13 Apr 2012
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Survey: councils do use SMEs

NIEP survey flies in face of claims that smaller contractors lose out, reports Michael Glackin

A survey of local authorities appears to refute criticism from small contractors that they are squeezed out of local government contracts.

The survey, carried out last year by the National Improvement and Efficiency Partnership for the Built Environment (NIEP) – an umbrella group for improving procurement in local authorities – looked at NIEP member framework agreements at about half the UK’s 400 local authorities. It found that 85% of subcontractors employed through such frameworks were small or medium-sized businesses.

The survey also found that 75% of the money spent by authorities in these framework agreements is spent through construction SMEs and that 67% of subcontractors engaged were local firms. The figures represent work given to SMEs in all aspects of the supply chain.

Michael Lee, project manager with Hampshire County Council, whose chief executive Andrew Smith pioneered the NIEP, said: “All the evidence indicates local authority NIEP frameworks show a high degree of SMEs and local supplier participation. In order to get onto a NIEP framework contractors have to show how they provide real local economic benefit.”

Lee added that although large contractors that win NIEP frameworks can use their own suppliers, they are encouraged to work with local firms.He said: “The pressure from local councillors to show these contracts are providing benefits to the local economy and businesses is quite intense.”

The findings are in stark contrast to a Construction Manager survey that revealed more than three quarters of small and medium-sized contractors believe they are being excluded from government and local authority contracts.

Commenting on NIEP’s figures, National Federation of Builders policy manager Paul Bogle said: “NFB research on winning work in 2010 showed that 79% of our members were finding it harder to win work with local authorities. We have a current survey out with suppliers, local authorities and framework operators, so it will be interesting to see if our updated results align with those of the NIEP. Of more interest is the benchmarking work NIEP is doing as part of the government construction strategy. This will provide a more comprehensive picture.”

The government has said it is committed to increasing the number of small and medium-sized businesses involved in public sector contracts.

Last month Cabinet Office minister Francis Maude unveiled measures aimed at enabling SMEs to participate in public sector contracts. Companies that have won large framework contracts, including Amey and Balfour Beatty, will have to publish subcontracting opportunities on government website Contracts Finder.

n The CIOB and Construction Manager have launched a survey to gather views on the government construction strategy, a year after implementation. The strategy aims to cut construction costs by 20% over the life of the Parliament and covers BIM, procurement, SME access and the supply chain. The results will be in the May edition of CM. Go to http://constructionstrategyCIOBCM.questionpro.com to complete the survey.