Procurement · 26 July 2018

Small firms remain locked out of public sector procurement merry-go-round?

The government is committed to spending 1 in every 3 with small businesses by 2022
Small UK business owners are unable to access contracts in the public sector, a committee of MPs has claimed, despite large firms failing to offer value for money.

According to the Public Accounts Committee, government has created a merry-go-round? procurement culture which has seen a small number of large companies win the majority of public sector contracts, despite not delivering value for money.

the government has failed to use its unique position in the market to encourage competition in the market.

Strategic Suppliers, Public Accounts Committee

we have identified a need for government to be more assertive in shaping the markets in which it operates, with a renewed focus on driving value for taxpayers? money, said Labour and Co-operative MP, and committee chair, Meg Hillier.

it must look with fresh eyes at the motivations of companies currently bidding for central government work, and develop a strategy that requires contract-awarding bodies to look beyond bottom-line costs.

MPs acknowledged efforts made by government to increase use of small firms in the public supply chain, but had ‘seen little evidence of action.

By 2022, the government intends to spend 1 in every 3 of public money with small businesses. Figures published last year by the Federation of Small Businesses (FSB) showed just 23% of smaller firms had worked for the public sector down 4% since 2014.

Responding to the new report, Mike Cherry, chairman of the Federation of Small Businesses (FSB), said the findings had reinforced the view that the public procurement process is broken, heavily favouring big firms that waste taxpayers’ money.

it doesnt make good reading following last week’s drop in central government small business spend and points to the need for immediate action to make the system fairer, simpler and more transparent, Cherry said.

the committee recognises that a merry-go-round? culture has developed where public contracts are being awarded to a small number of large companies. By doing so, government is handing over huge market power to these firms and effectively closing the market for small businesses.


 
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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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