Public contracts have been shown in a negative light in recent history following the demise of construction firm Carillion, but they can still be a great way to scale your business.
The government spends billions to hire businesses large and small in the private sector to deliver a multitude of goods and services – like the construction of council housing and the collection of refuse.
The recent controversy over these contracts, also referred to as tenders, centre on whether the Government’s process for deciding when to outsource and its decisions on bids is fit for purpose.
The Government wants 33 per cent of its procurement spending to go to small firms by 2022
Some markets analysts accused the government of awarding contracts to Carillion in a bid to plug financial holes in what was effectively a sinking ship.
But for small and medium sized enterprises, they represent a way of securing a lucrative deal with a client with deep pockets that requires a large number of services.
The Government has set itself a target of spending £1 in every £3 on SMEs by 2022 through both direct and indirect spending as part of a wider effort to bolster the economy.
But how exactly can SMEs bid for and win these contracts?
We take a look.
Why work for the government?
The government is a good client to work for. It offers a plethora of contracts suited to an array of businesses, and their payments tend to be better honoured than in the private sector.
Bidding for these tenders is more straightforward than it used to be. In 2015, the Government introduced measures to simplify the public procurement process – including the abolition of the pre-qualification questionnaire for contracts under £100,000.
This reduces the amount of paperwork and time spent on a tender application.
To tackle the issue of late payments, the government mandates those in its supply chain to pay contractors and sub-contractors within 30 days.
To ensure accountability of this, all Government departments are required to publish the percentage of their invoices paid within five days and 30 days every quarter.
Where to find public tenders
You can source public contracts using the Contact Finder service on the Gov.uk website. The tool allows users to search for information about contracts worth over £10,000 with the government and its agencies in England.
Here, you can search for contract opportunities in different sectors, find out what’s coming up in the future and look up details of previous tenders and contracts
You can create an account to get email updates and save your searches.
Scotland, Wales and Northern Ireland have their own dedicated public sector procurement websites.
How the tender process works
There are four procurement procedures used to award contracts in the tendering process:
Open Procedure is the default choice. Here, any organisation can respond to the advertised contract notice, request/download the procurement documents and submit a tender.
The Restricted Procedure is split into two stages. The first involves creating a shortlist of suppliers that are likely to meet the tender requirements.
In the second, those shortlisted are invited to tender. These applications are then evaluated and the contracts are awarded.
All tenders are evaluated in line with the methodology and award criteria set out in the tender documentation.
Competitive Procedure is used for complex procurement where multiple solutions must be discussed with bidders before a formal tendering process can begin. This process is followed by an Invitation to Tender and contract award.
Competitive Procedure with Negotiation is applied in limited circumstances where the minimum requirement can be specified but negotiations with bidders are needed for the public body.
Some markets analysts accused the government of awarding contracts to Carillion in a bid to plug financial holes in what was effectively a sinking ship
Top tips to secure a government contract
The amount of tenders being awarded to small business is on the up – so much so that the government has set a new goal of 33 per cent having beaten its previous target of 25 per cent.
This is good news for SMEs but in order to fend off the competition, bidders need to submit an application which plays to their business’s strength and helps it stand out from the crowd.
We’ve asked Penny Godfrey of Proactis, which runs public sector contracts platform Tenders Direct to provide tips on how win a public tender. Here is what she said.
For any private sector business, big or small, expanding into the public sector is a big shift in culture.
Forget what might be the norm around pricing, it’s not up for negotiation and expensive marketing materials won’t count, which makes for a level playing field and helps create healthy competition.
As well as new processes, understanding the rules of engagement when it comes to public sector tendering is important: it can be challenging but once you have done a couple of bids, it will begin to become the norm.
Never miss an opportunity
It can be an excruciating thing to hear when a rival organisation has secured a hot business opportunity, especially one that might never have been on your radar.
That’s why it’s so important for SMEs to be signed up to a tender alerts service. It not only ensures you are aware of opportunities that are relevant to the services you offer but it also means you are able to meet deadlines and submit successful bids.
Learn the lingo
Understanding some of the terminology used in public sector procurement can be daunting, so it’s important to try and understand what different documents are for and to be able to use them in the correct way.
From PQQs and ITTs to SSQs and social value clauses, there are a lot of specific documents and processes that need to be understood. Getting your head around these in the first instance is time well spent.
Once you have a good understanding you can create your own collection of tendering documents, they are easily on hand for use in future opportunities.
Hone your writing skills
Writing a bid which has multiple sections and strict word counts can be really intimidating for SMEs who have not done anything similar previously.
The first thing to consider is training – there are some great courses and webinars which can help you develop your tender content to ensure you hit the high scores on the meatier questions.
Play the long game
Moving into new sectors can have its risks but in the long term can be worth it for new opportunities.
The mistake that many SMEs make when it comes to public sector tendering is thinking about the process as short term. You need to make it a central part of your business plan by building it in to your strategy and budget.
Finally, don’t give up
It’s easy for many SMEs to give up at the first hurdle. If you’ve had bids knocked back in the past, it’s important not to let this influence your future plans.
Seek as much feedback as possible from buyers, a detailed assessment of what you could have done better will allow you to take some time to regroup and will help reinvigorate you to try again and this time win.
Small Business Essentials