PUBLISHED: 06:00 25 August 2017 | UPDATED: 10:13 25 August 2017
Bureaucracy and a lack of resources are preventing smaller firms from taking advantage of public sector contracts, according to a business owner who managed to secure one.
In a new report the Federation of Small Businesses (FSB) is calling on the government to step up efforts to remove obstacles for small and medium-sized businesses (SMEs) in securing work with public bodies.
The report, Balancing the public procurement odds, states less than a quarter (23%) of SMEs have worked for the public sector over the last year – down two percentage points from 2014. The number of small businesses interested in public sector work has also fallen to just 10%.
Values Training Services in Watton managed to secure seven first aid training contracts with Norfolk County Council, which had previously been snapped up by national names like St John Ambulance.
VTS managing director David Howell said the process could be a “big gamble” for smaller firms with fewer resources.
“It was a nightmare completing all the paperwork. If you have no understanding of how to answer the questions properly to score the points you will not be successful.
“My background with the police and military helped me with that. The bigger companies will have someone specially trained to do it for them.
“If you are a small business supplying products in bulk, you have to outlay quite a lot of money to buy that bulk.
“You may have to finance the first couple of months, and if it is a big contract that could be £20,000. You know you are going to get it back but there are other risks involved which I think prevents people going for them.
“It is also locked down to whether the contractors pay on time. If they pay late it has a big impact on the small businesses if they have had a large outlay.”
He added: “Instead of us trying to convince them, they should be trying to find out whether we can provide a better service as small businesses.”
‘Further work is needed’
Each year the public sector spends more than £200bn on the procurement of goods and services from third parties, but statistics suggest it is far from reaching the government target of one third of that amount being spent with SMEs by 2020.
To reduce barriers for smaller firms to public procurement, the FSB report suggests measures such as changing purchasing systems so smaller businesses are not locked out of lists of potential suppliers, and pushing the government to better enforce the law requiring detailed feedback from local authorities to unsuccessful applicants.
Salena Dawson, FSB East Anglia regional chairman, said: “Some progress has been made over the past few years in making public contracts more accessible to our small businesses but it is clear that further work is necessary.
“Our members tell us that it is difficult to keep track of the opportunities available here in Norfolk and Suffolk, so it’s crucial that they can have confidence in the Contracts Finder system.
“In addition we are working with councils in the region to help them get the word out to small firms about the opportunities available and the processes they need to follow.”
At the FSB’s local Expo on November 1, Tracy Woods, business relationship and procurement manager at Norwich City Council, will talk to members about the council’s procurement strategy and the process involved in application.
A spokesman for Suffolk County Council said it operates an “open, fair procurement system”, with 48% of its third-party spend going to firms in the county, but the authority does not hold data on how many contracts are awarded to SMEs.
“Businesses of any size can register on our Suffolk Sourcing e-tendering system to receive information on, and bid for contracts as they become available,” he said.
A spokesman for Essex County Council said approximately 88 contracts had been awarded to SMEs by the authority in the past year.
A request was also made to Norfolk County Council for comment but it was unable to provide the data before our deadline.