1. Member of North Staffordshire Chamber
Construction Line was intended to be a central
body that carried out evaluation of all types of contractors and
sub-contractors for the benefit of Local Authorities. Unfortunately,
the system does not work as it should as there are still many
Local Authorities who still circulate their own questionnaires
and then make their own decisions.
Some Authorities require £5 million product
liability where £2 million would be quite sufficient, particularly
for small contracts. This increases all insurance costs unnecessarily.
On several Authorities' tenders it is required
to submit all sorts of paperwork at the tender stage. This is
time-consuming and a waste of paper for the unsuccessful bidders.
Some of the documents required include: Method Statements, Risk
Assessments, Health and Safety Policy, Racial Discrimination Policy,
Disabled Workers Policy, Quality Assurance, Insurance details,
If pre-qualification worked none of this paper
would be required at the tender stage. The purchaser may want
to see it all again prior to placing a firm order, but then only
one successful bidder is involved.
In some cases it is not possible to pre-qualify
for a Local Authority or to tender because they have an approved
list of suppliers. This is understandable, but how can doors be
opened with the advent of a new product or idea.
2. Member of North Staffordshire Chamber
Problems which make it difficult for small businesses
to procure from public bodies.
Over recent years, our company has managed to
get on more lists but the process is not easy.
(a) Local authorities ask for professional
indemnity insurance (which is fee based), but our company has
product indemnity insurance, which includes a small element of
professional indemnity. It takes a long time to explain why we
have to have one instead of the other. We lose many contracts
because of this.
(b) The level of insurance sought is steadily
increasing, it has gone from £1 million to £10 million
in recent years. We must have this in order to go on the tender
lists. This increase creates an additional cost of several hundred
pounds, (typically £700) which is repeated every year for
the duration of the contract/life of the product. The cost cannot
be passed on to the customer.
(c) The burden of paperwork to get on tenders
lists. Up to 30 pages each time, always asking the same questions.
The company is a member of "Construction Line" which
indicates it satisfies a number of criteria and shows the company
is approved up to £1/4 million contract. Therefore, why do
we have to answer the same questions over and over again?
(d) We have difficulty getting to the right
person in our local authority. For example, as many as eight different
people might deal with lifts in various departments, one for purchasing,
one for checking contracts, one for specifying etc. It is not
easy to get the names or to get to speak to the right people in
the right order. Again, we lose out on contracts while being passed
around from person to person.
At the same time, there is an increasing number
of directory companies ringing, who ask £400 to go into a
directory for a particular region's public bodies. We decline
entries, but the number of phone calls is becoming a nuisance
(three a week).
3. Feedback from Sussex Chamber
I have a number of building/construction companies
who undertake work with public organisations. The main issues
they face are having to evidence quality standards, eg ISO 9000
achievement and/or IIP. The second one is that as a small business
they often do not have the knowledge or skills about the procurement
process itself and the issues they have to address when submitting
tenders for work, eg contracting on a large scale, having the
workforce to deliver large contracts, having the resources to
finance large works prior to payment at the end of the job.
4. Feedback from Leicestershire Chamber
Public procurement by local government is not
very transparent to small businessespartly because many
local authorities use select list procedures and/or subscribe
to purchasing schemes, which closes the market information flow
to the private sector unless they know about this.
Larger government and utility purchases are
subject to notification procedures, for example Official Journal
of the EC, but the national publicity of tendering is not particularly
consistentit is tempting to say that minimal effort is
made to promote these tenders in an accessible way to local and
national markets. The trade press seems to be used in preference
to local newspapers, which may tend to exclude small businesses
that have no subscription to controlled circulation or commercial
Public bodies have not made a practice of posting
tendering opportunities on their websitesone has to question
why, given the low cost. Certainly they are less reluctant to
place job opportunities on their websites.
Some of the requirements to register health
and safety, equal opportunities and environmental policy statements
in tender applications deter a segment of small businesses who
have given these lower priority.
