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SMEs ‘struggle to understand public sector bid process’

David Gray

Research: David Gray

The vast majority of SMEs believe the public sector should do more to remove the tendering barriers they face when bidding for public sector contracts, according to new research.

David Gray, managing director of tender specialist AM Bid, said a survey it commissioned showed that SMEs find the public procurement process challenging,

The company, which has developed an online modular training programme, says many firms currently bidding for public contracts just don’t understand the process or what it takes to develop a winning tender.

Its report Navigating the Public Procurement Minefield found that more than 90% of UK SMEs surveyed think the public sector should be more accommodating and do more to remove the tendering barriers they face.

Mr Gray said: “This reflects our initial research which showed the vast majority of SMEs find the public procurement process challenging.”

The latest report comes as the UK Government is preparing the next stages of its Transforming Public Procurement strategy, which aims to speed up and simplify the procurement processes faced by bidding parties and to reshape public procurement for generations to come.

Westminster wants £1 in every £3 of public procurement money spent with SMEs by 2022, a level which would represent a huge leap from the current rate of around 12% of the estimated £292 billion spent by government on private sector services annually.

From a raft of proposals contained in the Green Paper, which closed for consultation earlier this year, a new, more flexible approach to procurement is planned with the aim of making it easier for SME businesses to win more public contracts.

The survey of UK SMEs drawn from a diverse range of sectors and service lines revealed that more than 90% of SMEs agreed that for the Government to achieve its ambition of a more inclusive procurement landscape, barriers need to be removed from SMEs to create a more level procurement playing field.

Among the barriers cited by SMEs were the overall complexity of the procurement process (44%) and the lack of publicity for opportunities (41%) which were both highlighted by over two-fifths of respondents.

More than a third were dissuaded either by finding the process too time consuming (37%), difficulty meeting mandatory qualifying criteria (35%) or by finding the process too costly based on being unsuccessful in the past (34%). While one fifth (20%) were concerned that the incumbent supplier would simply be reappointed.

“SMEs have given Government a clear signal that they want to be involved in tendering and winning work from the public sector but also that they want the barriers removed. They want Government to do more,” added Mr Gray.

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“The perception that public contracts are a closed shop can be a deterrent to businesses. They want to bid for contracts and are prepared to do so but there are so many perceived barriers in their way; some throw the towel in even before they start.

“Government must use the opportunity of its procurement reforms to level the playing field for small businesses to help build a fairer procurement landscape where businesses of all sizes have equal opportunities and stand a greater prospect of winning lucrative and bankable contracts.

The research coincides with the Federation of Small Businesses (FSB) saying the value of procurement contracts won by smaller firms has been in decline in Scotland since 2016, despite Holyrood promises to ensure more work is directed to the sector.

Official figures show only 5% of the Scottish public sector’s £14 billion procurement budget is spent with firms with fewer than 10 employees, even though they account for the vast majority (94%) of all businesses in Scotland.

The FSB reckons that by removing the barriers to smaller firms winning public work, ministers could boost the economic impact of spending and maximise the benefits for local communities.

“Too many small businesses in Scotland lose out to multinationals when it comes to winning public work,” said Andrew McRae, FSB’s Scotland policy chairman.

“Many will have been pleased to see the SNP and Greens agree to change the systems the Scottish public sector uses to buy goods and services. These reforms could make it easier for more locally-based firms win valuable green contracts.”



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