FSB: Awarding more government contracts to SMEs would help economy – BVCA/FSB/CBI

The current economic climate requires businesses that can adapt to change rapidly, an area in which SMEs are adept. The government should rapidly develop proposals to ensure a greater proportion of public sector contracts are awarded to SMEs offering best value for money. This will benefit the wider business community, the economy and local communities, three of the UK’s major business organisations say.

In a report published today by the British Private Equity and Venture Capital Association (BVCA), the Federation of Small Businesses (FSB) and the Confederation of British Industry (CBI), a detailed survey of over 500 SMEs, reveals that these nearly three quarters of SMEs rarely or never bid for government work.

Research carried out by FreshMinds for the three business groups suggests that small businesses continue to face a number of barriers in winning public contracts.

· Over three quarters of SMEs believe it’s still difficult to find out about government opportunities;
· Over half of SMEs feel that the tendering process and timescales require too much resources to respond effectively;
· Nearly three quarters of SMEs feel that there is a lack of responsiveness and too much formality in the procurement process.

John Wright, FSB National Chairman, said:

“Small businesses offer great value to communities and by using them, money is kept within the local economy. However, small businesses face significant barriers and are not always given a fair chance to compete against larger companies.

“Small businesses should be made aware of the practical steps they need to take to improve their bids. But without government support, small businesses are put at a disadvantage. We need to see actions implemented so we can ensure that SMEs are represented fairly when tendering for government contracts.”

Simon Walker, CEO BVCA, added:

“Over 90% of the companies in which our members invest are SMEs. Helping them overcome obstacles to winning public sector business will bring significant benefits both to small business and, we believe, to government as well. We are making a number of formal requests to government to create a more balanced and fair procurement process and to allow more small companies to win a greater share of their contracts. Our focus is firmly on this as a core strand in our pre-budget report submission and our venture manifesto.”

Professor Russel Griggs OBE, Chairman CBI SME Council, said:

“Evidence from the UK and elsewhere shows that small and growing businesses are able to create and provide innovative goods and services to fulfil public contracts at local, regional and national levels.

“However, this survey reveals that they need to be given fair access to winning these contracts by removing barriers in the procurement process and procurement officers need to implement procedures consistently. The on-going Glover review needs to realise that this is not about special treatment but greater recognition of the fact that SMEs offer good value for money by providing a better solution or outcome in many cases.”

Caroline Plumb, CEO FreshMinds, said:

“It is exciting to have had the opportunity during this research to help other small companies understand how they can successfully compete for public sector contracts. Value for money, flexibility, and innovation are major advantages in public sector delivery – and are all areas in which SMEs come into their own. By levelling the playing field, tendering becomes more competitive; a boon in any sector.”

The full report has been distilled into a guidance document that provides bite-sized, practical suggestions for how SMEs can improve their chances of securing government contracts, including:

· How to understand two stage procurement processes, and getting the most out of framework agreements;
· Uncovering new routes to public sector clients, such as sub-contract with private sector firms; and
· Tips on how to make the opportunities come to you.

Ends

Notes to Editors

1. FreshMinds is a research and recruitment consultancy providing organisations with inspired thinking and analysis that helps them understand their customers, competitors and markets. More information is available at www.freshminds.co.uk/research.

2. The FSB has over 215, 000 members and exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

3. The BVCA is the industry body for the UK private equity and venture capital industry. The BVCA has over 400 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers. More information is available at www.bvca.co.uk.

4. The CBI speaks for some 240,000 businesses that together employ around a third of the private sector workforce. More information is available at www.cbi.org.uk.

5. Copies of the report will be available free on each of the organisations websites.

Contacts:

Stephen Alambritis, Head of Public Affairs: 020 7592 8112 / 07788 422155
Rachel Barbour, Director of Communications, BVCA: 020 7025 2971
CBI Press Office: 020 7395 8090/ out-of-hours pager 07623 977 854
Ruth Evans, Senior Research Consultant, FreshMinds Research: 020 7692 4490