwich, Hackney, Newham, Tower Hamlets and Waltham Forest) that are hosting much of the new infrastructure, since they are in need of economic

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ODA PROCUREMENT POLICIES AND PRACTICES
1
ICSB World Conference 21-24 June 2009, Seoul
PROCUREMENT AND SUPPLIER DIVERSITY IN THE LONDON 2012 OLYMPIC GAMES
David Smallbone, John Kitching, Mirela Xheneti and Rosemary Athayde
Small Business Research Centre
Kingston University, UK
(d.smallbone@kingston.ac.uk: +44(0)208 4175 218)
1.INTRODUCTION
This paper is concerned with the access of SMEs to public procurement contracts connected
to the provision of infrastructure for the London 2012 Olympic Games. The Olympic Delivery
Authority (ODA) has a budget of more than £7 billion to deliver the new venues and
infrastructure required for the 2012 Olympics. As well as creating an infrastructure for the
Games themselves, spending this budget offers considerable potential economic and social
benefits through the regeneration associated with building the infrastructure of the Olympic
Park and associated venues. This is particularly important in terms of the five boroughs in
the East End of London (i.e. Greenwich, Hackney, Newham, Tower Hamlets and Waltham
Forest) that are hosting much of the new infrastructure, since they are in need of economic
regeneration.
The Department for Business, Enterprise and Regulatory Reform (BERR) estimates that up
to 70,000 supply chain contracts may be won, as a result of the 2012 Olympics.
(Department of Business, Enterprise and Regulatory Reform (2008). In spending this
money, the ODA has an obligation to comply with EU public procurement directives, UK
public contracts regulations and public sector duties, including a duty to ensure that its
procurement practices are fair and open to diverse suppliers, including SMEs.
In this context, the aim of the paper is to assess the extent to which the procurement
policies and practices of Olympic Delivery Authority (ODA), are benefiting SMEs, with a view
to identiying ways in which their access might be increased. The study1, on which the paper
was based, was intended to be a formative assessment, to provide resuilts that could be fed
back to policy makers, procurement staff and business support practitioners as part of a
process of continuous improvement (Smallbone et al. 2008). The research was undertaken
in the summer of 2008, which means the procurement process for the 2012 Olympics is still
in its early stages. The case of the London Olympics has potential implications for the wider
public procurement policy agenda.
In this context, the paper will assess current ODA procurement policies and practices, from
an SME perspective; analyse the expectations and experiences of SMEs in London when
accessing ODA-funded work; and draw out the implications for policies designed to increase
the access of SMEs to public procurement contracts.
The methodology employed to address these objectives included an initial desk-based
review of documents describing the ODA’s procurement policies; a series of face-to-face
interviews with selected ODA staff; interviews with representatives of business support
organisations and membership organisations including some involved in potentially relevant
business initiatives, set up to assist local businesses to access ODA contracts; focus groups
1 The Small Business Research Centre at Kingston University was commissioned by the Equality and Human
Rights Commission to undertake the srtudy in 2008.

ODA PROCUREMENT POLICIES AND PRACTICES
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and face to face interviews ith small business owners. The data gathered relates to the
period up to October 2008.
The rest of the paper is divided into four sections. The next section summarises selected
previous research with respect to public procurement and SMEs. The third section analyses
the procurement policies and practices of the ODA; the fourth presents the findings with
respect to the expectations and experiences of SMEs and business intermediaries with
respect to ODA procurement; and the final section presents the main conclusions and policy
recommendations.
2. PREVIOUS RESEARCH EVIDENCE
Access to public procurement contracts is a potential business opportunity for firms of all
sizes, although previous research has identified a variety of barriers to SMEs in accessing
such opportunities in practice (Bates, 2001; Boston, 1999; Ram et al, 2002; Michaelis et al.
2003; Shah and Ram, 2003; BVCA/FM/FSB/CBI, 2008). Some of these barriers are related
to the capability and capacity of small firms to supply, whilst others focus on the policies and
practices used by purchasing organisations. In this regard, previous research has referred to
the bureaucracy of the procurement process, which can act as a particular barrier for small
and micro firms, where internal management resources are typically limited and
management approaches are informal (Ram and Smallbone, 2003).
There is also a pre-qualification process for firms to navigate before they are included in
tender lists. This usually involves completing questionnaires, including financial data and
information about policies on equal opportunities and health and safety, as well as the firm’s
relevant experience and references. Unlike larger enterprises, small firms are unlikely to be
able to allocate dedicated staff resources to the tendering process, which means that the
latter has to compete for the time of busy managers with other management functions. It has
been suggested that small firms often experience difficulties obtaining information about
supply opportunities and how to bid for contracts (Better Regulation Task Force and Small
Business Council, 2003; Ram and Smallbone, 2003). The introduction of the
www.supply2gov.uk website constituted an attempt to improve information flows, although
not all public bodies systematically use it to advertise lower value contracts (usually
<£100,000) (Smallbone et al, 2007). The use of open days, supplier briefings and help desks
have been welcomed as a positive development for SMEs (Smith and Hobbs, 2002),
particularly when combined with a systematic attempt to monitor the changing pattern of
supply.
Research has also drawn attention to the constraints, which public bodies seeking to
diversify their supply base, have to deal with (Ram and Smallbone, 2003). Procurement
officers in public bodies operate within constraints imposed by public tendering procedures,
particularly where this involves suppliers possessing formal certification, with respect to
issues such as quality assurance and health and safety. The scope to give preference to
targeted groups of potential suppliers by public bodies in the UK is limited by national and
EU Competition Policy rules, which are based on the principles of non-discrimination,
equality of opportunity, transparency and competition. The purpose is to open up the public
procurement market to ensure the free movement of goods and services within the EU. As a
consequence, the criteria for shortlisting candidates are restricted to: technical capability;
financial capacity to deliver the contract; adherence to statutory requirements; and relevant
insurances. Indeed, the Treaty of Rome and other EU directives make the use of place of
residence and location of bidders illegal when public bodies award a contract.
EU Competition Policy rules set out detailed procedures for advertising and awarding
contracts of certain values. Essentially, tenders above the EU thresholds must be advertised
in the Official Journal of the European Union (OJEU), which currently means tenders above
£139,893 for goods and services, and above £3,497,313 for works. EU law establishes

