Due to resource constraints, complex procurement procedures and unfamiliar terminology, many small- and medium-sized businesses feel discouraged from tendering.
They may think they stand little chance of being appointed; only the largest companies in their sector will be awarded the contract or place on the framework agreement; or that they cannot bid because they do not have a full-time in-house bid writer.
This is not the case. We dispel some common misconceptions around bidding for public sector work as an SME, and some tips for breaking into public procurement.
Misconception 1: Public sector tenders do not want SMEs as suppliers
The public sector has specific targets of one-third of public procurement spend through SMEs. With SMEs making up 99.8% of businesses and generating £2.8 trillion in revenue, they are a crucial part of the public sector’s wider supply chain.
This is underscored by last year’s National Procurement Policy Statement, which highlighted ‘driving economic growth and strengthening supply chains’, including facilitating market entry to SMEs as a particular focus.
Lastly, the Procurement Act’s introduction outlines that buyers must actively reduce barriers for SMEs, with specific measures including:
- Simplified and transparent procurement processes
- Thirty-day payment terms to support cash flow
- Consideration of lots and open, flexible frameworks in procurement.
Misconception 2: Tendering as an SME – no chance of success?
Even if SMEs are convinced they should bid for public sector work, many smaller businesses feel they will not have the size or scale of resources to compete with larger organisations. However, it is not the size of the organisation but the quality of proposed work on which bidders will be evaluated.
Recent CCS figures indicate 75% of their suppliers on commercial framework agreements are small- and medium-sized businesses. As the largest contracting authority in England, these figures demonstrate it is entirely achievable for SMEs to bid – and win – public sector tenders.
Misconception 3: The bid will always be awarded to the incumbent provider
This misconception is common not only for SMEs but many bidder organisations. Put simply, prospective bidders may reach a ‘no-bid’ decision because they feel there is no other outcome aside from the current provider retaining the contract. However, this is not the case for a variety of reasons, including:
- Underperformance: It is impossible to know how the contract is going unless you are the buyer or supplier. They may be struggling to resource the scope of works, fulfil KPIs or are failing to deliver against their social value. You can substantiate your ability to deliver by providing case studies and supporting evidence of other contracts similar in size and scope – and may be assuring the authority that another organisation will provide better value for money.
- Complacency: Incumbent providers are often comfortable and confident in their chances of being reappointed. This may lead to an overly complacent approach to the tender as a ‘box ticking’ exercise, allowing you to exploit competitive advantages and real value-adding approaches and innovations – which the incumbent may take for granted rather than explicitly outlining in their quality submissions.
- Innovation vs. ‘business as usual’: Typically, an incumbent provider’s response focuses on past and present service delivery. This gives an opportunity for competitors to propose innovations to the existing service model, giving evaluators food for thought on something they may not have previously considered.
Remember, public procurement has a duty to be fair, honest and transparent – relying much less on existing relationships than the private sector. The tender process exists to determine which option is the best value for money in an impartial manner.
Misconception 4: The lowest priced tender will always win
It is a very common belief among the most inexperienced or infrequent bidders that the authority will award – or find a way to award – the tender to the organisation with the lowest cost solution.
Tenders are evaluated on a split between quality and price. Ordinarily, this is 60% quality to 40% price, but in some instances these can be evaluated 80/20 in favour of quality – or even 100% on quality, for some mini-competitions and health and social care tenders.
Competitive pricing is important, but not everything. Drafting quality responses will usually take the most time and resource to complete, and is equally if not more important – particularly with submissions being won on the basis of several marks.
Misconception 5: Finding tender opportunities takes too much time
Unlike the private sector, all qualifying tender opportunities are required to be published in a free-to-use government website. Contracts Finder publishes all opportunities with a value exceeding £30,000 and Find a Tender hosts opportunities in the region of £140,000 and above.
Tender notices host a wealth of top-level information, including:
- Scope of works or services for the opportunity, ensuring it aligns with the services
- Geographic region organised by region and CPV codes
- Lots for applicable opportunities – usually either split by geographic area or workstream/service offering
- Contract length and value (including possible extensions), allowing you to envision how the contract would sit alongside current commitments
- Tender deadline, permitting an assessment of whether there is sufficient time to submit a competitive bid.
The tender notice will also include a link to the relevant tender portal, where bidders can express interest and gain access to the documents. By dedicating just a few minutes twice a week, you can begin building a pipeline of opportunities to tender for public sector work.
Supporting SMEs with successful tenders
Over the past 16 years, we have supported hundreds of small- and medium-sized businesses to gain work in the public sector – many who were bidding for the first time.
If you are an SME and would like to find out how to add public sector contracts to your portfolio, we can arrange for a free 30-minute bid consultation at info@executivecompass.co.uk or 0800 612 5563.