The FMB and the CITB are planning to develop training to help small and medium-sized builders set up consortia to win public sector work.
The recommendation is one of several listed in an FMB report highlighting the difficulties SMEs face winning work on government frameworks.
The Improving Public Procurement for Construction report found that as many as 40% of construction SMEs lose out on 90% of the public sector work they bid for, while over half of SMEs said they have seen their success rate fall when bidding for public sector contracts over the past five years.
That’s despite the fact the government has pledged that at least 25% of central government contracts should be awarded to SMEs by 2015.
Brian Berry, chief executive of the FMB, told CM: “We want to explore working with CITB to set up training for firms wanting to form consortia as many companies need help in trying to promote themselves. Work also needs to be done to help local authorities understand that consortia are just as valid as larger contractors doing work, there’s a perception that they can be more unstable, so we need to build up their reputation,” he said.
The report’s recommendations on improving SME access to contracts also include requiring that small businesses complete no more than one pre-qualification questionnaire (PQQ) per public sector client each year in a bid to cut down the cost and time burden on SMEs trying to bid for work.
It also recommends that all public sector clients use the PAS 91 standard PQQ and mandate 30-day payment terms for subcontractors.
The report found that SMEs often failed to secure work under a framework agreement because public sector clients were “over-cautious when assessing a firm’s capacity to deliver”, particularly when considering a firm’s turnover.
In response it recommends that public sector clients review the limitations they impose when assessing the financial viability of SMEs attempting to get on to a framework and copy the private sector approach of deeming SME turnover suitable when the contract is no more than 33% of the firm’s annual turnover.
The report also warns against the wholesale ‘bundling’ of contracts in preference for dividing them into lots in order to maximise opportunities for SMEs to act as the principal contractor.
“A big part of the problem is that larger contractors are better geared up to promote themselves regionally than SMEs, so local authorities should be actively trying to give them opportunities,” said Berry. “As our figures demonstrate, local procurement initiatives are not really working as well as they should do. It’s also about visibility, a lot of smaller firms just don’t know about the work that’s available, which is where the government’s pipeline database of future public sector contracting opportunities might prove helpful.”
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