Councils Should Value Small Businesses

A new report from the Federation of Small Businesses (FSB) has welcomed the progress made by councils in opening up the procurement process to small firms, but warned that further progress may be hampered by the increasing pressure for councils to make efficiency savings.

The Federation of Small Businesses urges councils not to lose sight of the value of procuring from small businesses.

The report revealed that a third of the council procurement professionals surveyed confirmed that their department now had a core pre-qualification questionnaire (PQQ) containing standardised information which businesses only have to complete once. Around three quarters of current tenders include questions that enable small businesses to illustrate their unique selling point, as well as demonstrating the innovation and added value they can bring to the delivery of contracts. All these are key selling points for small businesses which allow them to compete against large businesses in the public sector marketplace.

The report “Public Sector Procurement: The small business perspective 2011” published by the FSB South East Policy Unit (SEPU) revealed that a quarter of the procurement professionals felt that including contract clauses requiring main contractors to engage with local small businesses (within Official Journal of the European Union rules) was a key challenge for their department for the next 12 months.

However, despite the progress made to date in opening up public sector procurement to small firms there was a warning note.  The majority (80 per cent) of procurement professionals identified a need to achieve cost savings via procurement as the single biggest challenge for the next 12 months.

To overcome this challenge the FSB recommends:

• Public sector bodies should publish details of all contracts over £10k on the new Contracts Finder website
• Identify and advertise specific contract opportunities suitable for small firms
• Local authorities should undertake training for procurement managers on small business friendly procurement practices
• The Government should publish definitive guidance on a legally valid approach to requiring main contractors to use appropriate sub-contract clauses for small businesses

Roger House, South East Policy Chairman, Federation of Small Businesses www.fsb.org.uk, said:

“ Our report demonstrates that local authorities are increasingly embracing the value that comes from purchasing goods and services from local small businesses. Small firms clearly provide councils with better value for money, better quality of service and greater innovation in the delivery of public sector contracts. The next 12 months represent a severe test of local authorities resolve to build on the gains already made in encouraging more small firms to bid for contracts, as the reality of the cuts in public sector budgets start to bite.  The public sector must not lose sight of the fact that the transformation of public procurement to encourage a diverse supply base for contracts will be the key to securing economic growth and recovery.”

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