PUSHED OUT In association with ISME

Mark Fielding, CEO ISME, The Independent Business Organisation.

Bureaucracy and red tape is squeezing small businesses out of tendering processes with SMEs losing out on opportunities to tender for Government contracts worth millions, writes Mark Fielding

The public sector tendering process is failing small business, with SMEs losing millions in potential sales due to bureaucratic procedures and the State procurement officers’ preference to deal with bigger suppliers. This policy is radically reducing the States purchasing options and consequently providing bad value for money.

There seems to be a concerted effort across the board to make it as difficult as possible for SMEs to tender for public contracts. The administrative process is bureaucratic and cumbersome, using language that is alien to many owner managers of smaller businesses. The level of bureaucratic requirements is, in our view, restrictive and prevents many SMEs from participating in public contracts.

COMPLEX SPECIFICATIONS

Tendering documents, in most instances, are put together badly and take no cognisance of the practical realities of the company completing the tender document. Unnecessary information is requested and in many instances the technical specifications are too broadly drafted, with the tender documents designed by individuals with little experience in that particular field.

However, the area of main concern to SMEs in the public tendering process is the fact that a number of the agencies are showing a preference for bundling of contracts and using only a very limited number of suppliers, which are generally multi-nationals and bigger companies.

This is squeezing out SME suppliers from the tendering process. Consequently, there is a domino effect, as many SMEs do not even attempt to get involved in the process.

UNBALANCED COMPETITION

A recent ISME survey confirmed that 30% of SMEs had considered tendering for public contracts but decided against this, mainly because the process was too complex with too much information required and too much time involved. There was a general consensus that the contract would be awarded to a single large supplier in advance of the process beginning.

It is difficult for SMEs to compete on price alone but the indications are that many contracts are awarded on this basis. There is a strong view held by SMEs that the process is geared towards larger suppliers and achieving the lowest price as opposed to the best service offered, the ‘economically most advantageous tender’ (EMAT). This problem needs to be addressed before SMEs lose complete faith in the public procurement process.

ACCESS TO TENDER

Facilitating the access of SMEs to public tenders, and therefore putting more players on the market, will help to promote fair and effective competition and innovative solutions. This, in turn, would benefit public authorities.

There is no doubt that a serious educational and promotional programme is required to address many of the issues outlined above and to help develop relations between SME suppliers and public sector purchasers. This will work to the benefit of all parties and should help ensure greater ‘value for money’ in a process that spends a considerable amount of taxpayers’ funds. This is not the case at present and consequently the taxpayer is losing out.

Published in the October 2007 Issue of Irish Entrepreneur