The economic downturn could be improved if the government awards more contracts to smaller businesses, according to the British Private Equity and Venture Capital Association (BVCA), the Federation of Small Businesses (FSB) and the Confederation of British Industry (CBI).

The three organisations have released survey of more than 500 small- to medium-sized enterprises, which reveals nearly three quarters of entrepreneur-led businesses rarely or never bid for government work.

More than three quarters of respondents believe it’s still difficult to find out about government opportunities, more than half feel the tendering process and timescales require too much resources to respond effectively, while nearly three quarters of SMEs feel that there is a lack of responsiveness and too much formality in the procurement process.

The findings come despite Alistair Darling's pledge to provide greater assistance to SMEs to win government contracts in this year's budget.

The BVCA, FSB and CBI are calling on the government to rapidly develop proposals to ensure a greater proportion of public sector contracts are awarded to SMEs, believing it will benefit the wider business community, the economy and local communities.

BVCA chief executive Simon Walker says: “Over 90 per cent of the companies in which our members invest are SMEs. Helping them overcome obstacles to winning public sector business will bring significant benefits both to small business and, we believe, to government as well.  

“We are making a number of formal requests to government to create a more balanced and fair procurement process and to allow more small companies to win a greater share of their contracts."

Caroline Plumb, the co-founder of consultancy FreshMinds that conducted the research, adds: “Value for money, flexibility, and innovation are major advantages in public sector delivery – and are all areas in which SMEs come into their own. By levelling the playing field, tendering becomes more competitive; a boon in any sector.”

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