SMEs are key to delivering best value for local government spend

Increasing SME engagement in public procurement is the best way to deliver value for money for local government according to the Federation of Master Builders (FMB) in response to today’s Select Committee report.

Brian Berry, Chief Executive of the FMB, said:

“We have concerns regarding the strong emphasis the Committee has placed on economies of scale. Although the advantages of SME procurement are also recognised, if economies of scale are the priority, there is a danger that councils will overlook the value for money, and wider social value, that good local procurement can achieve. For instance, in construction, 60% of apprentices are employed by micro-businesses so they must be given fair access to these public sector opportunities if we are to maximise employment opportunities for our young people.”

Berry continued:

“The Committee has taken heed of the FMB’s advice and highlighted the need for greater standardisation of PQQs in order to reduce the administrative burden on SMEs. Our own research shows that almost half of small construction firms have a negative experience of completing these forms and they are a major barrier to SMEs.”

Berry continued:

“We are pleased that the report stresses the crucial role of the LGA in shaping local government procurement policy on the ground and the FMB will continue to support the LGA which has already done a great deal to improve public procurement for construction SMEs.”

Berry concluded:

“If central government really wants to encourage more SMEs to bid for public sector work, it must transpose the article in the new EU Public Procurement Directive that requests public sector clients, including councils, to divide their contracts into smaller lots wherever possible. Of all the new measures in this Directive, this would have the most positive impact on small construction firms and should be written into UK law as soon as possible.”