Small firms want more access to public contracts

25 Nov 04
Small companies are missing out on billions of pounds in public sector business each year because of the widespread myth that only large firms can deliver best value, their representative body claims.

26 November 2004

Small companies are missing out on billions of pounds in public sector business each year because of the widespread myth that only large firms can deliver best value, their representative body claims.

The Federation of Small Businesses says its 18,500 members are blocked from bidding for many lucrative procurement contracts because public bodies unfairly favour a few big players.

Just 3% of FSB members count public bodies among their main customers, a finding it describes as 'very worrying'.

In response, the federation published an action plan on November 22, which it wants implemented to level the playing field.

Carol Undy, the FSB national chair, said a contradiction at the heart of government policy was to blame for the problems faced by her members in accessing 'such lucrative business opportunities'.

Central civil government and councils spend £13bn and £42.2bn respectively on procurement each year.

'The Gershon Review calls for a reduction of the number of suppliers to government in a bid to cut costs. Meanwhile, the Small Business Service and the Office of Government Commerce want to make it easier for small businesses to supply both government and local authorities,' Undy said. 'The government must resolve these competing agendas.'

The FSB wants contracts to be advertised much more widely, ending the situation where 'competition is restricted to a few suppliers and consequently authorities cannot be sure of obtaining best value'.

It is demanding the abolition of accreditation regimes, which force firms to pay for membership before they can bid for contracts.

It also wants approved supplier lists to be more accessible as, it says, these often act as a barrier keeping out small companies.

Public bodies should break contracts down into manageable sizes so small firms can compete for them, the action plan says.

Where that is not possible, it wants public sector clients to insist, in the terms of the primary contract, that some activities are subcontracted to small firms 'on economically viable terms'.

The FSB said that all public bodies should use the pre-bid questionnaire developed by the Office of Government Commerce to assess initial expressions of interest.

It is calling, too, for councils to employ specialist procurement staff trained to assess the advantages, including the economic regeneration potential, of trading with small firms.

PFnov2004

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