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Home » Small businesses squeezed out of public sector contracts, report

Small businesses squeezed out of public sector contracts, report

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By Max Salsbury

Small and medium-sized enterprises (SMEs) are ‘fighting an uphill battle’ to win public sector contracts, a new report has warned.

According to the Federation of Small Businesses’ (FSB) research, the government is failing in its own targets to increase the number of contracts handed to SMEs, as the lion’s share continues to be awarded to larger firms.

The FSB’s report – Unstacking the Deck: Balancing the Public Procurement Odds – reveals that just 23% of the country’s SMEs have worked for the public sector in the last 12 months, down 2% on 2014.

The UK’s public sector sources a whacking £200 billion-worth of goods and services from private firms annually – far too little of which is going to SMEs, the FSB says.

And the organisation isn’t just complaining: unlike Donald Trump, it has actually tried to come up with some solutions, such as making councils publish all £10,000+ contracts on Contacts Finder; giving the Mystery Shopper Service legal powers to enforce its findings, while ‘naming and shaming poor performers’; and getting the government to publish a thorough action plan about how it will better enforce the law.

Which is all very well, but seeing as central government seems to positively enjoy awarding contracts to giant companies that are continually inept, deliver rubbish services and commit large scale fraud, maybe the FSB should be looking elsewhere for help.

Last month, Socitm released a briefing looking at a new marketplace purchasing platform and a buyer support service created by the Crown Commercial Service, which have been designed to assist public bodies when procuring goods and services. You can read all about them here.

The FSB’s National Chairman, Mike Cherry, said: ‘Opening up the public service market is a win-win for everyone involved in the supply chain because when small businesses are used effectively, they are able to create jobs and growth. They are overwhelmingly the route that people take to get out of unemployment while also creating greater competition leading to better value for money for Government.

‘By supporting local small businesses, we are helping to pay the wages of local people who then go and spend money in local businesses which helps the whole local economy. FSB research backs this showing that every £1 spent with a small or medium-size business, 63% is re-spent in the local area. It is crucial that these local firms are given a fair chance to compete.’

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