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Coalition failing SMEs, says survey... Small firms claim they are being excluded from government contracts. Michael Glackin reports


More than three quarters of small and medium-sized contractors insist they are being excluded from government contracts because of their size. The findings emerged in a survey


commissioned by Construction Manager, and call into question the coalition government’s much-touted commitment to increasing the number of small and medium-sized businesses involved in public sector contracts. The survey, carried out for CM by


Constructionline, canvassed the views of a cross-section of construction SMEs comprising consultants, general contractors and specialists. It also revealed that more than 86% of small firms believe the procurement policies of both central and local government create barriers to SMEs winning work. Almost 1,000 firms responded. The stark findings underline industry


complaints that the shift in public sector procurement to large aggregated contracts — which can only be carried out by large, usually multinational, contractors— has left an increasing number of construction SMEs squeezed out of the system. The results come as the government began trials on three procurement models recommended by a task force looking at improving procurement. And north of the border, the Scottish parliament is revising its processes for public procurement to try to make it easier for SMEs to win work


Do you feel excluded from government contracts because of the size of your business?


No 25% Yes 75%


(see page 19). The CM/Constructionline survey found


that 75.5% of SMEs think their size prevents them from winning public sector contracts. It also found 94% of contractors believe the government had failed to include SMEs in its procurement system. The coalition has said it wants 25% of


government contracts by value to be awarded to SMEs. But that target has not been met and the latest figures from the Department for Business, Innovation and Skills reveal a fall in the amount of money spent with SMEs at the start of this year. A spokesperson from the department


said: “We are on track to meet our 25% spending target with SMEs. We are already working to achieve economies of scale and at the same time increase procurement through SMEs by working with Research Council UK’s Shared Services Centre to purchase more through this facility.” He added the fall in money spent on


SMEs by government departments so far this year was “a slight drop caused by normal seasonal variations”. Construction SMEs account for around


80% of construction jobs and more than 60% of the sector’s annual turnover. But more than 86% of those polled said construction SMEs lacked a voice within government. The Constructionline survey makes clear that SMEs believe their importance to construction’s economy is ignored by government and that departments have


Do you think government procurement policy creates a barrier to SMEs winning work?


No 13% Yes 87%


“I cannot see how the current system saves the government money in the long run.”


Alan McEwan, Alan McEwan Associates


failed to take on board their concerns over barriers to the procurement process. Suggestions for improving access included simplifying the procurement process by reducing the amount of red tape involved in applying for public sector contracts. PQQ’s emerged as a consistent bone of contention, with many complaining they require too many resources to complete and are biased towards large contractors because of their emphasis on


Teamwork brings framework tendering success


More than half of contractors surveyed (61%) said they would consider teaming up with other small businesses to bid for framework agreements, an approach pioneered by the National Federation of Builders that has met with some success. By combining together in a


consortium, typically consisting of around half a dozen firms, smaller contractors are able to compete with larger competitors on frameworks that require contractors with higher turnovers. Paul Bogle, policy manager with the NFB, said there had been a “noticeable increase” in the number of NFB members wanting to form a consortium to bid for public sector work in the past year. Bogle said: “We now have


five different consortia in various parts of the country.


Each one is based on a limited liability partnership which basically acts as an umbrella company to allow the firms within the consortium to bid for frameworks. It increases a firm’s skills and scope to a client. Two of our consortia have won framework agreements so it does work.” Bogle said the consortium model tends to suit medium- sized regional contractors rather than specialists and very small companies, but hopes that as more contractors combine for contracts the model can adapt. “It is definitely making


a difference to SME contractors. Even those firms that failed to get onto frameworks say getting as far as the interview process through a consortium has helped them gain a better understanding of what clients want.”


Do you think that construction SMEs have any voice within government?


No 84% Yes 14%


Would you consider teaming up with other organisations to bid for framework contracts?


Yes 61% No 34%


I am already part of one 5%


4 | MARCH 2012 | CONSTRUCTION MANAGER


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