He added: "So you would have had to turn over £400 million to bid for that contract, which could just be worth £20 million over ten years."

Updata had been the previous supplier to Dorset for its wide area network (WAN) but due to the guidelines under the new tender, it lost the contract to KCOM.

"We provided that WAN to Dorset, to the same number of sites, 90 percent the same technology throughout, at an annual cost of £820,000 a year. We had been doing that since 2004 when we turned over just £1.6 million a year and employed about 16 people. Suddenly the bar has been set somewhere else," said Bennett.

"Don't just come up with arbitrary figures - companies could be turning over X amount, but could be losing money hand over fist. In the local authority's eyes it's okay, as long as you are over the limit. A company could be doing 95 percent turnover selling boxes, what use is that if a local authority is looking for a managed service?"

He added: "It's very foolish, short-sighted and it's not fair."