Councils urged to make procurement more SME-friendly

Posted on 23 Jul 2012

With local councils spending £88bn a year on procurement, the Federation of Small Businesses (FSB) has said that small (and often local) firms are losing out on business due to procurement.

The FSB polled all local councils to see how and where they spend their money, with many councils indicating that over half their procurement spend went to small and medium-sized businesses.

The spend with SMEs ranged considerably from less than 10% to in excess of 70%.  A third of local authorities felt that SMEs face barriers in accessing procurement opportunities.

However, of the 148 local authorities that responded, more than a third of councils do not actively record the location of their spending and almost half 49% don’t know the size of business they trade with.

With an average annual spend of £185m per council, the FSB believes that councils must be more aware of what they spend and how they spend it to maximise the benefits to the communities they work for.

The FSB wants to see more accurate and public recording of spend so that it can properly inform strategy and decision making. This will help to embed and understand the link between procurement and local economic development.

The organisation is calling for all local councils to ensure they have initiatives to support small firms with the tender process and to develop the potential of their local small business supply base.

It has been suggested that local councils provide detailed, specific and timely feedback to all unsuccessful businesses so they are in a better place to bid in the future and break contracts into smaller lots where possible.

John Walker, national chairman at the FSB, said: “We were surprised that so many councils aren’t being more proactive in terms of the how they record their spending. Knowing where spend is going in the local area, as well as what type of businesses are getting contracts, would help small businesses compete for contracts.”