The latest Atkins Investigation in Smart Highways suggests that small firms are missing out on Government contracts because of onerous procurement rules.
The report spoke to a number of experts in the industry, including a former Transport Minister and businessmen who run small companies.
“We have to produce far too much paperwork just for a few thousand pounds worth of work,” says leading British consultant Andy Graham of White Willow Consulting, “The PQQ process to select tenders for a next stage often has substantial costs. Frameworks do help reduce this and should be used more, but need to be more SME friendly.”
Nick Hewitson, who until recently ran Smart CCTV agrees saying tenders “will often state as part of the conditions that the price bid must be no more than a predefined percentage of the bidders last year’s turnover. On the reverse side using small companies with weak balance sheets can increase the risks in that they can go bust mid project, however it is not only small companies that can get into financial difficulties as recent experience in the industry has seen.”
And Mr Graham adds that rules on indemnity cover also act against small companies hoping to get Government work: “Quite often I am seen as too small a business even for a few weeks of work. And because we don’t have enough turnover to get £5m of Professional Indemnity cover, we can’t bid for £5,000 of work. This is actually often the real challenge – I might do a piece of advice where the risks are low and the downside of it going wrong infinitesimal, but clients impose the same level of PI as if I was designing a product. If the project is worth £5m if it goes wrong then surely its worth more than £5k to the client.”
The investigation also looks at how things are done in the US, whether the process is too complicated and how fast-moving technology can mean the process is out of date before it is completed. It will appear in the next issue of Smart Highways, out in September.