18 December 2006 | Helen Gilbert

The paperwork and hours involved in public sector contract bids deter many small businesses from applying, new research has shown.

Of 600 small and medium-sized enterprises surveyed, more than three-quarters described the application process as "unfair". The findings from Tenon Forum, a thinktank established by business advisers Tenon, showed that 81 per cent of organisations with between five and nine employees felt excluded, as did 68 per cent of larger businesses, with workforces of 200 to 499 employees. They blamed the time and labour needed to apply, inexperience of bureaucrats managing the process and the suspicion that decisions are already fixed before companies are invited to tender.

Adrian Rutter, Tenon director of government and public sector services, said: "The processes involved in public sector procurement require a mass of resource, so it's no wonder that particularly small companies, where time is such a valuable asset, often feel excluded."

Martin Williams, managing director of advisory group European Business Solutions, said experience had taught his firm a few of the tricks often employed by contracting organisations. He said public organisations have to prove that any contracts awarded have been won competitively. This means that even if the contractor knows exactly who is best for the job, they still have to invite other organisations to pitch.

"When we receive invitations to pitch with just two-weeks' notice, we suspect we're only being invited to make up the numbers," he said. "In this situation we often decline the invitation."

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