Inefficient Tendering System 'Is Costing SMEs'

Up To £22bn Of Public Cash Is Being Delayed

13.03.2014

Billions of pounds of public sector cash that should be pumped into the UK economy is being tied up by an inefficient tendering system.

This is according to Open Data Institute (ODI) start-up Spend Network, which has analysed more than £1 trillion worth of EU procurement information.

It suggested that as much as £22 billion is being delayed and this is having a particularly negative impact on small and medium enterprises (SMEs).

On average, around £734 million of stalled funds that are intended to stimulate economic growth are not being delivered to small firms on time each year.

ODI chief executive officer Gavin Starks welcomed the fact the EU has made this data available to the public, but warned that there is still more to do in order to increase transparency.

The figures showed the UK had the third slowest tendering process in Europe in 2013, behind only Greece and Ireland.

It took 45 per cent longer than the European average - the equivalent of 53 days - for an EU-compliant tender to be completed.

Much has been made about availability of finance to SMEs and the government has also pledged to be more inclusive of smaller organisations when awarding public sector projects.

A significant number of small business owners complained that large corporations held the monopoly on these contracts and the authorities are keen to rectify this.

However, managing director of Spend Network Ian Makgill thinks these delays do little to improve the relationship between government and SMEs.

"Having to wait nine months to know if you've won a contract is really only feasible for larger companies, SMEs simply can't operate with a nine-month delay on cash flow," he commented.

Spend Network is now urging the government to reveal details of all completed EU tenders, as less than one in three deals are reported at the moment. The group also wants to see greater clarity surrounding contracts that have been awarded through government frameworks.

Expert Opinion
This research has offered an important insight into the day-to-day challenges that small businesses can face. As is mentioned in the article, a slow and inefficient tendering process can pose a challenge and a risk to smaller firms which are often more reliant on a steadier cashflow and are simply unable to await the outcome of longer term bid processes – which unfortunately may often be linked to more lucrative opportunities.

"As the economy improves, smaller firms will be looking at ways to expand their operations and it is vital that efforts are made to support them so they are able to compete with larger organisations for major work which could, potentially, have a huge impact on their operations.

"We would also urge any smaller firms taking the step into bidding processes to ensure they have legal support on hand to provide input in relation to contractual, finance and corporate issues should their tenders prove successful."
Steven Beahan, Partner