ODA PROCUREMENT POLICIES AND PRACTICES
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rules, which promote transparent and non-discriminatory practices in the procurement
process. They also set minimum time periods to allow suppliers to respond to
advertisements and prepare submissions (Olympic Delivery Authority, 2008).
From an economic development perspective, the size of procurement budgets of public
bodies means that even a modest increase in their spending with small firms can have a
significant impact. Progress with public sector procurement in the UK has included two
national pilot schemes: one in the West Midlands; and the other in the London Borough of
Haringey. This reflects recognition on the part of UK central Government that public
procurement is a potentially important policy lever for economic development. The wider
procurement agenda is also reflected in the work of the Glover Review, which investigated
the barriers that small firms face in winning public sector contracts (Glover 2008).
3. PROCUREMENT POLICIES AND PRACTICES OF THE OLYMPIC DELIVERY
AUTHORITY (ODA)
The ODA
The ODA is an Executive Non-Departmental Public Body, accountable to the Secretary of
State for Culture, Media and Sport. The ODA’s mission is
‘to deliver venues, facilities, infrastructure and transport on time for the
London 2012 Olympic and Paralympic Games that is fit for purpose
and in a way that maximises the delivery of a sustainable legacy within
the available budget’. (Olympic Delivery Authority, 2007: 24)
Its primary objectives are value for money, fitness for purpose and sustainable development.
Seven priority themes underpin the ODA’s mission and objectives: cost, on time, safe and
secure, environment, quality and functionality, equalities and inclusion and legacy (Olympic
Delivery Authority, 2007: 24).
The ODA’s procurement activity covers three elements:
 Works - the commissioning and construction of venues and supporting
infrastructure
 Services - to plan, guide, design, commission, build, operate and service Olympic
facilities as well as to convert legacy venues after the Games
 Goods and commodities.
The ODA has three main procurement teams: Programmes Procurement; Project
Procurement; and Corporate Procurement. The Programmes team provides guidance,
assurance and standard documentation for procurement across the organisation. The
Project team is responsible for procuring works relevant to the construction of venues and
infrastructure required to stage the London 2012 Olympic and Paralympic Games. In
practice, they provide procurement leaders who sit within project procurement teams to
ensure that the procurement policy and procedure is followed accordingly. This involves the
use of standard documentation, although some tender documents are bespoke to individual
projects. The role of project team members is to deal with the project specific content of
procurement that is, the technical specification. The Corporate team is responsible for
procuring the goods and services required by ODA itself. All procurement team members are
‘procurement trained’ and professionally qualified, with a mix of public and private sector
experience.
ODA Procurement Practices

ODA PROCUREMENT POLICIES AND PRACTICES
4
The ODA procures works, services and goods through a multi-tiered supply chain, which
means that only first tier contractors contract directly with the ODA. First tier contractors
contract with tier two, tier two contract with tier three, and so on. Therefore, the ODA is only
directly responsible for procurement from first tier suppliers, and these tend to be for the very
large contracts. Whilst the ODA seeks to influence contracts issued below first tier level, in
most cases it cannot control them. At the same time, the ODA can veto works contracts and
suppliers bidding for a tier two contract worth more than £50,000, such as where prospective
suppliers are considered not to be financially sound. However, as of September 2008, ODA
procurement staff reported no instances of the veto being exercised. Contracts below first
tier level are typically between private companies and are not subject to public duty
regulations, including those of the EU. It is possible therefore, for a private contractor to
specify a preference for a local firm, for example, as part of a tender specification.
The pre-qualification documentation required by the ÒDA distinguishes between contracts
above the Official Journal of the European Union (OJEU) threshold – where first tier
contractors are required to have quality assurance certification (for example, ISO accredited)
– and those below the OJEU threshold – where a formal quality assurance policy is required
but not necessarily certificated. Pre-qualification questionnaires (PQQs) are used to shortlist
bidders by assessing their statutory compliance, capability and capacity, as well as
alignment to ODA policies and procedures. Firms responding to contract opportunities are
required to supply copies of their policies, procedures and insurance certificates. Invitations
to tender (ITT) for particular contracts, on the other hand, require a more detailed response
to specific tender documents.
It is ODA policy to offer firms at the tier one level that are unsuccessful at the PQQ stage an
opportunity to receive verbal feedback and to offer unsuccessful bidders at the ITT stage a
face-to-face debriefing. As providing feedback to tenderers is considered good practice, they
expect contractors to do the same. However, the ODA cannot compel contractors at tier two
and below to provide feedback to unsuccessful bidders lower down the supply chain, where
most opportunities for SMEs lie.
A balanced scorecard sets out the technical and commercial criteria, firstly for potential
suppliers to qualify to enter the procurement process (pre-qualification stage); and secondly,
for assessing competing bids, following tendering. The balanced scorecard is a template the
content of which is fixed at both the PQQ and ITT stages. The ODA also require first tier
contractors to use the balanced scorecard approach when choosing suppliers lower down
the supply chain. However, whilst it is the intention that the ODA’s policies and procurement
practices cascade down through the supply chain, beyond the first tier level, the ODA can
only encourage use of the balanced scorecard.
Reported Opportunities for SMEs
Most ODA contracts are, and will continue to be, let to large companies due to the scale of
the projects. However, ODA policy encourages contractors to offer full opportunities to
subcontractors, not disadvantaging SMEs. ODA staff report that procurement opportunities
for SMEs in construction will be mainly at tier three level and below. Small firm
subcontractors typically offer specialised products or services as niche suppliers further
down the supply chain.
According to ODA staff, supply opportunities for smaller firms will increase in the next 18
months to two years (from July 2008) with many perhaps not arising until late 2009 or early
2010, as supply chains are mobilised for all aspects of the infrastructure. Currently, most
opportunities are for first and second tier contractors and are therefore, of high value and out
of reach of SMEs. As time progresses, fewer opportunities will come from the ODA or from
the public sector more broadly. Most will come from the ODA’s supply chain and will
therefore, be private sector procurements. First tier contracts are currently being allocated
and it will take time for contract opportunities to cascade through the tiers.

