Huge opportunities for SMEs

In other developed countries you will find two and three person businesses making millions through understanding procurement systems

Remember, there are huge opportunities for SMEs to sell to this
marketplace; local government alone spends £27 billion per annum on
bought-in goods and services. With ongoing requirements across all
industry sectors, opportunities really can be quite diverse, so it is important
to monitor the marketplace to ensure you do not miss that one opportunity
which may prove vital to your business.
Understand the market and your potential customers
Knowing your market and gaining an insight into the procurement
procedures public bodies are required to follow will better position your
company to take advantage of potential opportunities. So, do some
research, build strong relations and network with prospective customers by
attending conferences and Meet the Buyer events.
Monitor the market for potential opportunities
Tender portals offering contract alert services will inevitably save you time
and effort. The public sector is vast, and with a focus on value for money
and increasing efficiency, there could potentially be an increase in the
number of smaller contracts advertised. Due to their lower values, they
could prove to be a more viable focus for your business.
Moreover, working with the public sector indirectly as a subcontractor can
also be a great way to increase reputation and gain valuable experience, and
may be a faster route to securing public sector revenue.
Finally, be selective!
The timescales set for expressing your interest can be short; however, it
is important to spend time carefully evaluating opportunities which may
appear relevant. Read what is being asked of you and then read it again to
ensure you understand all the requirements. Do not spend valuable time and
resources preparing a bid if you are unsure that you can deliver.
Public bodies are aware of the real benefits working with SMEs can offer
them. Government spend is crucial to the future competitiveness of the
economy and accelerating our recovery from the recession. Procuring using
processes that are open, fair and transparent not only allows the public
sector to achieve cost savings through obtaining value for money, but also
ensures the market is opened up to competition, presenting real
opportunities for many businesses to help the entire public sector drive its
efficiency agenda and assist in delivering cost savings.

Bid-writing is the aspect of the procurement process which SMEs tend to find most difficult

Bid-writing courses
Bid-writing is the aspect of the procurement process which SMEs tend
to find most difficult. However, organisations such as BiP Solutions'
Procurement Advice and Support Service (PASS) offer training specifically
covering how to complete tender responses. This can be helpful to SMEs
which do not have experience in this area and/or do not feel in a position
to hire a specialist bid writer. www.bipsolutions.com/pass
Meet the Buyer and networking events
Networking and Meet the Buyer events are useful ways in which
SMEs can form and develop those all-important personal relationships
with the public sector. Ask your local authority for details or visit:
www.bipsolutions.com/events/Supply/meetthebuyer.html
For details of the Supply workshops, which are held at locations around
the UK, visit: www.bipsolutions.com/events/Supply/Workshops
Financial support
Winning public sector contracts can sometimes seem like an uphill
struggle for inexperienced SMEs or those firms which lack the time and
resources to dedicate to the process. However, there may be financial
support available for your business. You should ask your local
Businesslink or local authority for advice.
Part 3
GOVERNMENT’S PERCEPTION OF THE
BENEFITS OF PROCURING FROM SMEs
The Office of Government Commerce (OGC) and the Small Business
Service (now the Enterprise Directorate, part of the Department for
Business, Innovation and Skills (BIS)) have produced several documents
outlining the benefits of procuring public services or goods from SMEs.
These fall broadly into the following three categories:
Better value for money:
• Bringing in more suppliers will often stimulate greater
competition in the marketplace, thereby reducing the costs of
procurement from all suppliers;
• SMEs have lower administrative overheads and management
costs than larger firms. Depending on the nature of the
procurement, this can result in lower prices.
Better quality of service:
• SMEs have short management chains and approval routes, so
they can respond quickly to changing requirements. SMEs may
also be highly focused on particular markets, making them
particularly responsive to changes in those markets;
• Business from large organisations is important to SMEs. This
can result in a better, and often more personal, level of service
and in a better relationship with the supplier;
• SMEs may also be more willing and able to tailor a product or
service to meet specific customer needs than a large firm that
sells an established offering;
• Many SMEs, including social enterprises, Voluntary and
Community Organisations (VCOs) and Black and Minority
Ethnic-owned enterprises (BMEs), supply higher quality
specialist products or services than larger suppliers, either
because larger suppliers are discouraged by the limited
demand, or because the SME has skills, originality and
commitment in that field greater than those found in
their large company competitors.
Innovation:
• SMEs can bring innovation through, for example, the early
exploitation of new technology, providing products or services
in new or underdeveloped markets, or by using innovation to
differentiate themselves from established market players.
Despite outlining these potential benefits of SME involvement, BIS is
keen to point out that these are not necessarily true in all circumstances.
The size of the benefit might be hard to quantify, which may explain why
the benefits are not necessarily recognised by public sector organisations.
This is also perhaps because the gain from using smaller suppliers comes
in the form of a ‘willingness to go the extra mile’, and this is an intangible
and unquantifiable quality.

