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July 27, 2012

Could do better - FSB studies council procurement practices

Nearly half of UK councils don't know the size of businesses they are trading with and more than a third (38%) do not actively record the location of their spending. These are the findings of new research conducted by the Federation of Small Businesses (FSB).

And with UK councils spending £88 billion per year on procurement, the study shows that some councils could be much more focused on local economic development when they make procurement decisions.

The FSB polled all UK councils in a bid to find out how and where they spend their money. 148 local authorities responded and, according to the FSB, many councils said that over half their procurement spend went to small and medium-sized businesses. However, the study found that 49% don't know the size of business they trade with.

The average annual spend per council, the poll finds, is £185 million. The FSB says that councils must be more aware of what they spend and how they spend it in order to maximise the benefits to the communities they work for.

John Walker, FSB national chairman, said: "We were surprised that so many councils aren't being more proactive in terms of the how they record their spending. Knowing where spend is going in the local area, as well as what type of businesses are getting contracts, would help councils focus on improving their procurement processes and ultimately boost local communities by helping councils ensure their local small businesses are getting a fair chance to compete for contracts."

The FSB is calling for all local councils to:

  • Record and analyse where and with which businesses money is spent, measuring the size of business by micro, small and medium. The data should be transparent and publicly available;
  • Ensure they have initiatives to support small firms with the tender process and to develop the potential of their local small business supply base;
  • Streamline and standardise the pre-qualification processes, including specific approaches for the lowest value contracts;
  • Provide detailed and timely feedback to all unsuccessful businesses so they are in a better place to bid in the future;
  • Break contracts into smaller lots where possible;
  • Use the relevant national portal to advertise procurement opportunities.