Leaders of the National Federation of Builders want to see new guidelines from the Cabinet Office and the Local Government Association about the use of agencies.

Research by the federation found that 13% of local authorities were using credit reports as the basis for a ‘pass or fail’ judgement for public contracts.

Julia Evans, chief executive of the NFB said: “The use of credit reports as the sole or principal means of assessment can lead to SME contractors being discriminated against as this approach fails to take into account variations in smaller contractors’ accounts.

“The NFB wants to discourage the use of credit reports in this way.

“Such usage wields CRA reports as an unnecessarily blunt instrument for deciding who passes and who fails in the tendering process and does little to support the very good and supportive practices of many local authorities.”

The Cabinet Office said: “We see the report’s endorsement of the PAS 91:2013 standard, which has been produced with the aim of streamlining and reducing the cost of pre-qualification in construction procurement processes, as a clear means of ensuring that all potential providers, whatever their size or constitution, are treated fairly and with equal diligence during the financial appraisal process.”

Jim Bligh, head of public services at the CBI, commented: “High-quality procurement can be an important driver of growth and is essential to ensuring good public services at a time of lower public spending.

“There has been progress in local authorities creating opportunities for SME suppliers directly, or through supply chains – but more needs to be done.

“This report shows that some local authorities are using credit checks as a blunt instrument to manage their suppliers. What is needed is sharper, more targeted engagement with the market that ensures the best providers can provide.”

The NFB is now calling for

• the government to undertake a full review of procurement practices across bodies in receipt of public money in order to find ways of improving SME access to contract opportunities;
• greater use of the PAS 91 common set of pre-qualification questions to simplify the tendering process and reduce costs on all sides. PAS 91 has been revised to allow clients to add their own questions, provided they are not project-specific questions;
• more systematic provision of feedback for below threshold contracts to ensure transparency and allow contractors to improve their performance;

• higher standards in public procurement through wider sharing of good practice and a high standard of education for aspiring procurement professionals;