ODA PROCUREMENT POLICIES AND PRACTICES
5
ODA Corporate Procurement
There appear to be more opportunities for small firms to access ODA corporate procurement
contracts, than for construction contracts. Corporate procurement constitutes approximately
£1/2bn of the ODA’s overall budget. Corporate procurement consists of the supply
requirements of the ODA itself, including IT and professional services, maintenance,
catering, stationery, transport, logistics, cleaning, printing and security services. The Head of
Corporate Procurement reported 135 corporate procurements by July 2008, ranging from
contracts of £5,000 or less, up to approximately £25m. Since about half of these contracts
were reported to be below £25,000, there appear to be good opportunities for SMEs.
Examples of small contractors mentioned by ODA respondents included a specialist
assessor of equalities and inclusion practices and a consultant specialising in environmental
sustainability assessments. Tenders for certain types of services (for example, catering, taxi
and chauffeur services) may specify that contractors need to be local (for example, to be
within a 20 mile radius), thereby presenting opportunities for local businesses. Although
expenditure on corporate procurement is much smaller than on construction, it is likely to be
maintained over the life of the ODA, whereas construction contracts will tail off after 6-9
months.
Challenges facing the ODA in achieving Supplier Diversity
One of the main challenges facing the ODA with regards to procurement is to balance the
competing responsibilities placed upon it. ODA’s procurement policies and practices have to
comply with public duties with respect to issues such as equality, but they must also comply
with EU procurement directives and UK public sector contract regulations with respect to
price and quality, as well as ensuring that all infrastructure work is completed on schedule.
Senior ODA staff stressed the constraints of operating in a public sector procurement
environment. There is a need for decisions to be justifiable and auditable, based on objective
assessment, with a requirement that unsuccessful bidders are de-briefed. Value for money
and the ability to meet delivery deadlines were reported as key criteria.
ODA staff report they have no scope to positively discriminate in favour of, or to prioritise,
businesses owned by members of particular groups or located in particular areas. Instead,
the approach is to seek to ensure that all businesses have an equal opportunity to bid for
ODA contracts. More scope exists for incorporating contract requirements that may favour
local firms for example, with contracts below the OJEU threshold, such as taxi or limousine
services.
From an ODA perspective, finding firms ‘fit to supply’ is itself a barrier to implementing
supplier diversity. ODA procurement staff referred to many small firms lacking the required
supporting documentation for example, with respect to health and safety, quality assurance
and equality policies. Also relevant are the effects of size per se, since businesses cannot
tender for public sector contracts whose value is greater than 25 per cent of their annual
turnover, without a Performance Bond or similar guarantee. The reason for this is to prevent
a business from becoming too reliant on any single client and therefore suffering as a
consequence of a contract coming to an end. It also ensures that clients are not over-
exposed to financial failure.2
The CompeteFor Website
The main mechanism for SMEs finding out about Olympic Games contracts is the
CompeteFor website. The portal, launched in January 2008, is a pre-procurement brokerage
tool enabling purchasers to advertise contract opportunities, for suppliers to express an
interest in those opportunities, and to match the two.3 The operation of CompeteFor is one of
the important influences on whether procurement for the Olympic Games is benefiting either
SMEs in general, or specific sub-groups.
London business owners may find out about CompeteFor through their own networks or
through dissemination events run by London Business Network and the ODA.4 The ODA,

ODA PROCUREMENT POLICIES AND PRACTICES
6
along with other organisations, have actively sought to engage with business networks
through events to disseminate information and to encourage take-up of CompeteFor. ODA
procurement staff emphasised national as well as local obligations with regards to
dissemination and outreach activities, since all English Regional Development Authorities
(RDAs) and devolved administrations contribute to the funding of CompeteFor. These bodies
expect to be included in the ODA’s programme of dissemination workshops and ‘meet the
buyer’ events. The ODA employ a Business Outreach Manager whose role includes
informing SMEs about CompeteFor and its procedures.
For SMEs to benefit from using CompeteFor, and put themselves in a position to pursue
advertised contract opportunities, there are a number of steps to take (Figure 1). First,
businesses must register on the portal by providing basic business information such as
business name, address and contact details. Registered businesses can view advertised
contract opportunities and can express an interest in them without having completed and
published their business profile, but they will not be automatically matched to opportunities,
receive email alerts or referred to Business Link for support.
Second, businesses complete a business profile; these are described as published
organisations. This step requires business owners to submit detailed information on
business activities, sales and employment and to meet the business readiness criteria
(having health and safety, equality, diversity and quality assurance statements in place).
Firms are also requested to submit information on insurances and policies, financial data
and ownership characteristics (but these are not disclosed). Buyers cannot, therefore, use
ownership characteristics to favour or disadvantage particular firms. For businesses that
publish their profile and do not meet the business readiness criteria, Business Link is notified
automatically and required to contact the business within 24 hours.
Third, buyers advertise contract opportunities on CompeteFor to solicit expressions of
interest from potential suppliers. The ODA has been the dominant single source of
advertised opportunities so far, but in September 2008 approximately 80 buyers were
reported to use the system. A Buyer Engagement Team has been active in encouraging
potential purchasers at all levels in the supply chain to advertise contract opportunities on
the CompeteFor portal. This work is now picking up momentum as the ODA works with first
tier contractors to develop the supply chain.
The ODA require contractors at all tiers to post contract opportunities on CompeteFor,
except where they have a captive supply chain in place. Prospective suppliers are alerted by
email, of contract opportunities which match their profile for supply and are invited to apply
by completing an online form. Businesses are then shortlisted according to the weighting
that buyers attach to particular questions. Unlike tenders issued by public bodies that are
subject to OJEU rules, supply chain buyers can weight in favour of aspects such as location
or other such elements not available to the ODA under the legislation that applies to
Government procurements. Buyers may reweight questions in order to generate a revised
shortlist. Firms cannot be identified until the shortlist is closed. Buyers may invite any, or all,
shortlisted suppliers identified through CompeteFor to tender formally through their own
procurement systems, although they are under no obligation to do so. Buyers may also invite
suppliers not identified through CompeteFor, to submit a formal tender.

