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Small businesses discouraged from bidding for valuable public sector contracts

Published on Apr 21, 2009 |

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A recent Parliamentary report shows that small businesses are still finding difficult to bid for public sector contracts, despite Government policies and attempts to intervene.

The report, released by the House of Commons All Party Parliamentary Small Business Group (APPSBG), recommends that many barriers still need to be removed to help SMEs win public sector contracts.

Last year's Glover Review advised the Government on how to help small businesses win a larger share of public procurement contracts. It is worth noting that 'small' companies account for an astonishing 99.9% of all UK enterprises.

Some of the key recommendations from the APPSBG report were as follows:

Key recommendations

- SMEs must not be seen as one group. Micro entities face very different challenges to medium sized companies, such as a lack of staff and resources, and tighter credit restrictions. This partly explains why medium sized enterprises are performing much better in bidding for and winning public procurement contracts than smaller rivals. Specific proposals should be developed and aimed at the micro enterprise sector.

- Public authorities should set individual targets for public sector procurement contracts to be awarded to SMEs, with a specific focus on micro enterprises. These targets should not be binding, but should give public authorities an ambitious basic figure to aim for.

- Bureaucracy affects SMEs disproportionately and needs to be reduced to ensure a level playing field exists in public sector procurement. Efforts to reduce the bureaucracy for SMEs should consider time spent to collate the information required for bids and the level of contractual compliance required by procurers.

- The procurement process should be made more transparent and selection should be on the basis of value for money.