Small businesses lose out in Government work

The ability of a business to win contracts from the public sector is directly related to its size according to figures released by the Federation of Small Business (FSB).

Just 38 per cent of firms with a turnover under £25,000 sell goods and services to local authorities, compared to 65 per cent of firms with a turnover of more than £1 million, showing that the maxim 'the bigger you are - the more likely you are to win a contract' also holds true with central government.

The survey of more than 18,000 FSB members reveals that even hi-tech firms are failing to win their fair share of government work. Half of the research and development businesses surveyed said that they had no contracts with central government.

Anti-competitive

The FSB believes that the reason why so few small firms are winning government business is that procurement processes are inherently anti-competitive.

In a formal approach to the Office of Fair Trading, the FSB is calling for a market study, arguing that current practices distort the public sector market and are in conflict with the Competition Act.

Tina Sommer, FSB Trade and Industry Chairman said: "Despite the numerous government reports and initiatives, the ability of a business to win a contract with the public sector is still directly related to its size.

"The time has come for the OFT to finally ensure that small firms get a fair share of the £117billion of taxpayers money that the public sector spends each year."

In its formal response to the consultation on the OFT 2005-2006 annual plan, the FSB is arguing that practices used by public procurers are anti-competitive, distort the market and are in conflict with the Competition Act.