ODA PROCUREMENT POLICIES AND PRACTICES
7
Figure 1 Supplier and Buyer Processes
London2012.com/business
The London Business network and
equivalent agencies across the UK
Buyer Engagement Team and
contractual obligation to participate
BUYER
SUPPLIER
 Single registration for multiple opportunities
 Wide range of contracts of different sizes
 Business support from Business Link
 Free to use
Build profile
Supplier
registration
Buyer
registration
Input
opportunities

ODA PROCUREMENT POLICIES AND PRACTICES
8
The London 2012 business network (www.london2012.com/business) publishes the names of
every first tier contractor. Firms seeking to supply these contractors may use this site to identify
ODA contractors with a view to marketing their own goods and services to them. ODA staff
report that prospective suppliers are encouraged to think more broadly than CompeteFor as a
means of identifying contract opportunities and of seeking to influence buyers’ contract
specifications. This message is provided at ODA engagement meetings and in the ODA
Supplier Guide (Olympic Delivery Authority, 2008), which is a document providing useful
information to suppliers and contractors interested in opportunities. These include ‘meet the
buyer’ events, enabling would-be suppliers to discuss product and service ideas with potential
buyers.
CompeteFor Outcomes
Table 1 shows that 32,964 companies had registered on CompeteFor by 19 September 2008.2
Of these, 10,273 were located in London and 2,113 in one of the five Olympic boroughs. The
London Development Agency (LDA) indicated that the aim was to have 30,000 London
businesses registered by April 2009 and to have 40 per cent of those winning Olympic Games
contracts. However, as of September 2008, less than half of the London firms registered have
published profiles. The question of why so many registered firms are not published is
unresolved. One view is that these firms are not serious about seeking contract opportunities.
Alternatively, these firms may be those in most need of support, because by registering they
may be keen to seek contract opportunities but have not placed themselves in a position to
express an interest. The LDA is currently working with Business Link to discover why registered
businesses do not complete their business profile, with a view to encouraging more firms to
publish.
Table 1 CompeteFor, businesses registered: September 2008
Location
No. of firms
registered
No. of firms
with profiles
% of
registered
firms with
profiles
No. of
contracts
awarded to a
CompeteFor
short-listed
supplier
Greenwich
268
123
46
0
Hackney
486
199
41
7
Newham
391
166
41
2
Tower Hamlets
658
325
49
1
Waltham Forest
310
128
41
4
5 Olympic boroughs
2113
936
44
14
London
10,273
4553
45
No data
Total
32,964
No data
No data
54
Source: LDA.
Notes: as at 19 September, 2008.
2 This number is rising constantly. Data for 3 November, 2008 suggests 39,000 businesses have now registered.
2 Data missing for six businesses.

ODA PROCUREMENT POLICIES AND PRACTICES
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As of September 2008, four small firms with fewer than 50 employees, in the five boroughs were
reported to have won contracts as at 15 October 2008 – 18 in London as a whole and 38 in
total. For medium-sized firms the figures are three businesses in the five host boroughs, nine in
London, and 18 in total.3i
LDA have no targets for the number, or proportion, of contracts to be won by CompeteFor
shortlisted suppliers. Up to July 2008, CompeteFor shortlisted suppliers won 67 of 135 ODA
corporate procurements. The figure is depressed by the fact that some contracts were below the
£3,000 threshold for competitive tendering4 or above the OJEU threshold, and because supplier
engagement was at a much earlier stage at that point. Larger contracts may be posted on
CompeteFor to alert potential bidders, but must also be advertised through the OJEU in order to
comply with EU Competition Policy rules.
Any firm registered on CompeteFor is able to access support from Business Link. Specialist
assistance can be particularly important for small firms seeking contracts, as they often need
help to comply with the documentation required to support a contract bid. This emphasises the
importance of Business Link (and its partners) being able to attract clients from all sections of
the SME community.
There is no fixed total number of contracts to be let by the ODA, because contracts may be
bundled into more / fewer packages as procurement teams strive to achieve best value. ODA
data shows that by the end of August 2008: 759 contracts had been let to first tier contractors;
54 per cent to micro firms or SMEs; 27 per cent to large firms; and the rest are either
undisclosed or awaiting confirmation.
4. THE SME DIMENSION
In this section, we report the experiences and views of small business owners and a range of
intermediary organisations with regard to ODA procurement. Given the small sample sizes, we
do not claim that the views presented are ‘typical’ or ‘representative’ of business owners or
intermediaries in the capital, and generalisation to the broader groups from which these
samples are drawn should only be undertaken with caution. The findings presented should be
seen as indicative of the range of views held by both business owners and intermediary bodies
beyond those studied here. In presenting the findings, the aim is to identify issues that those
responsible for Olympic Games procurement may need to consider to improve access to
contract opportunities for SMEs.
Views of Business Intermediaries
Perception of Opportunities for Small Firms
Intermediaries include business associations and public sector organisations involved in
business support. Intermediaries reported a range of views of the 2012 Games as a source of
possible opportunities for businesses in the target groups. Some were positive about the
prospects for businesses, while others predicted negative outcomes as more likely. Several
intermediaries acknowledged that small firms might benefit from being able to bid for contracts,
but often qualified their comments by claiming that first, the number of opportunities might be
limited; second, opportunities would be available to some kinds of small businesses, but not all;
third, opportunities may arise from increased tourism and other activities in the period leading
up to and during the Games, rather than from opportunities posted on CompeteFor; and, fourth,
most opportunities would not come on-stream until much closer to 2012. Even those reporting
3 Data missing for six businesses.
4 Contracts below £3,000 require only a single quote.

