Regional contractors in the area are fed-up with national firms scooping-up major deals after public contracts are bundled-up into bigger packages.
Now the North East Chamber of Commerce is putting pressure on councils to change their procurement methods which they claim are “strangling” local companies.
The NECC said local authorities currently spend £3.5bn buying services from the private sector but only 45% is awarded directly to firms in the area.
It said larger North East companies are squeezed from both sides – they are too small to be the main contractor but too big for subcontracting.
Ian Walker, chairman of Newcastle-based Surgo Construction, said: “As a local company with over 100 years of successful trading behind us, we have always supported the local economy and our track record demonstrates it is a policy that works.
“The changes to public sector procurement practices are particularly damaging for a company such as ours because we are now prevented from tendering for the Building Schools for the Future programme because our turnover is below the procurement threshold.
“This is despite the fact that we have successfully delivered four academies, ranging in value from £20m to £30m in the case of Excelsior Academy in Scotswood, Newcastle using local people.
“Instead, contracts are being awarded to national firms who do not have the same commitment to the North East’s long term prosperity and much needed revenue is travelling south.
“If like minded companies get together and support one another, sharing skills, knowledge and training, everyone can benefit and the public sector should surely support this viewpoint.
“It’s essential that we have a steady stream of employment opportunities coming through for young people as well as secure jobs for our existing workforce.”
Brian Manning, chief executive of Durham-based Esh Group, said: “NECC has hit the nail on the head. We have moved on from the phase of meet the buyer, portals for opportunities and workshops to prepare SMEs for bidding and it is now all about what’s in the pre-qualification questionnaire (PQQ).
“We have seen PQQs that are put together in such a way that they favour larger national companies and this needs looking at. Interestingly private sector organisations such as Northumbrian Water have a more balanced approach.
“Many North East companies do have the required skills and experience to submit competitive bids for many of the projects on offer but they struggle to get through the PQQ stage.
“As a North East Business heavily involved in motivating, raising aspirations and instilling work skills into young people in the North East, it’s not surprising that discussions in these areas in the main always come back to Procurement and the areas so well covered in this NECC paper.
“It’s obvious that it’s not just the survival of North East businesses that’s at stake but the future of the region and we must continue to pursue this cause with vigour.”