Procurement 5 December 2017

What are public procurement contracts and what do they mean for your small business?

Public procurement contracts
The public sector purchases some £250bn from private sector suppliers each year

The UK government has billions to spend with private sector through public procurement contracts, so how can smaller businesses get a share of the pie? Jon Baldwin, partner at Winckworth Sherwood, explains how.

Public procurement contracts are opportunities to sell to government, local councils and other public bodies. The public sector has a wide and varied need for all sorts of products and services. Unlike private-sector customers, the public sector cannot usually choose a provider freely, but must instead advertise opportunities and run fair competitions.

Where can you find public procurement contracts?

Most public contracts are advertised on the Contracts Finder website or on equivalent sites in Scotland, Wales and Northern Ireland. Businesses can search for opportunities on Contracts Finder, either by keyword or by location. The site gives an indication of the value of the opportunity and the start and end date of contracts.

Some buyers list future opportunities early, to give businesses a chance to prepare. Often, you can use this time to express your interest to the buyer, which may help them to design the competition in a way which does not exclude you.

Some very low-value opportunities are not listed on Contracts Finder, and some buyers – such as schools – are not required to use the site. So, if you are keen to supply a particular organisation, it still pays to keep an eye on its website or contact their procurement team to see how they make small purchases. Most organisations will be happy to help, if you can get through to the right person.

Key statistics:

  •  £12.2bn – amount SMEs benefited from central government spending between 2015 and 2016
  • 27.7 per cent – the government’s overall percentage spend with SMEs (without Network Rail and MoD)
  • £5bn – how much more is spent with SMEs by the government when compared to 2011-12
  • 33 per cent – 2022 government target for SME spend

How can my business apply for public procurement contracts?

Contracts Finder advertisements will contain details of how to apply. Typically, they will either include a link to an online application system or contain documents explaining how the competition will be run. Often the key document is called an “invitation to tender” or “ITT”.

The portal system or ITT will explain how to bid for the opportunity. Usually this will involve submitting a written tender to the authority for scoring against other bidders. The length and complexity of tenders should ideally be proportionate to the value and complexity of contracts.

Competitions are usually run to strict timetables, so it is important to watch out for the deadline featured in the advertisement. Unless they have extended the window for everyone, it is unlikely that a buyer will accept a late application.

How can you maximise your chances of success?

Submitting tenders for work can be daunting, especially if you are used to gaining business in other ways, such as word-of-mouth recommendations. It’s generally something that businesses improve at over time, so if you are not successful at first it is important not to give up and to ask for feedback for next time.

The most important thing to remember is that public sector buyers usually don’t have the flexibility simply to choose their favourite bid after reading them all. Instead, to be fair to all bidders, they are required to follow the scoring criteria explained in the invitation to tender. This means that it is vital to make sure that you fully understand the requirements before starting to write your tender, and to ask the buyer before the deadline if anything is unclear. Most of all, remember to answer the question that is asked, and not the one which you wish they had asked.

Is there anything you can do to prepare?

Because many competitions run to quite a short timetable, it is worth pulling together a file covering the questions that are frequently asked. These include questions about your turnover, company details (such as registered number) and your experience. Although you will need to respond to each opportunity in the requested format, creating CVs for your business and its key staff can really help to make the process more manageable.

What is it like supplying the public sector?

Public sector contracts are often interesting and provide great, topical experience, and can include opportunities that are simply not available from private-sector buyers. Often, quality is considered just as, if not more, important than price. Furthermore, public sector buyers tend to be “good payers” and are required to pay invoices within 30 days.

On the minus side, public buyers tend to insist on using their own contracts, rather than those provided by their suppliers. This means that you will need to get used to reviewing contracts and deciding if you are happy to sign them.

Any other tips?

If you tend to be appointed as a sub-contractor, it is worth seeing if you can team up with your usual contractors to make joint bids together. You can also search Contracts Finder for awarded contracts, and approach successful tenderers to offer your services.

By Jon Baldwin, partner at Winckworth Sherwood.

Find out why small businesses appear to be fighting losing battle to win public procurement contracts.

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