Small firms could find themselves locked out of Scotland’s £9.7 billion market for public sector contracts if the procurement process becomes a “tick-box” exercise.
That was the stark warning from the Federation of Small Businesses (FSB), which said the Scottish Government’s public procurement bill, currently working its way through Holy-rood, could impose onerous conditions on many companies.
The FSB said “well-meaning extras” in public sector contracts, such as community benefit clauses (CBCs) – designed to deliver wider social benefits such as recruitment and training targets – risk becoming an “unintended barrier to participation by smaller businesses”.
According to the FSB, firms employing fewer than ten staff account for 94 per cent of all Scottish companies but receive just 4 per cent of public sector procurement spending, and 15 per cent of its members do not bid for work because they feel the process is too expensive and time consuming.
Susan Love, the organisation’s policy manager in Scotland, will give evidence to the Scottish Parliament’s infrastructure and capital investment committee tomorrow and said the procurement bill “has the potential to make a real difference”.
She added: “The £9.7bn that the Scottish public sector spends purchasing goods and services could play a pivotal role developing and supporting Scotland’s local economies.
“But we must resist the temptation to add well-meaning extras as it goes through the parliament. We can’t lose sight of the core objective – better use of the public pound to build a sustained economic recovery.”
The Scottish Building Federation (SBF) has argued that CBCs have an important role to play in public sector contracts, “notably through recruitment, training and apprentices”.
The FSB said small firms could be ruled out of bid on a technicality “if CBCs become a tick-box activity, or if buyers forget to focus on the desired outcome and how this could be delivered in different ways by different sizes or types of business”.
The SBF has already welcomed the bill’s aim of driving down the cost of bidding for public sector work. In its submission to the infrastructure committee, the trade body said Scottish construction firms spend almost £100 million a year bidding for work – equivalent to 4.4 per cent of the total value of construction contracts tendered by public authorities.
However, it said small firms could be given more chances to bid directly for work if large contracts were divided into smaller packages, “rather than having to rely on sub-contracting opportunities once a lead contractor has been selected”.
First Minister Alex Salmond has also warned firms caught up in blacklisting workers involved with trade unions or who have raised safety concerns could be barred from bidding for public work.
The infrastructure committee is expected to deliver its report on the procurement bill early next year.