We revisit how an increased focus on net zero will impact SME's approach to tendering in the future, and what they can do to create a carbon reduction plan.
A recap of tendering trends for 2022
The winds of change in the world of tendering have blown more forcefully than ever over the past two years. As we recently described in a blog post in January, the public sector is increasingly focussed on a supplier’s ability to provide:
- Social value, additional to the work they are contracted to deliver
- More contracts for SMEs – surely one of the more welcome outcomes of the government’s ‘Levelling Up’ agenda
- Robust risk management and disaster planning, demonstrating their ability to respond to global pandemics amongst other things
- Digital services and related cyber security activities – responding to barriers to physical delivery in response to, amongst other things, global pandemics
- Commitment to net zero and the production of carbon reductions.
The chances are, if you’re a large provider of contracts with a value of over £5 million per annum, you’re already familiar with this last point. (If you’re unfamiliar, then we suggest conducting some research. This has been a necessary output for bidding since September 2021 as outlined in PPN/06/21, as described in our blog here.)
The growth of net zero and environmentally friendly practices in tendering
As an SME, you may be wondering how achieving net zero impacts your ability to bid for public contracts. And you’d be right to. Guidance is often unclear for those bidding for contracts worth under £5 million per annum. Indeed, when public sector buyers issue invitations to tender, they only need consider net zero commitments ‘where it is relevant to the subject matter, and it is proportionate to do so’. As Tussell recently highlighted:
While public bodies will favour smaller suppliers who manage to successfully integrate climate considerations into their bids, unnecessarily ‘gold-plating’ a bid with unrealistic or vague commitments doesn’t appear necessary.
This is where it gets tricky for SMEs providing smaller public contracts. What constitutes unrealistic? How accurate and clear can your commitments be without the resources to properly measure your impact? How proactive should you be? What, in short, can you do to prepare?
Perhaps unsurprisingly, and with an increasing emphasis based on environmentally friendly initiatives, your first step should not be to stick your head in the sand in the hope that buying authorities tendering smaller contracts won’t ask you the question. After all, the public sector’s focus on carbon reduction and achieving net zero shows no signs of slowing down. In 2015, the sector awarded around £90 million in contracts that directly reference net zero in some form; in 2021, this figure had increased to £559 million.
How SMEs can prepare themselves to assess their environmental impact through a tendering perspective
Your first step should be to prepare and expect that your commitment to environmental sustainability will be assessed by buying authorities. One way to do this would be to simulate the actions necessary to creating a carbon reduction plan. The government has a handy template through which you can properly assess what you currently do, where you can most obviously improve, and how to integrate changes into business model with minimal risk.
You should then write a list of those changes that can applied to your company’s current practices. These are your commitments to contribute towards net zero. Next, you should unpack them to ensure they are proportionate and practicable to your organisation’s capabilities, considering:
- Are you able to identify local suppliers to, for instance, install an EV charging point in your office?
- Do your finances allow you to invest in your commitments?
- What logistical problems might there be?
If your proposal is not feasible, try thinking more realistically about how you reduce your carbon emissions. As noted above, ‘gold-plating’ is not necessary, and may result in you losing marks during tender assessment if your commitments are obviously unachievable. Not only this, but measures should be demonstrably integrated into your service delivery – the government has made it clear that ‘a clear “golden thread” of social value considerations – including net Zero – must feed through both the development and “awarding [of] contracts”’. Neat, climate-related ‘add-ons’ may be deemed unsustainable, their delivery predicated solely on fulfilling obligations additional to the scope of the contract. If you can demonstrate your measures’ integration into your wider delivery, this will hold you in good stead for any further public procurement changes.
These measures should form the basis of your response to environmental sustainability and carbon reduction questions in future tenders. In developing these measures now, you will not only successfully position yourself to win tenders, but you will positively contribute to the health of your employees, your business and your community.
To discuss how Executive Compass can support you with your tendering needs, contact our team today for a free consultation.
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