Looking for opportunities through both the public and private sectors.

FINDING OPPORTUNITIES
There are a variety of methods for finding opportunities through both the
public and private sectors. Some of these are described below.
Supply2.gov.uk public sector contract information portal
Supply2.gov.uk is the Government’s UK-wide contract opportunity portal,
created to provide small businesses with access to lower-value (typically
below £100,000) public sector contracts which fall below the EU thresholds.
The portal provides a platform for buyers across the entire public sector
to advertise their lower-value contracts free of charge, and has been cited
as a best practice means of advertising below threshold notices by HM
Treasury and the European Commission.
Once registered on Supply2.gov.uk, you can search the online database
free of charge to access lower-value contract opportunities nationwide and
benefit from the free Contract Alert service in a local area of your choice.
There are also a variety of guidances and resources available from the
Supply2.gov.uk website, making it a good place for SMEs to start looking
for potentially rewarding opportunities to sell to the public sector.
www.supply2.gov.uk
Government Opportunities
Government Opportunities (GO) magazine is a publication and website
(www.govopps.co.uk) focused on the public procurement industry. It is
aimed at procurers and suppliers alike, and provides news on public
procurement, information for businesses, reviews of procurement events
and analysis of trends and activity within the sector.
BiP Solutions – the publisher of GO – also provides a business
intelligence service called Tracker, which publishes over 122% more public
sector contract opportunities than the Official Journal of the European
Union (OJEU). Tracker offers unrivalled access to a worldwide database of
public and private sector contract opportunities of all values, providing
instant notification of the latest opportunities matching your profile, and
delivers key market intelligence tailored to your unique business needs.
www.tendermatch.co.uk
Procurement process training
Supply provides a range of roadshows and workshops around the
country to help SMEs better understand the public procurement process
and win tenders. www.bipsolutions.com/events/Supply/Workshops

7 MORE POINTS TO SUCCESS IN THE PUBLIC SECTOR

THE NATIONAL SME
ENGAGEMENT PROGRAMME

SMEs are able to provide innovative solutions and value for money
Step 13 Address risk
SMEs need to promote themselves not only as innovators but also as
experts in their field. Help and reassure your potential client by always
identifying potential risks and showing how your proposal mitigates them.
Any reduction of the risks perceived by the public sector to be associated
with contracting with SMEs is likely to result in an increase in engagement
with such companies.

Step 14 Carefully match responses to the stated criteria
Most public sector contracts involve a two-stage process – selection of
tenderers, followed by evaluation of tenders. At both stages, the criteria
for selection or award are clearly stated in either the original notice or the
invitation to tender documentation. Ensure that you understand the
relative weighting/scoring that the authority is applying to each criterion
and make sure that your response addresses these criteria proportionally.

Step 15 Consider engaging a specialist ‘Bid Writer’
Consider utilising the services of a specialist public sector bid writer.
Specialist bid writers understand the procurement process and what it
takes to make a successful bid. This approach may at first seem costly
but you will increase your chances of success and fast track your learning
so that you will not need their skills in the long run.

