Small businesses, including limited company contractors, could benefit if the Ministry of Defence rethinks the way it deals with SMEs, according to a new report by the FSB.
There are at least 9,000 small firms selling to the defence industry in the UK. Despite this, 90% of the UK’s defence export contracts go to the 20 largest companies in the sector. One reason for this is that more than 50% of small businesses feel they do not have the time or resources to tender for government contracts.
The FSB claims that the MoD fails to recognise small businesses and does not provide the support necessary for them to compete on an equal footing with larger suppliers. The Ministry has a shortage of project and commercial management skills which leads to inexperienced junior civil servants dealing with procurement. One member of the FSB spent £50,000 preparing a bid and then discovered it was completely ignored by the procurement team.
D30, a small business based in Brighton, won a development contract worth £100,000 from the MoD in 2008. The contract was to design a helmet liner similar to one it had created for ski clothing. However, the MoD has still not invited tenders for such kit and D30 is now in supply discussions with other country’s armed forces.
Things might be about to change, at least for a very small proportion of small businesses. The Ministry of Defence is planning to consider SMEs as subcontractors for six regional construction frameworks.
The deputy chief executive of Defence Estates, David Olney, said they recognise that smaller businesses can contribute to this project, alongside national and multinational companies.
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