ODA PROCUREMENT POLICIES AND PRACTICES
10
possible benefits did not place too much weight on the Games. Several associations
emphasised that the Games was only one source of potential opportunities for member / client
businesses. Others emphasised possible opportunities arising from links with other public sector
organisations – unconnected with the Games – and from other London developments.
Critical views with respect to possible business opportunities were more likely to be reported by
organisations with no contact with London Business Network 5or other bodies promoting
supplier diversity, suggesting that exposure to the ‘CompeteFor message’ may mitigate some of
these concerns. A number of respondents were concerned that the Games might generate
negative outcomes for small businesses in the five boroughs. Some claimed to detect a ‘Games
effect’ on local property rents and prices that might force local businesses to relocate out of the
borough or worse, to close (see also New Economics Foundation, 2008). To the extent that
such consequences do occur, the prospects for many local businesses might be worse rather
than better as a result of London being the host city. Rather than providing a boost to local
firms, the Games might simply lead to their displacement by large retailers and other corporates
who are able to pay the inflated rents.
Perceived Barriers to Participation by Small Firms
Intermediaries identified a number of possible barriers to small businesses being able to win
Olympic Games-related contracts. First, they recognised that small firms might not be suitable
for such contracts. Many operate in sectors for which there will be few, if any, contracts for
example, hotels, bars and restaurants. Furthermore, many SMEs simply lack the capacity to win
and deliver Games-related contracts. Clearly, this relates to the size of contracts, but without
proper preparation and business support, many SMEs, they argue, are engaging in wishful
thinking to believe they can win contracts. ‘Fledgling’ businesses lacking three years trading
history are unlikely to win contracts, because a track record of successful delivery is a key factor
influencing purchasers’ choice of suppliers. New businesses will need to join consortia if they
are to overcome this hurdle. Participation in procurement events might enhance firms’
capacities to tender for public contracts, although time constraints might prevent them from
taking part.
Turning to barriers external to the business, intermediaries made a number of points. First, there
was recognition that many contracts, particularly for infrastructure projects, are simply too large
for small businesses to take on. Respondents acknowledged that if there are to be opportunities
for small firms, these are likely to materialise closer to 2012 at lower tiers in the supply chain.
Second, several respondents were wary of claims that opportunities would be abundant even at
lower levels of the supply chain because larger contractors already had captive supply chains in
place. SMEs may find it difficult to secure opportunities even at the sixth and seventh tiers
unless they are already known to contractors. Under pressure to deliver on time and within
budget, contractors, even at lower tiers, are likely to turn to existing suppliers.
Third, CompeteFor registration and expressing interest in specific contract opportunities were
perceived as possible barriers to small firms. There was concern that the very short period
permitted to those wishing to express an interest (sometimes as short as a couple of days)
might exclude many SMEs, because their limited internal resources might prevent them from
submitting an expression of interest.
At the time fieldwork was undertaken, very few intermediaries knew of contract winners or firms
that had unsuccessfully sought contract opportunities through CompeteFor. The number of firms
5 London Business Network was established in 2006 to engage London’s business community in the lead up to 2012,
Its is a joint initiative of London First, the London Chamber of Commerce and the Confederation of Britsih Industry
(CBI) London and supported by the LDA.

ODA PROCUREMENT POLICIES AND PRACTICES
11
known to be aspiring to win contracts was higher, but many of these could not genuinely be
described as actively pursuing Games-related contracts; rather, they were considering whether
to seek such opportunities.
Views of Small Business Owners
A sample of small enterprises was constructed to investigate the views and experiences of
small business owners with regard to Olympic Games opportunities. The sample consisted of
31 small business owners, including 6 contract winners; 4 unsuccessful contract seekers and 21
aspirers i.e. those considering seeking contracts but who have not yet done so. Data was
obtained in individual interviews (face-to-face and telephone) and in a focus group held with
women-owned businesses. Businesses were recruited to the sample through the ODA,
business intermediaries, and from procurement events held in London.
Contract winners
Six contract winners were interviewed in a range of business activities, including events
production, training, consultancy, translation services and water supply services. Businesses
employed between 2 and 12 full-time staff and five of the six reported using outside contractors
when needed. The contracts won varied from £3-25,000 in value. None of the contract winners
were located in the five host boroughs. Five were based in Greater London with one in
Scotland.
Importantly, all six contract winners had previously won public sector contracts. This highlights
the importance to purchasers of prior experience in working for public sector organisations. Two
respondents reported undertaking previous subcontract work for the ODA and this encouraged
them to seek further contracts. For those winning a contract for the first time, the ODA contract
was perceived as good for the business. Contract winners drew upon existing links with
business / trade associations as a means of finding out about contract opportunities. Several
had attended procurement events and were aware of the statutory requirements placed on
suppliers. Respondents stressed the need to keep up-to-date by accessing web portals
regularly. Owners reported using three: CompeteFor, Supply2Gov and BiP Solutions.
All six contract winners were aware of CompeteFor and all but one was registered. Two were
registered on Supply2Gov and two on BiP. Four found out about ODA contracts through
CompeteFor and two also found out about them through Supply2Gov. Two felt that the
CompeteFor portal was an efficient way for them to find out about public sector contracts, via
the email alert service. The business not registered on CompeteFor found out about the ODA
contract through a BiP email alert. Only one business did not discover the contract opportunity
they ultimately won via CompeteFor. The business had worked for the LDA previously and was
invited to bid for the ODA contract along with two other businesses.
Prior experience of bidding for public sector contracts gave respondents an advantage when
seeking to win ODA contracts. All were comfortable using CompeteFor, although previous
research suggests small firms experience this as a barrier to seeking public sector contracts.6
I found it pretty straightforward; it didn’t take long. That was partly because I had
already gone through it all with BiP self-accreditation ... I think the whole area of
bidding for contracts7 is actually quite a complex one. We’ve been successful in a
6 Supplier Adoption and Economic Development Newham’s Kick-Start Model for Supplier Adoption.
7 This is the language used by the respondent. Strictly speaking, firms do not bid or tender for contracts on
CompeteFor; they merely express an interest in particular contract opportunities. This raises the broader issue of the
language used by procurement professionals and that used by business owners and others. It is not obvious that
business owners are able to speak the same language as procurement professionals and, therefore, more effort
might be required to ensure they understand the particular meanings given to words such as ‘express an opportunity’,

