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PQQ Nightmare to end for SMEs

sme small businessPQQ – the pre-qualification questionnaire -three words to strike fear into any small business.

But that huge obstacle to small business participation in government contracts is soon to be abolished for contracts below the EU threshold.

Lord Young of Graffham, enterprise advisor to the Prime Minister explained:

“PQQs have been found to be onerous by small businesses, often imposing more than 40 pages of questions before they can be considered for bidding for a contract.

“We will be making the whole procurement process transparent and open and will shortly announce further steps to enable small firms to compete for public sector contacts on a more equal basis.

“I am expecting that this will dramatically reduce the red tape involved in tendering for public sector contracts”

The long overdue abolition of PQQs comes into force this month.

The abolition is not total however. Indeed for those contracts worth more than the EU threshold PQQs will still be operated however these will be standardised, with a focus on significant simplification.

This will be welcomed by businesses of all sizes as even against the continent wide malignity of the PQQ, efficiency with which UK government tenders were managed was significantly worse than the EU average.

UK Longer than EU

Indeed in 2014 the UK took 53 days longer than the EU average to complete an EU-compliant tender.

Ironically it has taken Lord Young five years to complete his ‘Report on Small Firms’ something that perhaps doesn’t bode well for a speedy resolution for small businesses woes in dealing with public sector contracts. However a further strand in Lord Young’s proposals focus on the scandal of late payments by big business to SMEs.

Vince Cable has already moved to tackle the private sector calling for organisation such as the Federation of Small Business (FSB) to be equipped with powers to challenge companies operating unfair payment terms as well as being able to bring group claims against errant businesses.

Vince Cable, the business secretary, said:

“Large companies using their economic might to impose unreasonable terms on their suppliers causes real problems for small businesses. It is a significant issue and there is agreement that we need to keep the pressure up to bring about real change.”

It is not however only the private sector that is guilty of exploiting SMEs in their payment terms, one third of public sector bodies still take more than 30 days to settle their bills. However, as of this month, all public bodies will have a legal duty to pay within 30 days and ensure those terms flow down the entire procurement chain.

John Allan, FSB chairman said:

“[Lord Young’s] report underlines many of the issues we have made real progress on – not least the streamlining of public procurement for small firms, and the establishment of the British Business Bank. However, there are still many areas that need further work, such as poor payment practices and a fundamental reform of business rates.”

Let’s hope we’re not waiting another 5 years for further action.