SME experience of public procurement:
• Nearly three-quarters of SMEs rarely or never bid for public sector work
• Over three-quarters of SMEs believe that there is a lack of visibility of
public sector opportunities
• Over half of SMEs feel that the process of tendering for public sector contracts
requires more time and resource than their business can allow
• Over half of SMEs expect the proportion of their revenue coming from the private
sector to increase in the next two years but only one in five SMEs expects their revenue
from the public sector to increase within the same period
• On average, SMEs find the private sector easier to sell to than the public sector –
their rate of success in winning private sector contracts is double their rate of success
in winning public sector contracts
• Nearly three-quarters of SMEs feel that the public sector is more difficult to deliver work
to than the private sector, due to its greater formality, a lack of responsiveness and
unrealistic timescales
• Nearly three-quarters of SMEs rarely or never bid for public sector work
• Over three-quarters of SMEs believe that there is a lack of visibility of
public sector opportunities
• Over half of SMEs feel that the process of tendering for public sector contracts
requires more time and resource than their business can allow
• Over half of SMEs expect the proportion of their revenue coming from the private
sector to increase in the next two years but only one in five SMEs expects their revenue
from the public sector to increase within the same period
• On average, SMEs find the private sector easier to sell to than the public sector –
their rate of success in winning private sector contracts is double their rate of success
in winning public sector contracts
• Nearly three-quarters of SMEs feel that the public sector is more difficult to deliver work
to than the private sector, due to its greater formality, a lack of responsiveness and
unrealistic timescales
Practical steps to increase SMEs’ chances of winning public sector contracts.
Step 1 Be in the know If you don’t know about an opportunity you won’t win it; so ensure you are investing time in searching for and identifying useful contract opportunity gateways. Also, do your research and find out which public authorities have previously utilised the type of services you have to offer.
Step 2 Be selective Focus your energy by being selective about those opportunities for which you wish to express an interest. The scattergun approach will only cost you additional time and ensure that you do not commit the correct level of attention and resource to each tender response. Seek to tender for smaller contracts first. This may help you to gain experience with the public sector and provide reassurance to other public bodies that you understand what is important to them. The requirements for smaller contracts may also be easier to meet. Certain types of public procurement bodies, such as local authorities, are more open to bids from SMEs and could be targeted as a priority. As a rule, local authorities are more likely than most central government bodies to award contracts to SMEs as they are aware that the local economy can be helped through contracting on a local basis.
Step 3 Size matters Remember that public authorities will wish to be confident that you can deliver, so are unlikely to invest a high-value contract with a company with a relatively low turnover. As a rule of thumb, you could consider not tendering for contracts that are worth more than 25% of your current annual turnover. However, check how long the contract is expected to be let for – for example a contract with a value of £500,000 and a duration of three years has an annual value of around £166,000 – which could be within your reach.
Step 4 Invest before you bid You need to be clued up on the requirements of the public sector tendering process. Read the public procurement regulations and attend seminars and events that provide an insight into the tendering process. A lack of understanding of the procurement process will undermine the quality of your bids. Invest in putting together a dedicated team with the right skills and time available to understand how the process works. This will enable you to maximise your chances of being successful. It is important that you familiarise yourself with the rules governing public procurement because the size of the contract will affect the method by which public organisations procure their services. You also need to be aware that there will be subtle variations between organisations – for example, where they set their limits – so that a contract which does not need to be competitively tendered for in one borough might well require competitive tendering in another.
Step 5 Build strong relationships
Getting to know your clients, their ethos and needs is vital as is building
personal relationships with key people within the public bodies you wish to
work with. While SMEs have to work extra hard to engage in a personal
relationship with the potential client, they do have the benefit of being small
and therefore less impersonal than large organisations.
Step 6 Develop an effective marketing campaign
Approaching public sector organisations before they actively advertise
contract opportunities can be a good way to get on their radar and make
them aware of the sort of products/services your organisation offers.
Upstream marketing with key public sector agencies will raise your profile so
that your business name will be in their minds when they tender contracts.
Step 7 Build a standard PQQ response
The process that all public authorities will undertake has many similarities
so if you have your responses to the common Pre-Qualification
Questionnaire (PQQ) material prepared in advance, you can then tailor this
information to answer the PQQ on a tender-by-tender basis and save time.
Step 8 Build a tender toolkit
To save time and resources, develop a tender toolkit from which you can
lift and amend sections of text as necessary. Although no two tenders are the
same and there is no standard format used by central or local government
organisations, many ask for the same information. After every tender, refine
your toolkit utilising lessons learnt. Always check to ensure that text you have
reused is completely appropriate to the opportunity you are responding to.
Step 9 Engage with target clients
Suppliers that have shown interest and built strong relationships with
public bodies are those that stand a stronger chance of being considered
come bid time. It may seem quite obvious that a conversation with a person
will yield more information than the tender document but it is important not
to underestimate how true this is.
