Examination of Witnesses (Questions 141
WEDNESDAY 16 JANUARY 2002
141. Mr Fletcher, good evening. Could you identify
yourself and your colleague, for the shorthand-writer, please?
(Mr Fletcher) Yes; good evening, and apologies to
the Committee for our tardiness today. My name is Ian Fletcher,
I am Head of Policy at The British Chambers of Commerce.
(Ms Harris) I am Sarah Harris. I manage the Euro Info
Centre which is based in Bristol Chamber of Commerce, and Business
142. Thank you very much for your paper. You
listed a whole series of issues. Perhaps you could start just
by saying what are the main ones, when it comes to procurement
practice, what are the main problems that seem to face small businesses?
(Mr Fletcher) I think they centre round three issues.
Firstly, there is an issue of knowledge, of information, of actually
knowing about the procurement process and the opportunities that
are out there, and a number of sub-issues within that. For example,
the contracts that are forced to be advertised are mainly above
£95,000, because of European Union law; obviously, a lot
of the contracts, I think, that small businesses would like to
bid for are below that level. Also, there are opportunities in
terms of sub-contracting to some of the larger contracts, and
there is no sort of central point of collecting that information
and disseminating it to the small business community. I think
the second issue is one of procedures, and there are a number
of procedures which discriminate against the small businesses
that may want to bid for these particular contracts and tender
for them. Then, thirdly, there is a perhaps a cultural issue,
in terms of Government Departments are used to dealing with big
businesses, perhaps think that big businesses are best and the
best place to deliver, on a lot of the contracts that are advertised,
and there is a momentum, perhaps, against change in that respect.
143. Those are three big areas; has OGC made
a difference, so far?
(Mr Fletcher) I think it is early days.
144. It is two years?
(Mr Fletcher) From our perspective, it is really a
relationship that goes back to about June, July, of this year;
they proactively sort of sought us out and set out the programme
they are now engaged in, in terms of trying to assist small businesses
get Government contracts. I believe that some work had been going
on before that, in terms of the drafting of various guides, in
terms of tendering for Government contracts. They have since kept
up a regular dialogue with us, they invited us to contribute to
their Business Plan, they have kept us informed of their plans,
and, most lately, have invited us to participate in a survey that
they are doing with the small business community, trying to get
some more feedback, particularly from businesses that are actually
engaged in the process already.
145. That has all been going on, you say, since
last June or July; can you point to any practical improvements
for your members, rather than all this dialogue and conferencing,
and so on?
(Mr Fletcher) There have been a couple of policy changes;
firstly, in terms of the guidance that the OGC puts out to various
Government Departments on the financial strictures that are stipulated
in tender documentation. Previously, small businesses, and you
have seen from our written evidence that one of the problems that
they encountered was that they had to produce three years of accounting
data, which, when you consider that, I think it is, about two-thirds
of small businesses are not in existence after three years, obviously
it rules out a large proportion of the small business community.
And so, in that respect, that is a welcome change. And the other
stipulation which has changed is on the liability insurance side
of things, and, again, small businesses complained, in our written
evidence, that they encountered problems because of the unlimited
liability insurance that they were being asked to provide, and
there have been stipulations from the OGC that that should not
be the case in Government contracts but there actually should
be some limit on that. It is a particularly burning issue at the
moment amongst the small business community, they are finding
that, in general, their insurance premiums for various different
kinds of insurances are going up considerably, and that is obviously
a problem, from their perspective.
Chairman: Yes; it is one of the issues
we may come on to a little later.
146. You refer to your contact with the OGC
as being "limited"; is this critical of Government,
are you unhappy with this level of contact?
(Mr Fletcher) I do not, I am not being critical. I
think, as I said, the relationship only goes back to July and
we have had five or six contacts in that time. To be fair to the
OGC, what has perhaps impressed me is that they have been particularly
proactive in building up a relationship with us, to the point,
for example, where, when they asked us to contribute to their
Business Plan, I was unfortunately on my summer leave during that
period in time, and they chased us and chased us to make sure
that we did contribute to the Business Plan; whereas, I think,
some other Government Agencies would have said, "Well, they're
not interested," and gone away. So that is a plus point,
from our perspective.
147. That is encouraging. Do you feel, having
given that input, that they then took the comments seriously,
or is it too early to say, or do you think it might even be lip-service?
(Mr Fletcher) I think it is perhaps, one of the problems
we are having is distinguishing between which work is actually
going on by the OGC and which is going on by the Small Business
Service, and it seems to be a joint project. And we have had feedback,
through a session with two officials from the SBS, on the plans
that have been taken forward. I assume, in that respect, that
they are also speaking for their colleague at the Office of Government
148. Can you summarise the points that you made
when you were contributing to the OGC's Business Plan; were there
things that were particularly important which you would like us
to know about?
