Small firms slam 'unfair'contracts

17 February 2005
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17 February 2005 | Cara Whitehouse

Government purchasing is "inherently anti-competitive" and should be investigated, according to The Federation of Small Businesses (FSB).

The federation's accusation follows results of a survey it conducted across more than 18,000 members.

It found only 25 per cent of companies with a turnover under £100,000 have won central government contracts and less than 50 per cent sell goods or services to local authorities.

It also showed the larger the company, the more likely it was to have secured part of the £117 billion spent annually on public-sector business.

A spokesman for the FSB told SM: "There is a huge amount of unfairness in public procurement. The survey results show that size matters."

He added that small businesses are encouraged to compete for contracts. But the tendency for government departments and agencies to group contract needs together means smaller firms with fewer financial and skilled resources to cope with large deals are locked out of the bidding.

"We think this is a mistake. In the long run it is equally efficient to aggregate contracts to local businesses that know the area and can stimulate the economy."

The OFT said it is evaluating research carried out last year on public procurement.

It has already highlighted for examination nine areas where competition could be limited by public-sector buying power.

A spokesman for the Office of Government Commerce said: "We have already been working to help small and medium-sized businesses to gain greater access to public-sector deals.

"But ultimately best value for money will win contracts."


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