ODA PROCUREMENT POLICIES AND PRACTICES
12
high level of bids that we’ve gone for. Being small, obviously people look at our
turnover and you sometimes feel that might be a disadvantage ... But, having said
that, we’ve done pre-qualifications for lots of people successfully. (Contract winner
1)
Business owners also remarked on the convenience for small firms provided by the
CompeteFor portal:
The initial process for everyone is it looks a bit challenging, but after you feel your
way around I think it’s a wonderful idea... it’s one place, one stop. It makes life much
easier for small businesses to compete with large organisations. Large
organisations have a full-time staff member to look for tenders, but if you are a small
business, then you don’t have that luxury. (Contract winner 2)
Another potential barrier for small firms seeking public sector contracts is the need to comply
with a raft of statutory requirements such as having particular policies and documents in place
(equality, health and safety, environmental sustainability, and quality control) (Smallbone et al.
2007). All contract winners reported such policies as a consequence of prior bids for public
sector contracts. This experience undoubtedly enabled these businesses to seek, and to win,
ODA contracts.
Having done all the information once, it’s all there and easy for us to copy and
paste. So we don’t always have to re-do it. We have set up this system where a
different member of my board takes responsibility for a different topic and we review
them every year. At the moment, we are just going through a completely new health
and safety policy. (Contract winner 1)
But even contract winners were occasionally critical of CompeteFor. Several reported that
contract details were poorly specified.
The main issue that emerged regarding the operation of ODA contracts refers to the level of
detailed contract information available. At least three contract winners reported a lack of
information from the client both during the process of responding to, and securing a contract,
and in the early stages of contract work. Whilst this caused concern for contract winners, it also
provided an opportunity for them to deploy their own expertise, to advise clients on the best way
to achieve their goals.
Businesses unsuccessful in seeking contract opportunities
All four firms in this group found out about contract opportunities through the CompeteFor
website. Most were complimentary about CompeteFor, reporting it as easy to use, presenting
no difficulties to register or to complete a business profile. Businesses reported that contract
opportunities are advertised at short notice but once in possession of the required information,
the process reportedly took little time. One owner was very optimistic about CompeteFor
reporting the system was created specifically for SMEs. At the same time, he feared that many
large contractors to the ODA already have their small suppliers in place and will not choose
local businesses.
Unsuccessful seekers of contract opportunities reported a number of concerns regarding the
CompeteFor process. First, three of the four reported that contract opportunities were vague in
terms of suppliers’ obligations. Lack of information might encourage unrealistic expectations on
the part of those firms considering expressing an interest. They may seek contracts they cannot
deliver or conversely, ignore contracts on which they could deliver.
‘bid’ and ‘tender’. Given what some respondents reported, it seems clear they do not always attribute the same
meanings to these terms as do professional procurers.

ODA PROCUREMENT POLICIES AND PRACTICES
13
Another problem was that we had to provide information on the number of staff we
could allocate each month to [delivering the product]8 although they hadn’t specified
how many [products] a month they needed. They had only mentioned up to 25 and I
found this information to be quite confusing. (Unsuccessful firm 1)
Second, firms that had not been successful in getting shortlisted perceived the online form as
inadequate to allow them to market their businesses effectively. CompeteFor allows those
seeking contract opportunities to answer a number of questions, to describe themselves using a
free text section, and to upload three images to represent their businesses – although ODA staff
report that many suppliers choose not to complete this section. Two owners considered the
form, consisting mainly of questions requiring ‘yes’ and ‘no’ answers, to be constraining their
capacity to represent their business activities accurately.
Third, the lack of feedback to firms not shortlisted on CompeteFor was a further concern. Firms
in this group indicated that although they are informed of their score, they are not notified of the
reasons for it. CompeteFor has not been set up to provide feedback but this limits business
owners’ ability to learn from the experience and to develop their capabilities. Failure provides no
foundation for improving future responses to contract opportunities.
Unsuccessful seekers of contract opportunities reported a number of reasons why they believed
they had not been shortlisted on CompeteFor. Not surprisingly, owners considered business
size and / or experience as decisive influences on outcomes. To overcome the perceived
disadvantages of smallness, a number of owners reported considering joining forces with larger,
more established, businesses offering complementary products and services, in order to submit
better applications. Respondents identified potential partners through prior working and contacts
established at events. Despite a lack of success so far, all four firms that unsuccessfully sought
contract opportunities indicated they would pursue future opportunities on CompeteFor. This
suggests that firms have not been deterred despite a lack of success so far.
Aspirers
‘Aspirers’ comprise those actively taking steps to access Olympics Games contracts
through to those considering whether Games contracts are worth pursuing. Twenty one
aspirers were interviewed. This number includes 16 business owners and a further five
respondents (all women) in the pre-start, planning phase of their businesses. Most
business owners were located in the five host boroughs, as were the five pre-starts.
Aspirers believe they will benefit by seeking contracts through CompeteFor but primarily
perceive themselves as likely to benefit through increased demand for their products or
services. The huge publicity surrounding the Games, together with the favourable location
of these businesses, has definitely increased respondents’ expectations.
Procurement events have led many business owners to believe it is easier to win ODA contracts
than other public sector work. Others conversely, prefer to direct their efforts elsewhere and not
expect too much from the Games, either because they believe other firms will be focusing on
the Games (Aspirer 5) or because their products are not likely to be sought by the ODA or their
contractors.
Aspirers typically know what CompeteFor is designed to achieve, are registered, have
completed a business profile and receive contract email alerts automatically. Many heard about
CompeteFor through attendance at procurement events. One respondent described the ODA
as:
8 Bracketed text inserted by the authors to render remarks intelligible.

