Small businesses still having trouble securing public sector contracts

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

The Glover Review last year advised the Government on how to help small companies win a greater share of public procurement contracts. Small companies account for an astonishing 99.9% of all UK enterprises.

Professor Robin Jarvis, head of the ACCA's small business unit, said: "The procedures and practices used in many tenders disadvantage SMEs over larger companies. Many small businesses and contractors believe that days spent preparing tenders with a low probability of success are better spent earning, and therefore do not bid for public work all. They cannot afford dedicated teams to focus on what the Glover Report recognises are often complicated, costly and time-consuming tender processes. SMEs also believe the public sector views them as unreliable and constrained in their resources.”

The inquiry received evidence from a range of people and organisations, including Rachel Elnaugh, one time Dragon’s Den judge, the Confederation of British Industry (CBI) and British Chambers of Commerce (BCC) and GovData. They all agreed that the procurement process is opaque and there are basic difficulties in finding information about tenders.

Key recommendations from the Report

Here are four of the APPSBG's 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.