Government proposals hurt small firms

Government targets to award small firms 30% of all public contracts could be jeopardised by recent proposals.

The Forum of Private Business (FPB) is concerned at plans to force business owners to report on gender and racial equality, and also offer trade union membership to their employees, in order to be eligible to tender for work.

The FPB’s policy representative, Matt Goodman, argued that the government’s initiatives were not compatible with the 30% target.

“In the 2008 Budget, the government said that it wants to encourage small firms to take up 30% of public contracts, but then in the next breath it announced controversial proposals which would force companies into promoting trade union membership as a pre-condition of bidding,” he said.

“What is really needed is an improved framework and better support for small firms that do tender for public contracts. Currently, there are so many reasons small firms are discouraged from tendering.”

Goodman listed some of the main reasons why small firms are discouraged from tendering, which include:

• the lack of a single point of contact for all contracts, regardless of size;

• the time-consuming process of submitting a bid;

• the complicated requirements involved in bidding, which are unreasonable for many smaller firms;

• a lack of transparency in the tendering process, which can result in unfair competition.

An additional plan announced by the government to change procurement rules, which could force firms to prove their gender and racial equality credentials, is likely to further discourage small firms from bidding for public contracts.

One of the FPB’s members, who asked to remain anonymous, said: “Public procurement bodies tend to put out contracts to facilities management consultants who charge a fee of between £250 and £600, sometimes more, just to have your name added to their database, with absolutely no guarantees of any work. [This is] a big cost to any small business up front and it acts as a blocker, which I’m sure large companies love.”

Tim Williams, the FPB’s public procurement adviser, commented: “What would make the whole process of public procurement easier would be to standardise the qualifying questions. At present, each government department is asking the same thing, but in different ways.”

Mr Williams added: “There are also issues over transparency and openness – resolution of these matters is the key to more small businesses being awarded public contracts.”