Step 16 Price matters
Remember that most tenderers will have similar capabilities to achieve
the technical requirements of the tender. Where this is the case, price will
become increasingly important. Where price is weighted at 25% or over,
then it may be difficult to win unless you are providing the lowest or close
to the lowest price.

Step 17 Learn from the debrief
The chances are that you will lose tenders before you win them. The
more tenders you respond to, the better you will get at tendering, but only
if you ensure that you do not make the same mistakes time and time
again. So ensure that your tendering activity is a rewarding learning curve
by seeking information from the awarding authority after every
unsuccessful tender to determine why you were not selected or why you
were unsuccessful at the invitation to tender (ITT) stage. Most importantly,
learn the lessons for the next time. If the successful tender proposed a
higher price, remember that you have a right to know what the winning bid
was and why it was better than yours. Even if you are successful it still
pays dividends to attend the debrief, since you will discover where your
bid was stronger than the competition, and possibly also learn about
areas of weakness.

Step 18 Act as a subcontractor
Generating revenue through the public sector need not mean working
directly for the public sector. Increasingly, public bodies are hiring large
firms that contract out work to smaller suppliers. SMEs should be aware
that acting as a subcontractor to larger private sector organisations with
public sector funding may be a faster route to public sector revenue.
Winning subcontractor business also provides a useful reference should
you wish to work directly for the public sector in the future.

Step 19 Consider Framework Contracts
Although it may be time-consuming initially, getting onto a framework
agreement should result in many relevant opportunities over the lifetime of
the framework – normally two to five years. Framework contracts are also
a useful way of identifying who your competitors are. Once a
framework contract has been awarded you will be able to see all the
companies that have been successful in securing a place on it; some may
be known to you but some may not

Step 20 Invest in a high-quality service ethos
Delivering a higher-quality service than is required will increase the
likelihood of contract renewal. Once the contract is won, SMEs looking
to stay in favour and be considered for the next contract period must
invest in meeting, if not surpassing, the service delivery requirements of
their client. Your target should be to give your client the feeling that you
are their partner in trying to achieve and deliver their requirement. Make
it difficult for them to consider alternative providers.
Part

A DOZEN TIPS FOR BEING IN IT TO WIN IT

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

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.

GUIDE TO WINNING PUBLIC CONTRACTS

THE PUBLIC SECTOR MARKETPLACE
The public sector remains a key marketplace for SMEs, representing a valuable route to a market which each year procures
around £175 billion of goods and services (about one third of all public spending). In today’s economic climate, the fact that public
sector customers traditionally pay promptly makes them excellent clients, offering SMEs stability and business growth.
Organisations across the entire public sector should be viewed as potential customers:
• Local government spends around £27 billion on bought-in goods and services
• Regional spend in the NHS is estimated to be around £12 billion
• Civil government spend is estimated to be around £15 billion
• Up to 600 new contract opportunities are published every week
All public sector organisations buying in goods and services must get the best value for money. This means they must choose the
bid that offers “the optimum combination of whole-life costs and quality (or fitness for purpose) to meet the user’s requirement”.
It is important to realise that bids for public sector contracts will not be considered solely on the lowest price quoted.
Some of the benefits of supplying the UK public sector are as follows:
• Diverse requirements
• Positively inclined towards SMEs as suppliers
• Little or no risk of bad debt
• Prompt payment terms
• Potential for ongoing work
• Responsibility to provide services irrespective of economic conditions
Trading successfully with the public sector will also give you added credibility when dealing with private sector customers.
The Government recognises that in the delivery of goods and services to public sector organisations SMEs can offer real benefits,
including:
• Better value for money – increased competition among suppliers pushes down procurement costs
and SMEs’ lower overheads can also result in lower prices
• Better quality of service – shorter management chains and a focus on specific markets and customers
can mean greater flexibility and a more tailored, personal level of service
• Innovation – SMEs can sometimes respond more quickly to changes in technology and/or
develop new products to differentiate themselves from bigger market players
Some SMEs, however, perceive the barriers to tendering for public sector contracts as insurmountable.

This blog will act as your guide will help you to
overcome these barriers.