Counting the cost of council contracts

Small firms bidding for contracts from local councils are facing significant costs in the shape of charges from accreditation companies says the Federation of Small Businesses (FSB).

Local councils are using the accreditation companies as a means of vetting companies that want to win council contracts. These accreditation companies charge firms an annual fee, sometimes of more than £500, to be on their list of approved bidders. This is despite the fact that many firms only bid for one or two contracts each year.

The Government recently called on councils “to encourage a diverse and competitive supply market, including small firms,” but the FSB is concerned that at present there is very little practical advice about how to do this. As a result local councils are turning to private companies to set up and run lists of approved suppliers on their behalf.

Aside from the annual fees they have to pay, many small firms are unhappy about having to deal with accreditation companies because it is unclear who monitors the work of the accreditation companies to ensure consistency and because a history of good and reliable service is often ignored.

“I have some sympathy with councils because in many cases they are trying to encourage bids from small firms but are unsure of the best way to go about it. But approved lists, excessive paperwork and a raft of different entry requirements are really not the answer. Using third parties puts another layer of bureaucracy and cost in between councils and small firms and shifts the cost burden onto business,” commented FSB Trade and Industry Chairman, Tina Sommer.

See also: Public procurement portal for small firms

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