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FSB says public sector contract changes must not put up ‘barriers’ for small firms

The collapse of Carillion shook public confidence in outsourcing of public sector contracts and services. Picture: PA Wire

The collapse of Carillion shook public confidence in outsourcing of public sector contracts and services. Picture: PA Wire

PA Wire/PA Images

Small businesses in the region are hoping a shake-up of the public procurement system which could help them score more contracts will not end up putting more “barriers” in place.

David Howell, East Anglia area lead for the Federation of Small Businesses. Picture: Ian BurtDavid Howell, East Anglia area lead for the Federation of Small Businesses. Picture: Ian Burt

Cabinet minister David Lidington has announced changes to the way public sector contracts are awarded, with bidding businesses now required to demonstrate the “social value” of their operations.

It follows the collapse of outsourcing giant Carillion in January, costing thousands of jobs and leaving many smaller sub-contractors out of pocket.

The Federation of Small Businesses (FSB) in East Anglia has previously called for the public procurement system to be made more accessible to smaller contractors.

FSB area lead David Howell hopes the changes will not cause more problems than they solve for small businesses.

“Bringing fairness and openness to public sector procurement will lead to better value for the tax payer and society,” he said.

“However, the devil is in the detail and it is important that new requirements don’t amount to a new barrier to small businesses winning contracts.”

He added: “We welcome the government recognising the value of opening up public sector contracts to give smaller businesses a fair chance of competing.

“The Carillion saga highlighted the dangers of government relying on a few major suppliers – with dire consequences if any one of them fails.”

The changes to the Social Value Act 2013 on Monday will require businesses seeking public sector contracts to show how they are tackling challenges like the gender pay gap, ethnic minority representation and modern slavery.

Mr Lidington said the measures will help to ensure “that contracts are awarded on the basis of more than just value for money” and should lead to a more diversified outsourcing market.

In a speech to the Reform think tank Mr Lidington defended the outsourcing of public services as a method which could give the public sector access to specialist skills, deeper knowledge and greater creativity. But to “restore public confidence” in outsourcing he said the government would have to make sure it did so “fairly and wisely”.

New cyber security standards for public sector contractors are also being introduced in the wake of global attacks like the Wanna Cry ransomware.

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