New rules have been implemented by the European Union to improve public procurement for small and medium-sized enterprises (SMEs) with a number of legislative changes to current rules.
Key points outlined with the new EU Public Contracts Regulations have been designed to facilitate the participation of SME firms in public procurement. The most obvious of these will encourage contracting authorities to break contracts into smaller lots to make the inclusion of SME firms more viable. This change could see SME firms take greater control over projects instead of making up another link in the supply chain.
This policy has garnered the support of the Federation of Master Builders (FMB), which has long called for a policy to deliver benefits to the SME sector of the construction industry.
Brian Berry, chief executive of the FMB, said:
“The new EU obligation for public sector clients, including local authorities, to break down their contracts into smaller lots should help small construction firms win more public sector work. This means small firms can once again act as the principal contractor on smaller contracts rather than having to form part of the supply chain. This is important because working for large construction firms is not appealing for many SMEs as they are unwilling or unable to cope with late payment which is still a major problem in our sector.”
The new EU rules will also introduce a turnover cap to further encourage SME participation. Contracting authorities will not be able to set company turnover requirements at more than two times contract value except where there is a specific justification.
Local authorities will also be required to publish any procurement opportunities worth over œ10,000 on Contracts Finder, a new service designed to allow firms to search for new Government opportunities.
Contracting authorities will also have to pay invoices submitted by the contractors within 30 days, as well as publish their payment performance online to promote transparency.
All of these measures have been designed to offer small businesses better opportunities within the public procurement sector by simplifying public procurement, increasing transparency and reducing bidding costs.
Mr. Berry added:
“Public contracts account for almost 40% of total construction output but in recent years, small and micro firms have been increasingly losing out to the big players. It is essential that the new Rules are implemented promptly so that small firms can begin to benefit, which in turn will unleash the potential for much needed economic growth in all parts of the UK.”
Other new regulations include the launch of an Innovation Partnership scheme to allow suppliers and local authorities to jointly develop a new service or product, and the inclusion of full life-cycle costing considerations when awarding contracts. This could encourage more sustainable and greater value procurements, which might save money over the long term despite appearing on initial examination to be more costly.
To find out more about the new EU changes, click here
