Public sector shuts out small firms

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Public sector shuts out small firms

Microscope contributor

by Billy MacInnes

Many small businesses are being shut out of Government contracts because of the cost and complexity of a tendering process which favours larger companies.

The Forum of Private Business has called on public authorities to stop bundling tenders together, a practice it says stops smaller firms securing public sector contracts and saving taxpayers’ money.

Campaigns manager Matt Hardman suggested "bureaucracy and a culture of risk aversion" in the public sector were acting as barriers to smaller businesses.

While the principles of the Government’s procurement policy were clear, "implementation is a huge problem and smaller firms, which could often provide authorities with the best value for money, are excluded from the tendering process", he argued.

Steve Reynolds, managing director at Civica, which has a strong public sector business, agreed that the cost of bidding for some tenders would rule out smaller companies. But he was sceptical that breaking down tenders would provide better
value for money.

"Imagine if each department was buying its own PCs," Reynolds said. "The economics of doing lots of little tenders doesn’t make sense. It would be an expensive proposition to tender for every thing."

It would be "nutty" if public sector organisations had to go to tender every time they wanted 50 computers, he added.

One FPB member claimed small businesses were being blocked from the tendering process by the upfront costs.

"Public procurement bodies tend to put out contracts to facilities management consultants who charge a fee of between £250 and £600 – and sometimes more – just to have your name added to their database, with absolutely no guarantees of any work," he said.

Calls for more channel involvement in public sector business have been continuing in recent years, the most controversial being IT provision in the NHS (MicroScope 23 April).


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