"Bureaucracy and a culture of risk aversion within the public sector form barriers for smaller businesses wishing to trade with the public sector," said the FPB's Campaigns Manager, Matt Hardman. "The principles of the Government's procurement policy are clear, however, in practice, its implementation is a huge problem and smaller firms, which could often provide authorities with the best value for money, are excluded from the tendering process."

The FPB provided evidence to the Select Committee's inquiry, supported by case studies from a selection of the 25,000 small and medium-sized businesses it represents. It calls for government action to ensure that more contracts are awarded to smaller firms based on the principle of best value for money.

One FPB member, who wished to remain anonymous, said: "Public procurement bodies tend to put out contracts to facilities management consultants who charge a fee of between £250 and £600 – and sometimes more – just to have your name added to their database, with absolutely no guarantees of any work. [This is] a big cost to small business up front and it acts as a blocker, which I'm sure large companies love."

Mr Hardman called on authorities to avoid cutting corners for the sake of convenience, and urged the Government to reduce bureaucracy in order to level the playing field of the procurement process.

"Public authorities tend to bundle tenders together for convenience, when they could get better value for money by breaking them up and putting them out to tender individually," he said. "Breaking down contracts and reducing the bureaucracy involved would enable smaller firms to secure more public sector contracts and could save taxpayers' money."