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Gloucestershire Business News

‘Stacked’ procurement system locking out smaller firms

Small businesses are still fighting an uphill battle to secure public sector contracts, meaning the Government's new targets for SME public procurement are unlikely to be met.

The Federation of Small Businesses (FSB) is now calling on Government and the public sector to step up efforts to remove blockages which are unfairly preventing smaller firms from supplying to the public sector.

Proposals include forcing local authorities to publish all contracts over £10,000 on Contract Finder, as central Government does. This would put a stop to the practice of local authorities avoiding putting smaller contracts on the digital platform, and so only publishing higher value thresholds which are outside the reach of smaller businesses.

Each year the UK public sector spends over £200 billion on the procurement of goods and services from third parties, but far too little of this is with small firms, says the FSB.

The FSB's new 'Unstacking the Deck: Balancing the Public Procurement Odds' report highlights that just 23 per cent of SMEs had worked for the public sector over the last 12 months - down 2 percentage points from 2014.

The report also shows that the number of SMEs, which had expressed an interest in competing for a public sector contract in the last year, had also fallen to 10% - down 4 percentage points. This suggests that the Government has some work to do to reach its target of increasing procurement spend with SMEs to 33% by 2020.

FSB 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 per cent is re-spent in the local area. It is crucial that these local firms are given a fair chance to compete."

Picture credit: Pixabay

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