5. Feedback from Hull Chamber
Hull City Council sold off 45 per cent of the
municipally owned Kingston Communications in 1999, which netted
them a capital windfall of more than £200 million. It decided
to spend this money on some local road improvements, refurbishment
of council homesincluding double-glazing etc, building
a sports stadium and a number of other projects. Combine this
with the SRB and European funding in the area and there are many
millions going into local development.
However, little benefit is being felt by local
business. The Council says it is using the best designers, architects,
consultants, construction contractors for the jobsfine
you might think. What it is not doing, is doing anything significant
to build the capacity of local firms to deal with the work. At
the same time it is drawing more and more of its activity in house,
through its ever expanding DSO (indeed some of the money will
be used for a new DSO depot) which is growing whilst the local
construction sector is contracting.
Our basic argument is that with all of the money
sloshing around going to build local authority and non-local private
sector capacity, local firms will end up weaker when the projects
are finished, not stronger.
The feeling from members who are missing out
on the work seems to be that the Council is afraid to go with
local firms with less experience and perhaps higher costs. Whilst
you might argue that this is for the market to determine, you
could also say that its in-house DSO development is distorting
the local market, thus reducing competition in the long term.
6. Feedback from Bristol Chamber
1. Contracts are for £95,000 or more,
which is a barrier for SMEs. To many SMEs a single contract of
that size would be prohibitive in cash flow terms and also in
capacity, exposing them to risk by making them too dependent on
a single, public sector customer.
2. The time factor involved in responding
to tenders is very great. 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 reshaped each time
a tender is submitted.
3. There is no continuity to the detailed
information that the tenders require: all ask for proof of financial
viability in the form of accounts. Sometimes they must produce
accounts for three years and sometimes for more. No other form
of proof is acceptable. Companies less than three years and sometimes
less than five years old are therefore prevented from bidding
4. European PP legislation requires that
when a contract is let, the notice of that award is also 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.
5. Access to the tenders information is
also a barrier. Whilst the information is available on the net,
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 it is missed by the company
the application deadline will be missed. SMEs do not have the
resources to search in detail daily.
7. Feedback from Bristol Chamber
As Bristol offers a Tender Alert Service, I
approached our Information Team for their experiences.
These are their comments:
Companies must be aware of the time consuming
factor involved in the whole process. There are sometimes several
stages to go through before winning a contract. Companies need
to be ready to spend time filling in the paperwork/forms provided
by the awarding authorities and also gathering the information
required (financial information, samples, company history, etc).
On the other hand once it is done companies can usually use them
One thing that I have recently been asked about
is the fact that most public authorities will ask for three years
accounts details. This is not usually a proviso since they are
simply being asked to prove their financial eligibility to provide
such large contracts and therefore other means of showing financial
viability of the company should be welcomed. However, I feel that
this may put certain small businesses off applying in the first
Tender alert only advertises contracts over
£95,000, which is also going to cause a barrier for certain
businesses that are not in a position to apply directly for the
contracts. One subscriber I am sure actually follows the tender
application process and then bids to suppliers further down the
chain who want smaller contracts with smaller outlay. It seemed
like a rather cumbersome process to be able to get public sector
work to fit a certain budget.
8. Feedback from East Midlands Chamber
Most small companies I speak to have no idea
on how to get onto local authorities list of preferred suppliers,
when I have made specific enquiries it seems inevitable that the
tenders have gone out to this preferred group and local small
companies remain blissfully ignorant.
9. Feedback from Barnsley Chamber
SMEs tendering with Local Authorities tend not
to get any feedback on why they were unsuccessful. They feel they
should be helped so that next time they can ensure they meet the
criteria. Perhaps there should be workshops for SMEs on tendering
procedures. Local Authorities should also consider how their actions
impinge upon the local supply chain.
