Large companies are nearly twice as likely to win government contracts than smaller businesses, claims a new report.
When it comes to providing goods and services to local and central government it seems size matters.
Figures released by the Federation of Small Businesses (FSB) reveal that only 38 per cent of businesses with an annual turnover of under £25,000 are successful in securing government contracts, compared to 65 per cent of firms with a turnover of over 1 million.
The figures will put further pressure on the government, which last month promised to “level the playing filed” in terms of procurement as a means of promoting UK enterprise.
However, at present only one in five businesses with a turnover of £25,000 sells anything to central government, compared to two in five businesses that boast a turnover above £5 million.
The FSB believe the reason for such imbalance lies with the inherent anti-competitive nature of the procurement process, which they believe distort the market.
The lobby is calling on the Office of Fair Trading (OFT) to conduct a market study to gage the extent of which small firms are being locked out.
Central government spends £13 billion a year on products and services, while local authorities spend a further £42 billion, a pie which small businesses want a much bigger piece of.
Tina Sommer, FSB Trade and Industry Chairman, said: “Despite the numerous government reports and initiatives, the ability of a business to win a contract with the public sector is still directly related to its size.
“The time has come for the OFT to finally ensure that small firms get a fair share of the £117 billion of taxpayers money the public sector spends each year.”
The 2002 Enterprise Act enables the OFT to conduct market studies, with a possible outcome being a full investigation in the Competition Commission and the way contracts are awarded.
