Small Businesses Losing Out on Public Sector Contracts

Small businesses are still struggling to win public sector contracts despite the Government’s efforts to make it easier, the latest figures from the Federation of Small Businesses (FSB) show.

The tendering process for public sector contracts is too complex according to 40% of small businesses. This is one of the key findings of the Voice of Small Business survey of FSB members in England conducted in March 2012. In addition, 37% of SMEs think that public officials sideline small business and believe that bigger firms must be better.

The survey of more than 2,700 FSB members showed that although one in seven firms had bid for a public sector contract in the past year, 41% of these firms had failed to secure any business from any of the bids they had submitted.

These findings come despite the Government’s launch of its Contracts Finder website designed to make it easier for small firms to find and bid for public sector work.

The new Contracts Finder website has received a mixed response from small firms. The FSB survey found that, of those firms that had won contracts, only a quarter (27%) said they had found the website useful, with twice that number (55%) relying on personal contacts and referrals.

The survey’s key findings reveal:

  • 40% of firms want a simplified tendering process
  • 38% believe the public sector should actively use small businesses or encourage consortia of SMEs where possible
  • 38% believe public sector bosses should evaluate tenders based on experience and ability rather than on the size of bidding firms

John Walker, National Chairman of the FSB said:

“The Government has made an effort to raise awareness in the public sector that Britain’s entrepreneurs and small businesses are willing and able business partners.”

“But clearly more must be done. While central government has raised its game, without a true culture change across the public sector as a whole the Government’s initiatives will have little impact.”

The FSB has announced that it is undertaking its own research into local government procurement, surveying every council in the UK in order to identify and promote best practice.

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