Entrepreneurs and employers groups have expressed disappointment over the missed opportunities in this week’s official review into creating a fairer deal for small businesses bidding for public sector contracts.
The report by Anne Glover, chief executive of Amadeus Capital Partners, admitted small companies still face “substantial hurdles” that prevent them from competing with large companies for central and local government business.
The report’s recommendations, which the government has accepted in full, include the development of an electronic marketplace to advertise all public sector contracting opportunities for deals above £20,000.
The report concluded that all businesses should be able to tender electronically by 2010 to cut the volume of paperwork companies have to submit when bidding. It said there should be an “ambition” for all tenders to be electronic by 2012. Some parts of the public sector are already using such portals.
However, the report stopped short of calling for a specific percentage of government contracts to be awarded to small and medium-sized enterprises.
Irene Armstrong, who runs corporate communications business Carcanet Media with a colleague, said the biggest problem for the smallest businesses, such as hers, was the red tape involved in bidding – not access to contract tenders.
Carcanet has applied for 10 public sector contracts since June and was shortlisted for one, providing services for the 2012 Olympics. However, Armstrong said she did not bid for about 70 tenders the company could have fulfilled because the application process was so burdensome.
“Even if we had been successful in some of these contract bids, we would have spent the money earned winning them,” she explained.
“One of the things required is three years’ audited accounts, but most small businesses don’t need to get their accounts audited.”
Doug Richard, a serial entrepreneur who earlier this year produced a report on supporting small business for the Conservative Party, said Glover’s proposals were “massively inadequate”.
Any plan that did not include a specific percentage of public sector business to go to small enterprises would not help, he said.
The Federation of Small Businesses (FSB) gave a cautious welcome to the review by Glover, who was asked to lead the inquiry in the March Budget.
Stephen Alambritis, the FSB’s head of public affairs, said there were some good points, but also a sense that the report had been rushed. “Given the economic difficulties, getting it right would have helped greatly in spreading the benefits to small businesses,” he said.
On average, only 16 per cent of the £175bn spent each year by the public sector is awarded to small businesses, according to the FSB. It would like a target of 30 per cent of government contracts to go to small and medium-sized enterprises, particularly micro businesses of less than 10 people.
