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Why are SME's treated differently (and some say unfairly) compared to larger companies when it comes to public sector contracts and tenders?

Jason • 14th Aug 2019
Why are SME's treated differently (and some say unfairly) compared to larger companies when it comes to public sector contracts and tenders?

The Tees Esk & Wear Valleys NHS trust had been hoping to have 6 companies on its framework. But, according to the Official Journal, only 3 companies; Esh Construction, Interserve and Kier submitted tenders.  All 3 won places on the framework. This raises some interesting points;

Why did only 3 companies submit tenders? We have lots of construction companies in the UK who should be able to meet the minimum tendering requirements, but only 3 companies submitted tenders. 

Why are other companies not interested in this work? Is the public sector procurement process too difficult, bureaucratic and time-consuming? Are the profit margins too small? Are the contract requirements not realistic? 

Questions need to be asked, why did only 3 companies submit tenders for this framework. What put off the other companies from bidding? We need competition in the supply chain to drive value and innovation. Can the framework be changed to encourage more companies to submit tenders?

Another big question for me. Is how did Interserve PLC win a place on this framework? Interserve PLC is currently in administration ( One of the sections in the PAS-91/PQQ (im assuming the PAS-91 or similar was required for the Tees Esk & Wear Valleys NHS Foundation health trust framework tender) is in relation to companies financial and operational status. If the purchasing authority dont have confidence that the supplier is in a position to deliver, due to their financial situation, they can be excluded from the tender process. 

I have seen this happen to SME's on several occasions and for good reason. But this same rule never seems to be applied in the same manner to large companies. Carillion is another example of where this rule was ignored and the consequences of this were laid bare for everyone to see.

Interserve PLC has also been suspended from Prompt Payment Code ( because it has failed to meet the minimum requirements to pay 95% of its supplier within 60 days. (They were suspended because they only managed to pay 86% of its suppliers within 60 days).

Interserve will get paid within 30 days by Tees Esk & Wear Valleys NHS Foundation. That is the law. But yet, Interserve suppliers will have to wait up to 60 days. But their past performance (hence why they have been suspended from the Prompt Payment Code) does not indicate that will happen for all their suppliers.

So to put that all into perspective, Interserve PLC is currently in administration and the government has acknowledged that they do not pay enough of their suppliers within 60 days. But yet, they are still allowed to bid on larger public sector contracts. I don't believe that SMEs are afforded the same level of when bidding for public sector contracts. 

I'm not singling out Tees Esk & Wear Valleys NHS trust, it just so happens this particular framework illustrates and encapsulates a lot of issues surrounding public sector procurement. It also shows how large companies (or at least on the face of it) are treated differently to SMEs.  

All this reminds me of the old adage; Everybody is equal, except some people are more equal than others.

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