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Small firms to get better chance of landing public contracts

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The Government has launched a series of measures aimed at making it easier for smaller firms to secure public sector contracts.

The need for businesses to complete pre-qualification questionnaires, some of which can run to over 50 pages, is to be dropped in cases where bidding is for contracts worth less than £100,000.

Large public sector contracts are to be broken up into smaller elements so that SMEs can more viably pitch for them.

And an online tool is to be set up called Contracts Finder, the purpose of which will be to help smaller enterprises track down government projects.

Recent research into small firms’ access to public procurement markets across the EU places the UK 24th out of 27 member states, with only 24 per cent of contracts going to small firms, compared with 44 per cent in France. 

Small and micro businesses do particularly badly in the UK, with only an estimated 11 per cent of the total value of contracts being awarded to businesses of that size. This is despite the fact that small and medium-sized enterprises (SMEs) account for 49 per cent of the UK’s turnover.

Small business groups welcomed the announcement.

John Walker, the national chairman of the Federation of Small Businesses (FSB), said: “The FSB has worked hard to ensure that small firms have the same access to public sector contracts as big businesses. The measures outlined, which look to remove red tape and open up more transparent channels of communication, are most welcomed. 

“These measures will now need to be accompanied by a genuine cultural change within Government procurement in terms of its approach to dealing with small businesses.  

“Removing the need to fill in a PQQ for smaller contracts is a bold move but it is vital that something more bureaucratic or confusing does not emerge in its place. We hope the promise of a dedicated voice for small suppliers within Government will help to prevent this.

“The good thing is that the Government is going to publish figures on the amount of contracts going to SMEs so we will be able to measure its success and hold the Government to account if it is not working. That type of measurement and transparency is something we’d like to see adopted more widely across the public sector.”

Adam Marshall, director of policy and external affairs at the British Chambers of Commerce (BCC), commented: “The complexity and lack of transparency throughout the procurement system has long been a source of disillusionment for small- and medium-sized companies. The creation of a new online tool, the break-up of larger contracts, and greater engagement with those companies the public sector wants to do business with, should provide an environment that allows firms to operate in a more free and competitive way.

“If our businesses are to generate the jobs and growth necessary to sustain a recovery, then it is only right the Government should be looking to award contracts to smaller firms. It is now incumbent on the Government and business alike to ensure that this new system has every chance of delivering what it promises, and not become another false dawn for procurement policy.”

Institute of Directors spokesman Alexander Ehmann added: “Making procurement easier for small and medium-sized businesses is long overdue. We are particularly pleased that the Government is abolishing the pre-Qualification Questionnaires for all procurement bids under £100,000. That will help SMEs by removing a layer of complex paperwork and assessment requirements.

“However, it remains to be seen whether today’s changes will benefit small businesses or whether risk-averse bureaucrats will soldier on with ‘safe’ choices of big brands.”