A move like this would ensure the government gets better value for money and would also help small firms in the credit crunch.

The FSB states the British Private Equity and Venture Capital Association and the Confederation of British Industry agree with this notion, after research found nearly three-quarters of small businesses do not bid for public sector work.

John Wright, national chairman of the FSB, says: ‘Small businesses should be made aware of the practical steps they need to take to improve their bids.’

He adds currently the smaller firms are ‘at a disadvantage’ when competing against larger companies.

The government needs to implement moves to ensure these companies are represented fairly as they ‘offer great value to communities’, Wright says.

Small firms can apply to receive information on contracts in their area from the government free of charge.