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Unfair public sector procurement process stacks odds against leading entrepreneurs

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More than three-quarters (76 per cent) of the UK’s entrepreneurs of small to medium businesses feel that the process of applying for public sector contracts is unfair, according to research conducted for the Tenon Forum. The research also shows that practice confirms this negative impression, with 85 per cent of those that have actually applied for a public sector contract finding the odds stacked against them.

Key elements of public sector procurement which contribute to the negative impression are the Byzantine application process - which is very time and labour intensive - the inexperience of the bureaucrats managing it, and the suspicion that decisions are already fixed before companies are invited to tender.

The bi-annual research, conducted by GfK NOP on Tenon’s behalf, questioned managing directors, financial directors and senior directors of 600 small and medium-sized entrepreneurial businesses for analysis by the Tenon Forum, an independent think-tank of entrepreneurs.

Adrian Rutter, Director of Government and Public Sector Services at Tenon, said:

"While these contracts can provide a crucial, staple income to a growing business, entrepreneurs need to think very carefully before incurring the expense and jumping through all the hoops required to secure them. There are entrepreneurs whose specialist focus is on public sector contracts and winning more of them. They are very successful at applying for the contracts and running them but these clients have recognised the long-term value of public work and made the resource required available. Half-hearted efforts are likely to flounder."

The research found that the UK’s youngest and smallest businesses have the biggest difficulty applying for public sector contracts. 81 per cent of businesses with between five and nine employees felt that the application process excludes smaller businesses because of the paperwork and man-hours involved, while marginally less (68 per cent) of the larger businesses, with workforces of 200 to 499 employees, felt the same.

Adrian continued,

"The processes involved in public sector procurement require a mass of resource, so it’s no wonder that particularly small companies, where time is such a valuable asset, often feel excluded."

European Business Solutions (EBS) provides practical business services to companies from the Nordic region entering and operating in the UK. EBS’ Managing Director, Martin Williams, has experienced the full range of emotions that the application processes provoke. EBS client companies have won and lost public sector contract applications and he now makes carefully considered, informed decisions on a case-by-case basis regarding whether or not they are worth expending a company’s energy on.

Martin Williams, Managing Director of EBS, said:

"We were overjoyed when our clients win public sector contracts but there is no doubting that companies can waste a huge amount of very valuable time on something that by the very nature of the process often leads to nothing."

"Experience has taught us a few of the tricks often employed by contracting organisations and we now know when it’s best to refuse to pitch. For example, public organisations have to prove that any contract awarded has been won competitively and this means that even if the contractor knows exactly who is best for the job, they still have to invite other organisations to pitch. When we receive invitations to pitch with just two weeks notice, we suspect we’re only being invited to make up the numbers. In this situation we often decline the invitation."

"The public sector is staffed mostly by honest people trying to do a good job. To force them to go through a tendering process when they have already identified the most suitable supplier is a waste of both their time and the contractors’. There has to be a better way, particularly for smaller projects."

Posted February 1, 2007