Despite fears that cutbacks would limit public-sector procurement opportunities for companies, Ron Burges, chief executive of BiP Solutions, the Glasgow-based procurement consultancy, said that larger contracts were likely to be replaced by a substantial number of smaller ones. He believed that this would create new opportunities for small and medium-sized enterprises (SMEs).
“Any reduction in spending will see the very biggest projects scaled back, but will mean there will be more smaller contracts coming out. For example, authorities won’t be buying so much equipment, so there will be more maintenance work. We saw the same thing happen in the recession of 1989 to 1992.”
If this proves right it will be welcome news for SMEs, who have been highly critical of the trend towards centralising procurement contracts on the back of recommendations from the McClelland report three years ago. Colin Borland, spokesman for the Federation of Small Businesses, said: “At the moment the pressure is in the opposite direction. Some of the contracts have saved money, but we are concerned about the pressure going to segments where it’s less appropriate such as maintenance or services.”
Burges, whose company is hosting the Procurex conference for his sector in Glasgow next month, said that the authorities have seen more interest from prospective contractors as struggling companies look to make up for the drought in private-sector work.
This comes at a time when he estimated that contract values have fallen by up to 25%. This has meant that certain public sector framework agreements – where an authority chooses from a roster of preferred contractors – have floundered because they fix prices at levels that are now too high. Burges said authorities were retendering the work that they cover, forcing contractors under the framework agreement to go through a fresh selection process and potentially lose the business.
