The role of Strategic Suppliers in the UK government’s procurement strategy is not just a matter of administrative convenience but a critical component in the effective and efficient delivery of public services. The Tussell’s 2023 Strategic Suppliers Report sheds light on the intricate relationship between these suppliers and the government, revealing trends and patterns essential for understanding the current state and future direction of public sector procurement.

One of the standout findings of the report is the shift in spending patterns. In the fiscal year 2022/23, while the overall spending on procurement increased across the public sector, the share attributed to Strategic Suppliers saw a significant decrease. This 17% drop in revenue for Strategic Suppliers led to their market share falling from 11% to 9%. This decline highlights a potential diversification in the government’s procurement strategy or a shift towards other suppliers outside the Strategic Supplier list.

The report also highlights the concentration of spending among a select few suppliers. Only five of the 39 Strategic Suppliers achieved direct public sector revenue of £1 billion or more in FY22/23. However, every one of these suppliers earned over £100 million, underscoring their substantial role in government operations. Despite this, only 11 of the 39 Strategic Suppliers managed to increase their revenue in the same period, indicating a challenging environment even for these established players.

Central government departments remain the primary source of revenue for these suppliers, underlining the critical nature of their services and products to national operations. Notably, 20 public sector buyers accounted for three-quarters of the Strategic Suppliers’ revenue. This concentration suggests a high dependency on a small number of large contracts, which could pose risks both for the suppliers, in terms of revenue stability, and for the government, in terms of supplier resilience and flexibility.

Key findings from the report indicate a shift in the landscape of government procurement and supplier performance:

• Market Share Decline: Despite an overall increase in public sector procurement, the Strategic Suppliers’ share of the market declined, with collective public sector revenue falling by 17% between FY21/22 and FY22/23. This resulted in their market share dropping from 11% to 9%.
• Revenue Fluctuations: Two-thirds of the Strategic Suppliers witnessed a decline in their public sector revenue. Only 11 out of the 39 managed to increase their direct public sector revenue in FY22/23.
• Central Government as the Prime Customer: Despite these challenges, the central government remains the biggest buyer, with 20 public sector buyers accounting for three-quarters of the Strategic Suppliers’ revenue.
• Technological Emphasis and Framework Agreements: The report highlights the crucial role of technology and digital transformation, with many suppliers falling into the technology sector. Moreover, a significant portion of the contracts won by the Strategic Suppliers was through framework agreements, which are pre-negotiated contracts that can be used by any government department.
• Evolving List: The list of Strategic Suppliers is dynamic, reflecting the changing priorities and needs of the government. The addition or removal of suppliers can happen at any time, as seen with the inclusion of Tilbury Douglas and the exit of Motorola and Interserve from May 2022 to December 2023.

The report also delves into sector-specific insights. For instance, technology and defence sectors saw some level of resilience or growth, reflecting ongoing national priorities in digital transformation and security. This contrasts with other sectors where spending has declined, pointing to the government’s shifting focus and possibly evolving priorities.

Additionally, the report underlines the growing importance of framework agreements in procurement. These pre-negotiated contracts simplify the buying process and have become a preferred method for securing goods and services. For Strategic Suppliers, the ability to navigate and capitalise on these agreements is increasingly crucial to maintaining their status and revenue streams.

In summary, the Tussell’s 2023 Strategic Suppliers Report offers a comprehensive analysis of the intricate dynamics between the UK government and its key suppliers. The findings point to a period of transition and adaptation, both for the suppliers and the government’s procurement strategies. As the public sector continues to evolve, so too will the role and performance of these Strategic Suppliers, each navigating a landscape marked by both opportunities and challenges.

This nuanced portrayal of the Strategic Suppliers in the Tussell’s 2023 report provides valuable insights into the complex relationship between the government and its key suppliers. While the designation as a Strategic Supplier brings prestige and close proximity to the heart of government decision-making, it also demands high standards of performance and accountability. As the government continues to navigate its vast procurement needs, the Strategic Suppliers will undoubtedly remain a focal point of strategy, efficiency, and public service delivery.