ODA PROCUREMENT POLICIES AND PRACTICES
14
… an organisation that comes to us rather than us having to go to them. ODA is
very good in engaging with the community. I do not think other organisations have
done the same. (Aspirer 10)
Other aspirers however, were unaware of CompeteFor, or were critical of its operation. The
majority of women focus group participants were not well informed regarding CompeteFor due
to being pre-starts or lacking experience of applying for UK Government contracts. Although
most aspirers considered CompeteFor processes as being relatively easy, some reported
problems. Contracts were perceived as too large for small firms to apply for, with suitable
opportunities only becoming available at lower tiers in the supply chain, and possibly not until
2010.
Aspirers reported public procurement events as useful in providing basic information about the
CompeteFor website and becoming fit to supply. Many owners see this as a simple process of
putting the required policies in place; policy templates can be obtained from business support
bodies and from the Internet. But, other factors are also important such as business probity,
skills and experience, and working style. Some aspirers had attended up to ten procurement
events, often with the primary aim of networking with potential buyers and suppliers. Networking
was considered one of the crucial ways to survive and thrive in business.
Some aspirers thought that support providers had an important role to play in increasing the
confidence of small business owners to enter the public procurement process. One suggestion
was that events might be redesigned to address the different needs of businesses with widely
varying experience of involvement in public procurement processes. Most appear to focus on
those lacking any prior knowledge of such processes. Third, a lack of awareness of the existing
support available, on the part of some companies, is a concern since Business Link assistance
is available to firms registered on CompeteFor, to help them become ‘supplier ready’.
As with firms that had unsuccessfully sought contract opportunities, there was some scepticism
among aspirers that central Government was serious about enabling public sector organisations
and their main contractors to engage small businesses as suppliers. Aspirers feel that central
Government is letting them down despite generating large expectations. A number of aspirers
believe that central Government should demonstrate greater resolve to enable small local
businesses to secure Olympic Games contracts. Smallness should not prevent firms from
winning contracts. If businesses have a track record of successful delivery, they should not be
dismissed just because of their size (Aspirer 5). Some aspirers maintained that Central
Government could make subcontracting to small suppliers a condition of contracts with first tier
contractors.
To overcome the size constraint, a number of aspirers were considering forming partnerships
with larger, more established businesses. Respondents stressed the importance of networking
at ‘meet the buyer’ or other events as a means of becoming visible to large organisations and
meeting potential small business partners.
5. CONCLUSIONS AND POLICY IMPLICATIONS
The study on which this paper is based sought to establish an initial baseline with respect to
whether the ODA’s procurement policies and practices are benefiting SMEs. The research
suggested that in a UK context the ODA’s policies and practices constitute a significant attempt
to increase supplier diversity, within the constraints of existing regulations and regulatory
requirements. This includes the CompeteFor Website, which the ODA is contributing to with the
LDA and other partners. At the same time, the research indicates that most Olympic Games
business opportunities for small firms lie closer to 2012 than to 2008. The process of

ODA PROCUREMENT POLICIES AND PRACTICES
15
procurement for the Games is still at an early stage and first tier construction contracts are too
large to be suitable for most SMEs. As a result, few SMEs have won contracts so far. Most
opportunities for SMEs from construction projects lie either further down the supply chain as
contracts cascade through the tiers over time, or in meeting the ODA’s corporate procurement
needs.
The ODA’s regulatory obligations under UK and EU law inhibit action to favour businesses on
the basis of their size or indeed any other characteristic. The ODA must select contractors on
best value grounds in a fair manner, which means that no favour can be shown towards
suppliers on grounds of size, location or other characteristics. However, there may be
opportunities to influence the choice of supplier with lower value contracts, particularly where
proximity may be necessary for a contract to be delivered effectively.
In this context, implementing supplier diversity is challenging for the ODA, for a number of
reasons. First, the ODA must balance a range of competing pressures alongside achieving a
diverse supplier base, the most prominent being value for money and delivering venues and
infrastructure in time for the Games. Contract awards will always seek to minimise the risk of
non-completion within the permitted timeframe, which will tend to favour contractors with captive
supply chains. In addition, many small firms lack the internal capacity, trading history and
required policies and documents to win ODA contracts. Thus, whilst any company can express
an interest in any opportunity, whether they are then invited to tender for that opportunity
depends on their supply capability and capacity to deliver. The CompeteFor website is the main
vehicle for linking SMEs with Olympic Games-related business opportunities. The operation of
CompeteFor in practice has an important influence on whether ODA procurement will benefit
SMEs. The CompeteFor model relies on enabling and encouraging registration and access to
contract opportunities by all types and sizes of firm. It is assumed that raising participation by
SMEs will translate into an increased number of responses to contract opportunities and
ultimately contract awards. However, on its own, this approach might not suffice to generate a
proportionate number of contract seekers and winners among SMEs It is too early to comment
on the effectiveness and overall impact of CompeteFor in relation to increasing supplier
diversity.
Access to Business Link support is a positive feature of CompeteFor. Many businesses that are
potentially capable of delivering on contract opportunities advertised on CompeteFor, are either
unable to complete a business profile in order to put themselves in a position to apply or
alternatively, lack the policy statements and/or documents required. Business Link can play an
important role in enabling such firms to complete a profile and to put the required policies and/or
documents in place. Without such support, many businesses that are close to being fit to supply
might be unable to respond effectively to CompeteFor contract opportunities.
Business awareness of Olympic Games opportunities is growing. Businesses aspiring to win
supply contracts have had their expectations raised as a result of publicity surrounding the
Games and the dissemination activities of important organisations including the ODA and the
London Business Network. Whilst the active promotion of business opportunities is to be
encouraged, there is a risk that business expectations might be raised to a level that cannot be
fulfilled. Many SMEs are simply not in a position to win contracts, because they are engaged in
activities that are not relevant to the Games; and/or lack the capacity to deliver; and/or do not
have the required policies or trading history. Whilst encouraging firms of all sizes to register on
CompeteFor is to be encouraged, it is important not to raise expectations beyond what might be
reasonably fulfilled.
SME contract winners interviewed as part of this project have previous experience in tendering
successfully with public sector organisations. Although difficult to find, all SME contract winners

