The British Chambers of Commerce (BCC) is the
"National Voice of Local Business", representing 135,000
predominantly small firms that are members of Accredited Chambers
of Commerce covering the whole of the UK.
In response to a request from Nigel Griffiths,
Under-Secretary of State for Small Business, dated 30 July 2001,
we have collated the following examples of Chamber of Commerce
members' views and experiences on public procurement.
The BCC very much welcomes the Minister's commitment
to look at this issue, so as to ensure that small businesses are
able to compete for the opportunities offered by Government contracts.
We hope that in pursuit of that objective this document is helpful.
Small businesses share a general lack of knowledge
about the procedures involved in bidding for public contracts
and the skills required to do so.
Access to information is a barrier. Whilst the
information is available on the internet free of charge, it is
so cumbersome to search the database that it requires expert skills.
Fresh data is published each day and each tender notice only appears
once. If the company does not see it, the application deadline
will be missed. SMEs do not have the resources to search in detail
The language used in advertising tendering opportunities
is often baffling and time-consuming to decipher, biasing the
likely response towards larger firms.
Contracts below £95,000 do not have to
be advertisedthe size of contracts that would attract a
lot of small firms.
Many SMEs would find a single contract of more
than £95,000 prohibitive in cashflow terms and also in capacity,
exposing them to risk by making them too dependent on a single,
public sector customer. Linked to this, some small suppliers complain
that some public sector buyers, particularly local authorities,
are slow payers.
Responding to tenders is very time-consuming.
Financial and other data has to be gathered in every case to support
the bid. There is no harmonisation of this requirement, so it
must be gathered and re-shaped each time a tender is submitted.
Short timescales will tend to favour existing suppliers.
Legislation requires that when a contract is
won, the notice of that award is posted. This is meant to allow
smaller companies the opportunity of tracking the outcome and
approaching the main contractor with a view to sub-contracting
opportunities. In practice, this does not work as the main contractor
will already have selected his sub-contractors and tied them to
a price before submitting his bid.
Buyers often stipulate very onerous financial
requirements. For example, the provision of three or even five
years' audited accounts. This instantly rules out new companies
and works against central government's desire to relieve small
companies of the need for an audit.
Small firms find it difficult to provide the
plethora of documents that public sector buyers often seek: financial
information, method statements, risk assessments, health and safety
policy, racial discrimination policy, disabled workers policy,
quality assurance, insurance details, etc.
It is sometimes difficult for a small company
to ascertain who is the buyer, with several people within a public
sector organisation having responsibility for different aspects
of a purchase.
There is aggregation of contracts at a national
level that might be better offered locally. See appendix, example
Pre-qualification systems. Suppliers complain
that some of these are relatively worthless, because buyers will
still insist on the same documentation, as if they were applying
from scratch. See appendix examples 1 and 2.
Small suppliers get narked by the charges they
incur to get on approved lists and other pre-qualification systems,
particularly so, where the charges appear to exceed the administrative
There is a proliferation of standards. Small
businesses find these costly to meet and obtain.
The use of turnover thresholds automatically
rules out some businesses.
It is not always clear to suppliers how to get
on approved supplier lists. If they are not reviewed regularly
they could harm competition and stifle innovation.
Purchasing skills. SME suppliers complain that
some government buyers do not have the training to appreciate
their circumstances, what they can do well and what will cause
Unlimited liability clauses in contracts dissuade
small suppliers from bidding.
Suppliers state that they are often asked to
provide product and professional liability insurance cover, with
the amount insured far in excess of what would be normally regarded
Suppliers feel that buyers do not provide them
with sufficient feedback on failed bids, which would improve their
chances of successfully bidding for other contracts.
Ten suggested solutions
1. Training seminars. The Office of Government
Commerce should run a series of local seminars through Chambers
of Commerce to alert small businesses to the public procurement
opportunities available and train them in the procedures involved
in applying for contracts.
2. Tender alert services. The Bristol Chamber
of Commerce's Tender Alert Service provides a good model that
could be copied in other areas. It is based on the European Commission's
network of official Euro Info Centres (EICs), which are recognised
experts in supplying relevant tenders information on the day on
which it is published, direct to SMEs. EICs have 10 years experience
and charge a nominal fee for a very sophisticated service. This
service needs to be more effectively promoted at Government level,
via Chambers, the SBS and Business Links.
3. A central clearing house for alerting
small businesses of contracts under £95,000 and sub-contracting
opportunities. This could be based around a web site and intelligent
e-mail alert service.
4. Replicate the joint bids service provided
by the Cardiff Chamber of Commerce. The Chamber has set up networks
of companies that are working together to put in bids, these are
now beginning to deliver tangible benefits to the companies involved.
5. Make all public authorities consider
an aggregation clause. Before advertising a contract public organisations
should be required to attest that they have considered the issue
of aggregation and where they pursue it should set out their reasoning
for opting for central supply.
6. Research the effectiveness of using public
procurement to pursue other policies. The Government should conduct
and publish research on the effectiveness of using public procurement
to pursue other policies, for example on discrimination issues
and other employment rights.
7. Make greater use of output-based specifications.
In contract information greater use should be made of output-based
specifications, and less reliance placed on input-based standards.
8. Guidance on financial stipulations and
alternative measures. The Office of Government Commerce should
provide guidance and training on alternatives to the current common
financial stipulation of having to provide three or five years'
9. Develop a standard format for the request
of information from suppliers. This would be a tremendous simplification
that would aid small businesses.
10. Guidance that illustrates best practice
regarding pre-qualifying and approved lists. From our feedback
there are clearly problems with both these methods of selecting
suppliers. The Office of Government Commerce should provide guidance,
which illustrates what is best practice.