Small firms look for way out of crunch
As the government tries to refloat Britain's financial institutions with a reservoir of cash, many small and medium enterprises – SMEs – are still at risk of being left high and dry.
Demand is growing for authorities to ease the pressure on small businesses, and last week the Federation of Small Businesses called on the government to relax the rules on public sector project bids.
The move would effectively open the floodgates for SMEs to compete as primary contractors on projects such as training and recruitment, while today's stringent criteria means many either cannot qualify or are not made aware of contracts' existence.
The proposed measures include scrapping the requirement to provide three years' worth of audited accounts for every application to allow new-starts to compete, a requirement that all contracts with a value upwards of 10,000 be published online on the local authorities website, and easier application forms which take the size of the contract into account.
Tim Colman, FSB officer in charge of procurement matters for Hampshire, said the local authority was investigating a 'competitive quotations system' for smaller value contracts, as an alternative to putting them out to full tender – something which can require a 'ridiculous' amount of paperwork.
He told BusinessWeek: 'A lot of small businesses understand their business and have the ability to put it down on a sheet of paper, but perhaps struggle with a major pre-tendering questionnaire.
'There's nothing wrong with that per se, but it can really take a considerable amount of time to fill in. I've just worked on one myself for a small business, which was a 32-page document, and that's taken two to three days to fill in.
'Now to a small business, particularly at this time, time is money. It is for large corporations, too, but a lot of them will have whole departments doing these things. They've got the resources, but for a lot of others it means stopping doing their day job to do that.'
He said he knew of cases where contracts worth only a few thousand pounds had been successfully clinched by SMEs, only to find the cost of meeting the tendering requirements had outstripped the value of the work.
'People are tightening their belts quite considerably,' he said. 'Businesses are having to make every hour count, and in some unfortunate cases, some may have shed staff just so they can cope, and are having to do all this themselves.
'We're not at all suggesting you should eliminate competition, but not to the level where the cost of competing eliminates the benefits of the work.'
One firm which could feel the tangible benefits of a relaxation in the rules is Biscoes Solicitors, a south-east Hampshire firm, employing around 120 people in seven offices from Chichester to Wickham, specialising in commercial and private client law.
Roger Salvetti, commercial partner, said: 'If you use a local service, a local firm, they're going to be far keener to do a really good job, because they can't escape by being far away, and if they don't do well their reputation could be sullied very quickly because they're in the local area.
'We've tried to bid in the past and I have to admit we weren't successful.
'There's a huge amount of work to do to satisfy them that you're competent, and it's speculative; you invest a lot of time in that, and if you fail, that's time you can't claim for or recover.'
BusinessWeek put the issue to Portsmouth City Council's business chief, MP Mike Hancock.
Mr Hancock said it was not within the power of individual councils to change the rules, but said he wished to table a motion backing the proposals, likely to happen in January, as a way of piling pressure on central government.
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