Public procurement practices stacked against SMEs branded as “scandalous”

The Federation of Small Businesses’ new report reveals that SMEs are still fighting an uphill battle to secure public-sector contracts

Public procurement practices stacked against SMEs branded as “scandalous”

Having set itself a target that 33% of procurement spending will go to SMEs by 2020, the government has been very public about its ambitions to boost small-business owners’ chances to get public deals. However, a new report suggests that this may be easier said than done, revealing the number of SMEs working public contracts has dropped over the past few years.

Despite the government raising its target for the proportion of procurement spending going to SMEs in 2015 after reaching its previous goal of 25%, the Federation of Small Business’s (FSB) report showed that the proportion of SMEs that have worked in the public sector over the past 12 months has dropped to 23%. It also revealed a fall in how many SMEs have expressed an interest in competing for a public-sector contract in the last year. That number had dropped to 10%, a decrease by 4%, which the FSB interpreted to mean that public procurement practices are stacked unfavourably against small-business owners.

Faced with the risk that the 2020 target may not be met, the FSB urged the government to do more to support small businesses’ chances of procuring public contracts. For instance, the organisation called for local authorities to be obligated to publish all contracts over £10,000 on Contract Finder, the database for public contracts, in the same way central government does. The FSB argued that this would prevent local authorities from only publishing larger contracts that are outside the reach of smaller businesses. The organisation also suggested that the Mystery Shopper Service, a scheme used to investigate suspected unfair public procurement practices, should be able to name and shame poor performers.

Commenting on the story, Mike Cherry, national chairman of the FSB, said: “It is scandalous that [so many] local government contracts go to small businesses.” He argued that if the government seriously stopped the practices holding back SMEs, it would be “a win-win for everyone involved in the supply chain because when small businesses are used effectively, they are able to create jobs and growth.” Cherry concluded: “Smaller firms need to be given the chance to secure these opportunities, it [is] no longer acceptable that they continue to be effectively excluded from the process.”

Given that the proportion of SMEs acquiring public contracts has fallen, it could be a good idea for the government to take any ideas under consideration in order to ensure it reaches its 2020 target.

Eric Johansson
Eric Johansson

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