10. Feedback from Cardiff Chamber
Rather than highlight specific problems that
companies have experienced, our concentration is on general barriers
to involvement that prevent SMEs from getting involved in the
public procurement process:
access to information, not knowing
where to find the opportunities;
capacity to deliver the entire contract,
very small companies often have the perception that the contracts
would be beyond their capacity to deliver. In response to this
issues in relation to TEDs, we have and are setting up networks
of companies that are working together to put in bids, these are
now beginning to deliver tangible benefits to the companies involved;
with some departments there appear
to be issues regarding the strength of the procurement rules,
causing products for example, printed materials to be sourced
at high rate, when they could be sourced locally much more reasonably.
My colleagues that work with companies on this
are convinced that what they need is capacity building to help
them into and to understand the process involved.
11. Warrington Chamber member
We are a firm of solicitors having a total staff
of about 50 and a turnover of about £3 million per annum.
We already act for some government agencies and local government.
We have recently suffered from the sort of situation
you are asking about in that we were previously on a select list
of solicitors who were asked to tender for some legal work for
the Probation Service. This would have involved some property
work in connection with a disposal of existing premises and new
The project was unexpectedly put on hold during
the last financial year and we were told that we would be re-invited
to tender when the go-ahead was given for the scheme in a revised
format in the new financial year.
Not having heard anything further I have recently
enquired as to the timescale etc for the project and the new tender
exercise. I have been advised that with effect from 1 April 2001
a list of nominated firms of solicitors has been issued by the
National Probation directorate with regard to the provision of
property legal work. The local office is required to instruct
a firm of solicitors on that list for all future property work.
We are not on that list. We were not invited
to submit for selection to be on such a list. I have not seen
any procedure, which would have allowed us the opportunity of
being considered to be on such list. Presumably this has been
handled centrally on a nation-wide basis.
The effect has been that work that we did have
the opportunity of tendering forand then hopefully doingis
now not being offered to us. It is not work that is outside our
experience or capability. This is an example of public procurement
that small businesses locally could have been engaged to carry
out but which has been lost to bigger law firms.
Hopefully this is a good specific and recent
example of the very problem that Nigel Griffiths wishes to address.
I am sure the same circumstances apply with other public procurement
for legal services, which could otherwise be procured just as
effectively though small businesses often local to the source
of the work.
12. Warrington Chamber member
One of the problems we experienced in the past
was the "Big equals best" syndrome and, for example,
minimum turnover requirements, in order to be even considered,
such as £1 million per annum.
I appreciate that ability to cope has to be
considered but how do you grow if you are supposed to have grown
already in order to tender?
There is a fundamental yawning gap between what
government and local authorities regard as a small business, and
the reality of what actually are small businesses.
Their concept of what is a small business is,
to an actual small business, quite a large one!
13. Warrington Chamber member
Recently we tried to enquire about providing
design and marketing services to The Countryside Agency and The
Environment Agency. In both cases they have already done things
like awarded national/European three year contracts, seemingly
to very large operators, though some tender process that we are
not aware of, and there appears to be no way in.
We have a particular specialism that could really
provide benefit and add value to both of these organisations,
especially with current issues such as post foot and mouth/environmental
solutions for the rural economy, yet it seems impossible to "break
in". The Countryside Agency and The Environment Agency are
our two most ideal target clients, so the Minister's advice would
14. Warrington Chamber member
We subscribe to a magazine called Contrax
Weekly, which gives lists of Government and local authorities'
tender lists. However, the vast majority have such onerous conditions
of qualification and award criteria that it is not even worth
applying for the tender documents. Therefore the vast majority
of work is given to larger contractors. For example, we list below
a typical requirement for a tender received today:
Qualifications: Proof of suppliers' economic
and financial standing is required and is to be demonstrated by
certificate issued by the competent authority in the Member State
of the authority awarding contracts, to the effect that the supplier
has fulfilled obligations relating to the payment of social security
contributions in accordance with the legal provisions of the country
of the authority awarding the contracts, or declaration on oath
or solemn declaration; certificate issued by the competent authority
in the Member State of the authority awarding the contracts to
the effect that the contractor has fulfilled his obligations relating
to the payment of taxes in accordance with the legal provisions
of the country of the authority awarding the contracts, or the
declaration on oath or solemn declaration; appropriate statement
from bankers/banker's reference; signed and audited accounts for
the previous three years including the presentation of the undertakings
balance sheets or relevant extracts from balance sheets confirmed
by independent audit; statement of the firms' overall turnover
and the turnover in the respect of the service to which the contract
relates for the previous three years.
