North-East News

Government procurement plans will hit small firms

8:00am Saturday 28th April 2012

THE Local Government Association (LGA) has refused to sign up to a new procurement pledge amid fears it favours big business.

The Cabinet Office has issued a Procurement Pledge, outlining five key promises on how the Government intends to buy goods and services in the future. It hopes the move will help Government and industry work collaboratively to spot skills and investment gaps, safeguarding UK competitiveness and growth.

But the LGA, which represents local authorities, is unconvinced by the new approach.

Its fears come after a number of medium-sized contractors in the North-East privately expressed fears that the public sector procurement process favours the bigger, national players and overlooks strong bids from local companies.

Construction chiefs in particular have become frustrated that smaller firms are struggling to get over the first hurdle when faced with a highly complex bidding process. They have called for a reduction in the amount of red tape to make the process more accessible to firms that do not have the time or resources to submit lengthy tender documents.

17 industry bodies and suppliers have already signed up to the Procurement Pledge, including the British Chambers of Commerce, the Confederation for British Industry (CBI), Institute of Directors and the UK Contractors Group.

Peter Fleming, who chairs the LGA's Improvement Board, explained why his organisation wouldn't add its name to the list.

"When it comes to stimulating productivity and growth what doesn't work is to have our hands tied by central prescription, which is why the Improvement Board is not going to sign up to the Government's Procurement Pledge.," he said.

"Ostensibly designed to stimulate economic growth, it fails to recognise the strength of councils' current procurement practices.

"It would put the sector at a severe disadvantage and it would, in our view, do nothing to help us stimulate SMEs locally."

The LGA objects in particular to the pledge's call for public bodies to publish pipelines of planned future procurements together with an indication of the likelihood of the procurement taking place to give potential providers greater confidence to invest for future business.

It said: "There is no evidence that pipelines work better for the goods and services local authorities buy, and the existing procurement portal and buyer events already provide suppliers with access to the market.

"Local authorities are better placed to engage with customer and suppliers early rather than the bureaucracy of predicting spend in five years' time for government returns."

The pledge also calls for all but the most complex procurements to be completed within 120 working days.

"Nationally imposed targets have not proven not to work in the past," an LGA paper stated. "Local authority effort is better used to achieve the best quality outcomes rather than focusing on targets."

The Government believes that by publishing details future requirements they can help give UK suppliers the confidence to invest in people, plants and technologies so they can compete for and win these government contracts, as well as seek new opportunities abroad.

Secretary of State for Business, Innovation and Skills, Vince Cable continued: "Frankly, we've been too short-term in how we've done procurement in the past.

"In addition to identifying skills gaps, these measures will help to combat the 'famine and feast' nature of the jobs market where a lack of central data on projects across the country can lead to avoidable gaps between projects."

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