13 August 2018

Every Government minister knows the value of small firms to the UK economy and all of them insist that they are keen to see these companies getting a fair share of public contracts.

And yet, according to a new report from the influential Public Accounts Committee (PAC), the emergence of a small group of large companies which are expert at winning public contacts but do not always deliver a good service is a major concern.

“Strategic Suppliers”, available at https://bit.ly/2v0eu8t, states: “The Government needs to consider how it responds to a number of its main suppliers experiencing severe financial pressure, and in the case of Carillion becoming insolvent.”

The market created and sustained by public sector contracts is not working for the companies involved, for those who rely on those contracts being effectively delivered, or for the Government, which must ultimately pick up the tab, it goes on.

Responding to the report for the Federation of Small Businesses (FSB), Chairman Mike Cherry said: “It reinforces the view that the public procurement process is broken, heavily favouring big firms that waste taxpayers’ money. It doesn’t make good reading following last week’s drop in central Government small business spend and points to the need for immediate action to make the system fairer, simpler and more transparent.”

He described as a merry-go-round culture, the system which has developed where public contracts are being awarded to a small number of large companies.

PAC Chairwoman Meg Hillier has told the Government that it must look again at the motivations of companies currently bidding for this work and develop a strategy that requires contract-awarding bodies to look beyond bottom-line costs.