Public Sector Procurement overly complex for Small Businesses

Small firms pitching for public sector contracts are struggling with overly-complex tenders, cancelled contracts and administration errors, the Cabinet Office has found. 

The Government launched a mystery shopper initiative in February to highlight the problems small businesses encounter when tendering for contracts.

In the scheme’s first three months, 23 complaints were lodged including one case where a supplier completed a six-month tender process for an NHS urology contract, but was told the tender had been cancelled with no explanation. Following investigation, the tender process was simplified and re-opened.

Other complaints involved unfair scoring criteria that excluded small businesses, lack of transparency regarding the award of contracts, administration errors, and tenders that had been lost or never received. The most common problems related to lengthy pre-qualification questionnaires (PQQs).
A Cabinet Office spokeswoman said the Government had taken “major steps” towards making contract opportunities more accessible to small firms.

“As well the mystery shopper initiative, new measures include the abolition of PQQs for contracts worth less than £100,000 and greater transparency through the Contracts Finder website. This publishes all public contracts worth more than £10,000 as well as details of those which have gone to small firms.”

However, the Federation of Small Businesses (FSB) said there were other issues that needed to be addressed, such as the grouping together of contracts by local authorities and public bodies. 

“The current trend towards larger consolidated contracts makes it more difficult for small firms to compete, even when they could provide some of those services just as efficiently if these were broken down into smaller lots.”

said John Walker, FSB national chairman.

“The Government clearly wants to award more contracts to smaller firms, but it needs to look at these findings and take action to make things easier.”

Stephen Allott, crown representative for SMEs, said there were still opportunities for “small and medium-sized enterprises on the ground” to highlight problems:

“We need to know how the changes are starting to bite, and, where they’re not, why not.”

“Any SMEs who come across a tender that they don’t understand, or where they think the procurer could be more transparent, should use the service to tell us what needs to change.”

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