The Federation of Small Businesses (FSB) has found small businesses "still fighting an uphill battle" to become suppliers to the public sector.
The membership and lobbying organisation wants the government to do more to remove "unfair" barriers that block smaller firms from winning contracts, noting that the the government's targets for SME public procurement are unlikely to be met.
According to a new report, each year UK public sector organisations spend more than £200bn on goods and services, yet only 23% of small firms made sales to public sector customers in the past 12 months - a decrease of two percentage points from 2014. Moreover, the number of small business that "had expressed an interest in competing for a public sector contract in the past year" was just 10% - a decrease of four percentage points.
The FSB believes the government has much to do if it is to reach its target of a third of all public sector contracts going to small firms come 2020. FSB national chairman, Mike Cherry, said: "Opening up the public sector market is a win-win, because small businesses create jobs and growth. Overwhelmingly, they're the route that people take to get out of unemployment, while creating greater competition, leading to better value for money for government."
The FSB also believes making sure small firms win more public-sector contracts could benefit local economies throughout the UK. According to its research, 63p in every pound that goes to a small business is spent locally.
Cherry added: "Despite government efforts to reform public procurement practices, most small businesses still face a fixed system that is preventing them from getting a fair share of public contracts. Our report shines a light on how local authorities are getting around their obligations to clearly and fairly advertise contracts, which could go to local smaller firms.
"In the next few years, work will begin on major infrastructure projects across the UK, which will bring a vast number of public-sector contracts. Smaller firms must be given the chance to secure these opportunities; it's not acceptable that they should continue to be effectively excluded from the process. The government must take another look at reform to make procurement fairer, simpler and more transparent."