The government is being urged to take action that will allow small businesses to gain easier access to lucrative government contracts.
A World Trade Organisation agreement is holding small businesses back, according to the Forum of Private Business (FPB), by forbidding a redressing of the balance that gives large businesses the advantage in the procurement process.
The government and EU Commissioner Peter Mandleson are under pressure to follow the lead of Japan, Canada, the USA and South Korea, by favouring an opt-out of the Agreement on Government Procurement (GPA). The favouring of small firms in the procurement process is forbidden under this agreement, which is set to last 10 years.
The FPB has drawn attention to disadvantages smaller firms face in gaining government contracts, such as a requirement to produce three years’ worth of accounts, which has caused a ‘derisory proportion’ of small businesses to acquire contracts.
In this unfair environment, they should be compensated with a guarantee of a certain percentage of the contracts, a FPB spokesperson said.
David Cameron, the leader of the Conservative Party, last week pledged to set aside 25% of government contracts for small companies if elected.
However, Martin Smith, the FPB’s European spokesperson, warned that “The Tories will be powerless to keep that promise until at least 2016 unless Tony Blair and Peter Mandleson act now.”
Tory MEP Syed Kamall, of the European Parliament’s Committee on Trade, said:
“Small businesses and entrepreneurs are the backbone of our economy, yet the government shuts them out of a potentially lucractive market.”
A spokeman from the FPB added: “This could improve efficiency for the government also. The biggest companies are not always the most cost effective.”
© Crimson Business Ltd. 2006
