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Better Access for Small Businesses to Public Sector Contracts?

06 February 2015 #Public Sector

As we are all painfully aware, the relatively slow pace of growth in the UK economy is a continuing concern, as it touches all aspects of our daily lives. When it is then considered that 99.9% of the UK’s businesses are SMEs, small businesses are crucial for growth.

Public sector procurement in the UK has an annual spend of £230bn. Marrying up public sector procurement with SMEs has the potential to create significant economic growth, as well as providing the public sector with a valuable add-on benefit of innovation and creativity, which SMEs can bring to the table.  

In its newly published Consultation report, the Government has announced that its Draft Public Contracts Regulations 2015 (“the Draft Regulations”), which will implement the new EU Public Sector Directive and repeal the Public Contracts Regulations 2006 (as amended) will now be implemented in early 2015, ahead of the required deadline of 18 April 2016.   The Consultation itself focused on areas where the directives allow policy changes to be made rather than the mandatory provisions.  

SMEs often find bidding on public sector contracts to be prohibitively bureaucratic, time consuming and expensive.   In an attempt to address this, the Draft Regulations contain measures aimed at ensuring that small businesses have simpler and better access to public sector contracts, including those that fall below the stated EU thresholds, by:

  • Publishing contract opportunities;
  • Providing information of below threshold procurements on the online Contract Finder portal; and
  • Prohibiting pre-qualification stages in below threshold procurements.

The usual access route for small businesses into the procurement market is via local authority framework arrangements or by the division of larger contracts into smaller value lots. Within the Draft Regulations there is no obligation on contracting authorities to divide contracts into lots. The Government found that some consultees called for the Draft Regulations to provide a list of permissible reasons for authorities for not dividing into lots. However, the Government has decided against the prescriptive approach as having a list would be restrictive, and instead has allowed Authorities the perceived freedom of continuing with the current practice of allowing choices for Authorities to provide their own reasons if they decide not to lot.  It is arguable, that this laissez faire approach to lots is inconsistent with the Government’s mantra through the Draft Regulations of allowing better access to small businesses through its measures of improved publicity of below threshold procurements and the abolition of pre-qualification stages for lower value contracts.

However, as is most often the case, the proof of the pudding is in the eating, and once the Draft Regulations are implemented, the effectiveness of the new measures in removing the existing barriers for small businesses bidding on public contracts can be tested and evaluated.

Carys Taylor
Senior Consultant
T: 0292 055 7561



This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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