Step 10 Identify and use support schemes
SMEs should explore the use of national, regional, local government or
independent support schemes that can offer advice, training or other support
to SMEs looking to bid for public sector work.
Step 11 Meet the client’s needs
The rigours of the public procurement process demand that suppliers
are incredibly diligent about meeting all the requirements of the procurer.
Suppliers should ensure that they can meet all criteria, and their proposal
should reflect this in detail.
Step 12 Combine expertise with innovation
There is recognition by government that new products can potentially
deliver better value for money than those that are tried and tested, and
so a more outcome-based approach to procurement – rather than simply
a cost-effective, single-solution approach – is being applied to contracts.
It is recognised that SMEs are able to provide innovative solutions and
value for money. If you have an innovative solution, seek the permission
of the client to offer it. However, ensure that when you present an
innovative solution it is not perceived as a risk.
Step 1 Be in the know If you don’t know about an opportunity you won’t win it; so ensure you are investing time in searching for and identifying useful contract opportunity gateways. Also, do your research and find out which public authorities have previously utilised the type of services you have to offer.
Step 2 Be selective Focus your energy by being selective about those opportunities for which you wish to express an interest. The scattergun approach will only cost you additional time and ensure that you do not commit the correct level of attention and resource to each tender response. Seek to tender for smaller contracts first. This may help you to gain experience with the public sector and provide reassurance to other public bodies that you understand what is important to them. The requirements for smaller contracts may also be easier to meet. Certain types of public procurement bodies, such as local authorities, are more open to bids from SMEs and could be targeted as a priority. As a rule, local authorities are more likely than most central government bodies to award contracts to SMEs as they are aware that the local economy can be helped through contracting on a local basis.
Step 3 Size matters Remember that public authorities will wish to be confident that you can deliver, so are unlikely to invest a high-value contract with a company with a relatively low turnover. As a rule of thumb, you could consider not tendering for contracts that are worth more than 25% of your current annual turnover. However, check how long the contract is expected to be let for – for example a contract with a value of £500,000 and a duration of three years has an annual value of around £166,000 – which could be within your reach.
Step 4 Invest before you bid You need to be clued up on the requirements of the public sector tendering process. Read the public procurement regulations and attend seminars and events that provide an insight into the tendering process. A lack of understanding of the procurement process will undermine the quality of your bids. Invest in putting together a dedicated team with the right skills and time available to understand how the process works. This will enable you to maximise your chances of being successful. It is important that you familiarise yourself with the rules governing public procurement because the size of the contract will affect the method by which public organisations procure their services. You also need to be aware that there will be subtle variations between organisations – for example, where they set their limits – so that a contract which does not need to be competitively tendered for in one borough might well require competitive tendering in another.
Step 5 Build strong relationships
Getting to know your clients, their ethos and needs is vital as is building
personal relationships with key people within the public bodies you wish to
work with. While SMEs have to work extra hard to engage in a personal
relationship with the potential client, they do have the benefit of being small
and therefore less impersonal than large organisations.
Step 6 Develop an effective marketing campaign
Approaching public sector organisations before they actively advertise
contract opportunities can be a good way to get on their radar and make
them aware of the sort of products/services your organisation offers.
Upstream marketing with key public sector agencies will raise your profile so
that your business name will be in their minds when they tender contracts.
Step 7 Build a standard PQQ response
The process that all public authorities will undertake has many similarities
so if you have your responses to the common Pre-Qualification
Questionnaire (PQQ) material prepared in advance, you can then tailor this
information to answer the PQQ on a tender-by-tender basis and save time.
Step 8 Build a tender toolkit
To save time and resources, develop a tender toolkit from which you can
lift and amend sections of text as necessary. Although no two tenders are the
same and there is no standard format used by central or local government
organisations, many ask for the same information. After every tender, refine
your toolkit utilising lessons learnt. Always check to ensure that text you have
reused is completely appropriate to the opportunity you are responding to.
Step 9 Engage with target clients
Suppliers that have shown interest and built strong relationships with
public bodies are those that stand a stronger chance of being considered
come bid time. It may seem quite obvious that a conversation with a person
will yield more information than the tender document but it is important not
to underestimate how true this is.
Step 10 Identify and use support schemes
SMEs should explore the use of national, regional, local government or
independent support schemes that can offer advice, training or other support
to SMEs looking to bid for public sector work.
Step 11 Meet the client’s needs
The rigours of the public procurement process demand that suppliers
are incredibly diligent about meeting all the requirements of the procurer.
Suppliers should ensure that they can meet all criteria, and their proposal
should reflect this in detail.
Step 12 Combine expertise with innovation
There is recognition by government that new products can potentially
deliver better value for money than those that are tried and tested, and
so a more outcome-based approach to procurement – rather than simply
a cost-effective, single-solution approach – is being applied to contracts.
It is recognised that SMEs are able to provide innovative solutions and
value for money. If you have an innovative solution, seek the permission
of the client to offer it. However, ensure that when you present an
innovative solution it is not perceived as a risk.
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