SME’s risk being shut out of public contracts

SME’s risk being shut out of public contracts

John Forbes, General Manager of TSL Contractors Ltd, has written a guest CECA Scotland blog about how Scottish SME’s could be adversely affected by the overly complex procurement practices coming down the line via the £30bn Crown Commercial Services Construction Works ‘Vehicle’ which will cover public sector work across the whole of the UK.

The Crown Commercial Service is soon set to launch Europe’s biggest ever construction procurement Framework, covering public sector work right across the UK. There is no doubt that this will have major implications for SMEs in Scotland and across all regions of the United Kingdom, potentially shutting out many from bidding for public sector contracts and certainly increasing the cost of tendering.

Already, for most SME’s, the cost of participation in these types of framework is ever increasing as they evolve and the requirements necessary to satisfy the prerequisites within the documents grow. It takes considerable time and precious resource to participate in these procurement exercises, frequently with no clear indication as to what commercial opportunities, if any, will be available should contractors be successful and included on the frameworks.

A recent CECA briefing on the new £30 billion framework raises concern that if contractors do not participate there is every chance they may be excluded from public works over the coming years and that is a serious worry for SME’s.

We are already seeing the detrimental impact of the trend towards the use of large framework contracts.During recent months, we have seen a plethora of frameworks issued or notified by local authorities, procurement bodies, public bodies and housing associations covering defence, public, construction and civil engineering work as well as housing. During this period, we have had to decline opportunities as there are just too many to participate in and we do not have the resource nor finance available to participate in all prospects. This is impacting on SME’s right across our nation.

In our experience we have seen clients abandoning frameworks following the completion and submission of documentation due to a change of circumstance or incorrect procurement procedures being followed. On other occasions we have been fortunate and awarded work from clients despite not being one of their approved framework contractors. We have also experienced frameworks where little or no work is issued over the term. These factors erode your confidence and make you question the benefits of participating. However, you are ever mindful of the potential which may be missed if you do not.

The burden of working under the threat that one may be excluded from potential works from years to come is not to be taken lightly and having to participate in numerous exercises all with differing requirements is frustrating and costly. If the Crown Commercial Service and the UK Government do proceed along this route of reduced volume but potentially enormous frameworks, then it may destroy smaller firms, who simply do not have the experience or resource to participate in these exercises. It may also harm SME’s if they miss or make an error in one submission resulting in the possible exclusion from millions of pounds of works for years to come.

Surely it is not unreasonable to expect the UK Government to issue and adhere to a clear policy, which provides reasonable opportunities for firms to participate in construction works across the various sectors and regions in the UK, without multiple overlapping agreements being continually issued or the high risk route of one or two huge frameworks being adopted where a small number of multi-national firms will undoubtedly benefit, to the detriment of SME’s that are the lifeblood of Scotland’s civil engineering sector.

John Forbes, General Manager, TSL Contractors Ltd