ODA PROCUREMENT POLICIES AND PRACTICES
16
interviewed had successful experience of bidding for public contracts. This emphasises the
potential benefits of SME owners investing time in understanding and meeting the procurement
requirements of public sector bodies, as well as business support agencies assisting this
process. It also draws attention to public authorities across the board making their procurement
practices ‘SME user friendly’, following good practice experience.
Implications for Public Procurement Policy
Analysis of the procurement policies and practices of a major public body has implications for
the wider procurement policy agenda. These include:
(i) The policy drivers to achieve supplier diversity appear weak in the context of
conflicting policy priorities. Public procurement is undoubtedly a potentially powerful
economic development tool, if it can be opened up to greater involvement by SMEs.
However, our analysis suggests that the ODA lacks sufficient powers to achieve a high
level of supplier diversity given the competing pressures placed upon it. The ODA has
public duties to emphasise ‘best value’, which in the context of the 2012 Games means
high quality goods and services delivered on budget and on time. In terms of the wider
procurement agenda, clearer guidance from central Government about competing
priorities would be helpful. A consistent message is required to be promoted by
Government and all public bodies about their expectations with respect to equality and
diversity policies and practices throughout their supply chains. This will help to avoid
SMEs finding positive experiences with one public body being matched by negative
experiences with others.
(ii) Supply chains for public bodies predominantly involve contracts between private
companies. On the one hand, this may be seen as an opportunity as supply chain
contracts are not subject to OJEU rules, but on the other hand, public bodies lack ‘teeth’
to implement supplier diversity at lower levels in the supply chain. From the standpoint of
the wider procurement agenda, it may be argued that public bodies such as the ODA
lack sufficient powers to achieve their supplier diversity goals. The ODA can compel first
tier contractors to advertise contract opportunities on CompeteFor, and encourage this
throughout the supply chain, unless a captive supply chain is in place. However, the
ODA cannot influence how contractors package their contracts or, in the vast majority of
cases, whom they select as suppliers (although they have an ultimate right of veto).
Given the rules that the ODA operate under, there are strong limits to their capacity to
increase supplier diversity. In practice, the ODA’s direct influence appears to be mainly
limited to its own corporate procurement (where contract values are lower) and to the
encouragement of first tier contractors.
(iii) CompeteFor is a novel and superior system compared with public sector
procurement models in the UK but improvements could be made. Continued efforts
are required to publicise CompeteFor aims and procedures in order to increase
awareness among SME owners. Where possible, buyers should provide appropriate
feedback to notify unsuccessful firms of the reasons for not being shortlisted in relation
to particular contract opportunities. There would appear to be scope for Business Link to
co-operate with ODA staff in providing feedback to such firms.
The CompeteFor model is anticipated to be used as the mechanism for all public sector
procurement beyond 2012. For CompeteFor to be able to develop this wider role beyond
2012 there is a need to establish legitimacy with a broader business constituency,
including SMEs. In the context of a Government aspiration to ensure small businesses
secure 30 per cent of public sector contracts, continued action to ensure a high level of
small business participation in the period leading up to the Games is essential. Second,

ODA PROCUREMENT POLICIES AND PRACTICES
17
encouraging CompeteFor registration might create a business base who are ‘fit to
compete’ for contracts for which they might otherwise have been unable or unwilling to
pursue. However, it might require considerable effort to sustain the interest of firms that
have been unsuccessful in seeking contracts.
(iv) Business support organisations can make an important contribution to supplier
diversity. Support organisations can contribute to higher levels of supplier diversity in
various ways: first, by playing a role in raising business awareness of CompeteFor (its
procedures and contract opportunities) and by hosting dissemination events; second, by
providing support to firms registered on CompeteFor, or by enabling other support
providers to reach them; third, by providing information on members / clients’ businesses
and products to enable buyers to identify potential suppliers; and fourth, by assisting
SMEs to access purchasing organisations’ networks through ‘meet the buyer’ and similar
events.
(v) Effective monitoring of supplier diversity is essential at all levels of the supply
chain. However, in practice, the ODA are likely to find monitoring of supplier diversity a
complex and resource-intensive task to undertake effectively at lower tiers in the supply
chain. The ODA are reliant on contractors at tier one and below to monitor contract
outcomes and to supply the data to the ODA. While it might be possible to obtain good
quality data from the first tier contractors with whom the ODA deal with directly, their
influence on contractors might be expected to diminish at lower levels of the supply
chain. Subcontractors lower down the supply chain may feel less motivated to pursue
supplier diversity objectives consistent with the ODA’s requirements and consequently,
less keen to maintain information on contract awards to their own suppliers.
(vi) Stronger promotion is required of the mechanisms available to enable innovative
SMEs to present novel product / service ideas to potential buyers where no
contract opportunity exists on CompeteFor. Currently, CompeteFor only enables
suppliers of innovative products to become involved if buyers have posted a particular
contract opportunity on the portal. Innovative business ideas might never see the light of
day on CompeteFor because no buyer has ever thought of them. Although opportunities
currently exist through the ODA’s Industry Days and meet the buyer events, the
research suggests these opportunities are not widely known among the local small
business community.
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