Small business calls for fair crack at Government procurement
21 Apr 08
Following the Office of Fair Trading investigation into alleged price-fixing by large building companies, the small business lobby is calling for a level playing field
by Robert Outram
Lobby group the Forum of Private Business is calling for the process of bidding for public contracts to be made more accessible to small businesses, following an Office of Fair Trading investigation which concluded that many large construction companies have colluded over the pricing of tenders.
The FPB is concerned that such practices prevent smaller businesses from being able to successfully compete, and is urging the Government to intervene if it is to achieve its target of awarding 30% of all public contracts to small firms.
The accusations follow the biggest ever investigation carried out by the OFT, which could see huge fines being imposed on construction giants such as Balfour Beatty and Carillion for what the OFT says is their part in fixing the price of bids, which leads to local councils paying inflated prices.
"This announcement typifies the behaviour that is all too common in the Government’s procurement process," said the FPB’s Policy Representative, Matt Goodman. "Well done to the OFT for bringing these particular cases to light, but these cartels could be foiled simply by making it easier for small businesses to tender for public contracts. More bids mean fewer opportunities for collusion, and fewer barriers to small business tenders means more bids."
Research carried out by the FPB in the last quarter of 2007 showed that 49% of the business owners who responded had been put off bidding for public contracts, with 28% of those blaming the complexity involved as the main reason, and 25% citing the steep cost of buying into the application process.
Specifically, 21% blamed the high cost of registering to tender, and 21% the bureaucratic process. In addition, 14% lacked the knowledge of where to find relevant information about bidding, 13% believed that too much information about their businesses was required, and 12% said they did not have enough time.
However, one third of the smaller firms surveyed (32%) said they would consider bidding for work related to the 2012 Olympic games.
Measures suggested to tackle the problem included introducing a control mechanism to evaluate the accessibility of public contracts for smaller businesses, simplifying the application process, publishing the details of all public tenders in local press and trade publications, and creating regional lists of small firms to make it easier for councils to approach them automatically.