(Mr Fletcher) The key things going forward that we
were keen to see; firstly, some more resource being put into the
project, in the past few months this has very much been, from
our perspective, one person at the OGC and two at the SBS, and,
in terms of actually taking the various projects forward and turning
them into practical action, some more resource may be required,
in that respect. I think, in terms of, the other thing that we
were keen to see is, once this project gets to the implementation
stage then really to bring in people like Sarah, to the left of
me here, in terms of, it is she and her colleagues who have to
translate these various policy diktats into practical actions
at a local level, and their input and the input of information
specialists, in that respect, is something that we wanted to see
built in there.
149. Do you have any feeling for how these proposals
were received, or is it too early to say?
(Mr Fletcher) We have not received any feedback on
the Business Plan; that is all I can say, really, on that.
Dr Palmer: Okay; thank you.
150. Mr Fletcher, you list in your memorandum
a lot of problems that your members face, starting with a lack
of knowledge about procedures, and then going through the fact
that contracts below £95,000 are not advertised, and those
are the ones that are most interesting to most of your members.
Out of that sizeable list, which is the most important, of the
difficulties you face?
(Mr Fletcher) I think, as said earlier, it is that
one, it is the fact that the smaller contracts and sub-contracts
are not made available. I think, also, tender documentation tends
to be particularly complex for small businesses.
151. What representations have been made about
(Mr Fletcher) I think it is fair to say, very little,
in the past.
152. What, few representations or few responses?
(Mr Fletcher) In terms of complaints of small business,
across my telephone and across my door, the major thing that I
have had complaints about in the past is actually the fact that
they have to pay to get on things like "approved lists".
and, as a matter of principle, a number of small businesses object
to that. It has always been difficult to convey those complaints
in the past because there has never been a central point for procurement
matters in Government.
153. There is now; so have you used the last
two years to make these points?
(Mr Fletcher) No, to be fair, no, we have not.
(Mr Fletcher) I have to say that it is not a priority
amongst the various other issues that we have to lobby on, on
behalf of small businesses, their priorities are things like red
tape, skills shortages, transport issues, things of that nature.
155. Red tape takes precedence over contracts
of £95,000, or so, that could be accessible to them, not
(Mr Fletcher) It does. I think we are well-publicised
as saying that red tape that the current Government has brought
in is of the order of £15.6 billion; so against those contracting
difficulties that is not something that our members have seen
as our priority.
156. So you really have not used the Office
of Government Commerce at all?
(Mr Fletcher) No; but I think, obviously, are obviously
keen, and have been engaged, over the past few months, to support
the project that they are now engaged in. It is one of these perhaps
earthy issues that will not make it onto the front pages of the
newspapers but actually is an issue that I think is worth taking
157. A number of the problems you list in the
Appendix to your paper relate to local authorities, but how does
that compare with any problems you have with Government Departments
and their Agencies?
(Mr Fletcher) At this point, I would perhaps defer
to Sarah, who, operating at the local level, has more experience
of the difficulties that small businesses face with the local
(Ms Harris) Thank you. I do not know if it would be
helpful for me to give a little bit of background about where
I am coming from, but, because I manage the Information Service
and the Business Link in a Chamber with the Euro Info Centre,
we are constantly in touch with the small and medium-sized enterprises
who are trying to get into public sector tendering; we offer a
Tender Alert Service to them on a daily basis, which surveys (Official
Journal of the European Commission). When it comes to the primary
problems that companies have, I think there is a gap with the
sub-threshold; that has been clearly identified and that is something
that we would hope to address. And, also, the information that
comes from OGC, just to backtrack slightly, to follow up on the
previous question, the information that OGC puts out on its website
is something that we have accessed, as a network of Euro Info
Centres, in order to assist the businesses who are our customers,
our subscribers, and for whom we are striving to gear up, so that
they can tender more successfully. I am keen that the way forward
with OGC is that, through the Business Links and the Euro Info
Centres, the representation to OGC can be cemented and used more
effectively, and that we can actually improve the situation for
small businesses by accessing the information that is available
through OGC. Now the brochure that they have produced is the most
front-line piece of information that we use, as a sort of distribution
mechanism for that, if you like.
158. This is tendering for Government contracts?
(Ms Harris) It is, indeed. We do not use that solely
as something that we just send out, we use that as an adjunct
to the subsidiary advice that we are able to give. The Euro Info
Centres have been in the SME assistance game for ten years now,
particularly with our public sector tendering advice service.
159. And has the Office of Government Commerce
improved the service to small and medium-sized enterprises?
(Ms Harris) From my point of view, it has improved
it, in the sense that we, as information providers and multipliers,
have access to what is good quality information; so, yes, to that
extent. I cannot say that, I do not believe, in my experience,
that it has actually reached the level of awareness of individual