Purchasers blast competition probe

19 February 2004
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19 February 2004 | David Arminas

Senior government purchasers have warned that a probe into possible discrimination against small firms will be a waste of time.

The Office of Fair Trading, the competition watchdog, has published a tender for consultants to carry out the review into fears that central government procurement practices in all areas, such as transport, are distorting competition and may be anti-competitive.

An OFT spokeswoman said the issue is whether small and medium-sized enterprises (SMEs) are being given a fair chance to win a share of government contracts, worth £109 billion.

She added that the review is not being carried out because of complaints from any companies, but "just because it is an important area of competition that we haven't looked at".

But Mark Forth, head of procurement for the Inland Revenue, called the review unnecessary.

He told SM: "Frankly, I don't think the review is essential because government purchasers are aware of the need to incorporate SMEs into their supply chains to maintain competition options in the marketplace."

Forth said most senior government purchasers already know that smaller suppliers can provide good products and services.

"However, for large organisations like the Inland Revenue with 80,000 staff in 600 locations, there are inevitably needs that only large suppliers can meet. But there will also be needs for which SMEs are perfect."

He added that many purchasers already encourage larger contract winners to use innovative SMEs in their own supply chains, so the government benefits from SMEs' skills.

Another senior purchaser, who wished to remain anonymous, said the review could be a result of consultants talking up the issue.

"It's a waste of time. It appears that some consultants are into 'scope-creep', where they sell their services for an important issue," he said.

"Besides, the Office of Government Commerce (OGC) is already trying to tackle this."

A spokesman for the OGC was upbeat about the OFT's review: "We welcome the review and the OFT investigation and will support it in any way possible although it is nothing that we haven't been doing anyway."

He added that the OGC has investigated the use of SMEs in government supply chains and published a guide, Smaller Supplier, Better Value?, on making the best use of SMEs.

The OGC has also launched, on the basis of recommendations from the Better Regulation Task Force, two pilot projects in the West Midlands to improve SME access to government contracts.

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