Evidence of suppliers' technical capacity to
provide the goods required is to be demonstrated by: details of
any other contracts of supplying this type of service complete
with customer references; details of quality control/assurance
policies operated by the company; confirmation of year 2000 compliance
on all systems/ services used; arrangements to meet and review
the contract to confirm quality and due diligence and for shortlisted;
product evaluation sessions on a date to be confirmed.
Award Criteria: Most economically advantageous
offer with due regard to service delivery, price quality and technical
merit but not necessarily in that order.
As you can see from the clauses above, tenders
are biased to large and long-established companies as opposed
to small firms.
15. Warrington Chamber member
As an SME that responds to many OJEC notices
(with a reasonable degree of success) I think our main complaints
are as follows:
1. Unrealistic deadlines set for response
to tenders. We frequently find that ITTs are issued, and then
the contact person is away on annual leave, and we are therefore
unable to respond as fully and/or as well as possible. Larger
organisations are inevitably better resourced to cope with tighter
2. Failure to allow face-to-face meetings
as part of the procurement process. I appreciate that time is
often limited, but this often enables an SME to gain credibility
with a potential customer and understand their needs in greater
detail. For a large corporate, the strength of their brand name
is often enough to ensure they reach the second stage of the procurement
3. Failure of public sector personnel to
actually read proposals prior to presentations/meetingsa
common occurrence! We naturally feel aggrieved if we have spent
considerable time responding to ITTs and then find that there
has been little or no preparation on the part of the potential
4. The cost of tendering is a definite obstacle
for many SMEs. We were successful in winning a £1.7 million
contract with NHS Direct in 2000, but this involved several weeks
of negotiations in London. Inevitably the cost of transport was
substantial (return rail ticket at £150 from the NW to London),
and we had several people involved as part of our bid team. Moreover,
there were also substantial legal fees incurred as part of the
5. Public transport is a major headache!
I would rather take the train, but the costs are prohibitive for
an early morning meeting, and trains are not that reliable.
As I said, we operate largely in the public
sector with a substantial degree of success, but there are still
significant hurdles to overcome.
16. Warrington Chamber member
We are a small translation company working in
North East Wales with a turnover in the region of £150,000
per annum. Almost all of our clients are public sector organisations/government
We have two comments to make with regard to
practices and procedures:
1. The use of indecipherable jargon (we
translate a huge variety of official documents and sometimes have
to re-write the English in order to make sense of them). We are
therefore in a position to know what people are faced with when
trying to sell to the public sector. This can be a very serious
barrier to trade for anyone unfamiliar with the terminology used,
for example, in tender documents.
2. Extremely late payment (eg in excess
of 90 days)This can result in serious cashflow problems.
It seems the public sector is blissfully unaware of late payment
legislation and is even more loath to conduct business with those
who use it! When quoting for any job, we make our clients wholly
aware of our terms (ie payment within 14 days of date of invoice).
However, this is often totally ignored and whilst our patience
has to last until we are paid, the VAT man will insist on being
paid on time!! We have tried arguing that we will pay him when
government offices have paid us, but the point we are trying to
make is not appreciated.
17. North Derbyshire Chamber
Just a small amount of feedback on public procurement,
based on discussions with clients visiting our meet the buyer
It is difficult to contract with the public
sector for a number of reasons:
it is difficult to know who is the
right person to deal with and then to get through to them if you're
not already known;
there are procedures that they don't
always know about;
there are complex steps to get onto
approved supplier lists;
sometimes if they jump through all
the hoops they feel they are just being used to make up the numbers
ie three proposals, which may take a lot of time to prepare and
will go to a better known, larger or more established contractor.