Inclusive procurement in action: LAIN’s strategy to support local MSMEs
Organisations: LAIN - London Anchor Institutions’ Network
The London Anchor Institutions’ Network (LAIN) is London’s first city-wide anchor initiative, spearheaded by the Mayor of London, that commits institutions to work together, using their procurement, workforce and estate management capacity for social and economic benefit. Through LAIN, some of London’s biggest organisations - from the NHS and Transport for London, to Thames Water and University of London - are collaborating to create a fairer, greener, more prosperous city for all Londoners.
A central feature of the city-wide network is LAIN’s Procurement Working Group, which brings together member organisations to commit to buying more of their goods and services from small and diverse-led businesses.
LAIN’s Procurement Working Group: Framing the challenge and the solution
As large organisations with substantial annual budgets, the Working Group asked themselves whether they could bring about greater inclusive economic growth by buying a greater share of our goods and services from smaller and more diverse businesses in London.
Part of this involved mapping out the challenges preventing this from happening already and identifying solutions - from improving information and outreach on available contract opportunities to producing guidance for businesses on how to register as suppliers.
Since 2021, the group has been developing interventions to support local, inclusive economic growth by enabling more micro, small and medium-sized enterprises (MSMEs) to enter their supply chains. Individual member organisations have pledged to spend up to 30 per cent of their annual addressable spend with MSMEs, with a particular focus on businesses owned or led by people from underrepresented backgrounds.
What actions did the Working Group take?
Meet the Buyers Events
Running online and in-person market engagement events helped the Working Group to proactively reach out to businesses to raise awareness of the contract opportunities that exist with LAIN members, and the range of goods and services they buy. These events have been attended by more than 100 London-based small and diverse businesses and have helped make the procurement process more transparent and accessible.
Small Business Guides
The Working Group has also produced guides for small businesses on how public procurement processes work and how to demonstrate social value. This has involved working with organisations such as the Federation of Small Businesses and London Chamber of Commerce and Industry to disseminate these guides, as well as publishing them on the Grow London Local portal - London’s front door for business. The guides have been accessed by more than 17,000 small businesses.
Simplified Terms and Conditions
Several LAIN members - notably, Metropolitan Police Service, London Fire Brigade and Westminster City Council - have collaborated on shortened Terms and Conditions documents. In the case of the Met, these documents were reduced down from nearly 30 pages to six. The updated documents use simpler language and more accessible formats, which means they are less intimidating for smaller businesses, or those for whom English is a second language. These templates have been shared across the group so that others can replicate them in their own organisations.
Training
The Working Group has developed e-learning resources for staff within LAIN anchor institutions who are involved in buying goods and services, to develop a deeper understanding of why we should be working with smaller businesses. These learning offers focus on practical ways organisations should be engaging with MSMEs - breaking larger contracts down or reserving under threshold contracts specifically for MSMEs.
Payment and Insurance Reviews
LAIN members have also been reviewing their internal practices and guidelines, including conducting payment and insurance reviews. They reviewed payment terms to increase the speed with which suppliers receive payment for their goods and services, making contracts more accessible to smaller businesses who are dependent on fast payments for cash flow. Similarly, reviewing the levels of insurance required to do business with LAIN members was central to the group’s aims to reduce barriers to MSMEs working with us.
What impact is emerging?
The work has created a tangible, collective impact. Since 2021 members of the working group have:
Entered into contracts worth over £2.72bn with micro, small and medium-sized businesses
Achieved their spend targets within two years, rather than the three to five years anticipated
Awarded over 2,800 contracts to MSMEs
Hosted supplier events benefitting 100+ of London’s smaller and diverse-led businesses
What have been some of the challenges?
The Working Group has faced challenges around changing established procedures, and gathering new kinds of data to inform their work and demonstrate impact. For example, many LAIN members did not hold diversity data on existing suppliers, so could not easily track spend in terms of diversity of supplier ownership. Whilst new systems have been implemented to gather this data from new suppliers, collecting information retrospectively for existing suppliers remains a challenge.
Although there have been some successful pilots reserving contracts for smaller businesses, embedding this new way of working at scale within our organisations has also proved challenging. To do this effectively, a good forward pipeline of contract opportunities is needed, but teams often want to move more quickly with commissioning goods and services than the reserved contract process allows.
What has helped LAIN succeed?
Having a proactive working group: The working group has developed a shared action plan with metrics that everyone reports against twice a year. Whilst not all members take part in every strand of the plan, they all benefit from the work being done elsewhere, and being shared back.
Peer-to-peer learning: LAIN has fostered a supportive environment of peer-to-peer learning, with members sharing their own practice and resources, and being honest about the challenges they face and the support they need to make change happen.
Ownership over the work: They’ve tried to ensure that their action plan, interventions, event design and even metrics of success are led by LAIN members. Procurement leads from different organisations chair the working group and any sub-groups established for particular interventions like the Meet the Buyer events. This has been vital in maintaining dynamism and engagement.
LAIN’s advice to other Anchor Organisations
For those looking to implement similar collaboration around procurement, LAIN recommends maintaining momentum and pace, making sure meetings are regular and focused, with a clear agenda, and taking away actions and timeframes. Celebrating the wins is also essential - showcasing and celebrating successes builds momentum with existing members and gains interest from new ones.
Learn more about sustainable procurement with HALN’s resource: