A survey analysing the changing picture of public sector procurement has been published by the National Federation of Builders (NFB).
The survey, which questioned over 450 contractors, was commissioned by the SME group of the Construction Strategic Forum to gain a deeper insight into how billions of pounds of central and local government construction work is awarded to firms. In particular, they wanted to assess the impact of framework agreements - the process whereby authorities roll smaller projects into a handful of larger contracts.
Three per cent of firms with sales under �500,000 report that they�re
carrying out more public sector work than five years ago, compared with
more than a quarter (26 per cent) of those classified as large (T/O �25
million to �60 million ). See below.
Change in public sector work over the last five years by turnover.
The survey also found the smallest firms were less optimistic about
winning new public sector contracts, with only five per cent predicting
that they�ll be doing more local authority work in the future. This
compares to 20 per cent of larger businesses. See below.
Predicted change to public sector work by turnover.
In response to changing procurement methods, forty per cent of firms that had been affected by framework agreements reported they had started to explore new markets outside the public sector.
Eight per cent said that they had reduced trainee numbers as a result, 10 per cent had started employing specialist bidding teams, while 18 per cent stated that they were providing additional staff training.
Eleven per cent of respondents said they had formed consortiums or partnerships with other businesses in order to compete more effectively with larger companies.
Julia Evans, chief executive at the National Federation of Builders said: �Changes in the way the public sector procures affect all parts of the industry. The survey highlights some of the important factors affecting companies in the SME sector. Our task now is work closely with the public sector to help strengthen links between the sector and SME companies so essential to the economic health of local communities.
�The picture isn�t clear cut. Procurement is evolving quickly and experiences are different across the board. There are organisations suffering as a result of changes and the introduction of frameworks, however there are also a number of cases where small firms have successfully fitted into larger organisations� supply chains.
�More and more contractors are responding by investing more in training and developing partnerships with like-minded businesses. There were some encouraging signs unearthed by the study, but hopefully this report will be a catalyst to others who haven�t already taken the necessary action that they needed to.�
Ends
About the research:
The research was conducted during earlier in 2007 amongst members of the
National Federation of Builders.
Key findings:
- Out of a survey of 462 firms, 320 said that they were currently undertaking public sector work.
- Small contractors report large reduction in the amount of public sector work undertaken.
- Small contractors less confident than larger counterparts about future public sector work.
- 78% of smallest firms say new procurement methods have led to a decline in work.
- 40% of businesses forced to explore new markets following procurement changes.
- 12% of businesses said they have had to downsize as a result of new procurement methods.
- 11% said that they have had to form consortiums/partnerships in order to survive.