The FPB is concerned that such practices prevent smaller businesses from being able to successfully compete, and is urging the Government to intervene if it is to achieve its target of awarding 30% of all public contracts to small firms.

The accusations follow the biggest ever investigation carried out by the Office of Fair Trading (OFT), which could see huge fines being imposed on construction giants such as Balfour Beatty and Carillion for what the OFT says is their part in fixing the price of bids, which leads to local councils paying inflated prices.

"This week's announcement typifies the behaviour that is all too common in the Government's procurement process," said the FPB's Policy Representative, Matt Goodman. "Well done to the OFT for bringing these particular cases to light, but these cartels could be foiled simply by making it easier for small businesses to tender for public contracts. More bids mean fewer opportunities for collusion, and fewer barriers to small business tenders means more bids."

Research carried out by the FPB in the last quarter of 2007 showed that 49% of the business owners who responded had been put off bidding for public contracts, with 28% of those blaming the complexity involved as the main reason, and 25% citing the steep cost of buying into the application process.

Specifically, 21% blamed the high cost of registering to tender, and 21% the bureaucratic process. In addition, 14% lacked the knowledge of where to find relevant information about bidding, 13% believed that too much information about their businesses was required, and 12% said they did not have enough time.

 

However, one third of the smaller firms surveyed (32%) said they would consider bidding for work related to the 2012 Olympic games.

Measures suggested to tackle the problem included introducing a control mechanism to evaluate the accessibility of public contracts for smaller businesses, simplifying the application process, publishing the details of all public tenders in local press and trade publications, and creating regional lists of small firms to make it easier for councils to approach them automatically.

In 2007, the FPB petitioned the Government to make procurement work for both taxpayers and small firms, which currently receive only 22% of government contracts, by creating fair competition and value for money. As part of the 2008 Budget, the Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, announced plans to boost that figure to 30%.

The FPB believes that government schemes such as encouraging private sector suppliers to commit to additional staff training and proposals for a hike in planning fees, fly in the face of its agenda to simplify the process of procurement, and could lead to even fewer firms bidding for public contracts.

FPB member ABA Consulting Ltd has offices in Derby and Newcastle-Under-Lyme. Its Managing Director, Alan Brough, has been frustrated in the past when applying for public building contracts. He is sceptical that the bid fixing scandal will change anything in the construction industry.

"We've recently applied for a contract relating to Stoke-on-Trent's regeneration, which is being managed by a publicly-funded body appointed by the Government. We were chosen to be on the panel of shortlisted firms, but haven't had any work out of it at all, and then you hear that they're working with companies from London and elsewhere."

He added: "There are all of these processes to go through, and I despair at it. I'm sure that the clients do as well, but these are the procedures they have to go through."