Small suppliers could break up cartels

20 April 2008
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21 April 2008 | Jake Kanter

Public sector buyers could avoid the threat of price cartels by making procurement processes more open to small suppliers.

According to Matt Goodman, policy representative for the Forum of Private Business (FPB), the public sector should make it easier for small businesses to bid on contracts. He said the threat and effects of cartels would be lessened if more suppliers were involved in the bid process.

Last week the Office of Fair Trading accused 112 construction firms of colluding to fix high prices when bidding on public contracts. Goodman explained: "These cartels could be foiled simply by making it easier for small businesses to tender for public contracts."

The FPB said bidding processes should be simplified and made more accessible if the government is going to reach its target of awarding 30 per cent of its contracts to small firms.

A survey carried out in December 2007 by the FPB found 49 per cent of small businesses had been put off bidding for public tenders. Of the 988 firms questioned, 28 per cent blamed the complexity of the process, while 25 per cent cited the steep cost of preparing applications.


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