|
Here's a question for you. Why, when small and medium-sized enterprises (SMEs) make up 99.8% of all businesses in the UK, do they get only 59% of public sector contracts: by number of contracts, that is. Why, when SMEs contribute 49.6% of private sector GDP, do they get only 22% of what the public sector spends on goods and services by volume?
Is it because they provide inferior products and services at higher prices? Absolutely not. If that were true they wouldn't produce the share of private sector GDP that they do. The fault is on the side of the buyer: SMEs are prevented from competing for public sector contracts by a range of factors.
Framework contracts and single-sourcing mean that many contracts are not even tendered for, but given to a preferred supplier – usually a large business – to minimise perceived risks.
Excessive bureaucracy means that tendering businesses sometimes have to spend 3 days filling in forms in order to be considered for a contract. Small businesses, unlike large businesses, cannot spare this amount of resources. In many cases the bureaucratic requirements are completely unrelated to the ability of a tendering business to complete the contract.
The record of government departments on late payment discourages small businesses from submitting tenders.
Too many contracts are unnecessarily bundled together making them too big for SMEs to compete for.
Empirical research shows that when contracts are actively broken out for competition rather than single-sourced, and when bundling and bureaucracy are reduced, access to government contracts is improved for SMEs and governments save money.
However, government departments will not take these measures unless they are compelled to do so, which is why we need a body at national level to train procuring authorities to take into account the capabilities of SMEs.
In the USA, this role was well performed in the past by the Small Business Administration (SBA): sign our petition to call for a similar body in the UK.
The FPB has successfully lobbied the European Commission to fight for the right of a government to create such a body under international agreements, if it wished to do so. We have also convinced the All Party Parliamentary Small Business Group (APPSBG) to initiate an enquiry into why smaller businesses are placed at such a disadvantage by public sector buyers, and we are putting together a compendium of members' experiences of attempting to do business with the public sector to inform the enquiry. Please send your experiences to feedback@fpb.org |
