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How SMES Can Win Public Sector Contracts

Public sector spending is under serious pressure worldwide, with UK government debt likely to outstrip Chancellor Darling's forecast for the year. But there is an upside for small and medium-sized enterprises. With their lower overheads, local knowledge and great flexibility, they could be better placed to win public sector contracts than large organisations.

Many still find the process of bidding geared towards the bigger players. Still, that shouldn't deter you from
pitching for a share of the government's annual procurement
spend. Bidding procedures are tough, because the priority for any public sector
body is getting value for money for the taxpayer.But with careful research,
the right contacts, and dogged determination, they are within your grasp.

Understand the process

Goal: Learn how to work within the public sector’s procurement process.

The UK public sector employs some 5.8 million people — around one-quarter
of the UK workforce — in government,
emergency services, the NHS, the military, and higher education.

But while private sector contracts are often won
on price, public sector buyers will be more prescriptive. They will want to see evidence of specific
competencies, quality of service or product, and compliance with health and
safety and other industry standards, before even inviting you to

“We are keen to use
local resources, provided that they meet public sector standards,”says Glyn Evans, CIO at Birmingham City Council, the
largest in the UK with a 3.5bn budget. But smaller or new businesses without a track record often struggle with heavily defined regulatory processes.
Government buyers will create a framework agreement for suppliers.
Those that successfully complete a pre-qualification questionnaire can be listed as approved suppliers to that department or organisation.
The framework agreement process itself can be just as
labour intensive — some organisations insist that bidders take out professional
indemnity insurance cover; others need audited accounts for the previous two or three years,
excluding newer firms. “Everything is marked and scored. Don’t be lulled into complacency by the fact that
you have a good relationship with the buyer, or there is a nice vibe. Be aware that in the current climate,
relationships are overruled by the discipline of procurement,”says Neil Malpas, operations director of Serco Consulting.
Companies whose policies adhere to the buyer are more likely to succeed – and quality standards are valued.
Tew Brothers, a Southampton-based building firm, strengthened its bidding position by achieving Investors in
People status, a standard held by only six per cent of small building companies.

But when you win a contract, quality work leads to repeat business, and payment
is usually on time.

The Devil’s in the Details

The marketplace is diverse and creative,says Serco’s Neil Malpas, so the details matter. Read and digest all of the tendering information
and be explicit with your answers,as a scoring system is used to assess your application. Assessors won’ be able to pick out relevant points if your pitch
has too much information. Use the requested format – some organisations insist on both electronic and hard
copy submissions.

Include relevant business experience and
references and crucially, observe the tender deadlines or risk being
disqualified. But “don’t submit a bid early.
You can never do too much,” adds Malpas.

Know your customers

Goal: Learn how to tailor your bid to each buyer’s expectations.

No two public sector bodies are the same. They
stick to the basic principles of procurement, but they have their own approaches to suppliers.

“We pitched for a contract with one
local council, and won against a large national building company, yet when we pitched
for a very similar contract with an adjoining council we came 10th,”
says Donna Tew, director of Tew Brothers, which
employs 60 people, and whose business is almost entirely public-sector based.

Find out how long the tendering process will take: they can vary from several
days to over a year, depending
on the buyer. “One particular Army contract that we
were interested in would have taken two years. The costs to us were
prohibitive, so we didn’t pursue it,” says Neil Morris,
joint chief executive of consultancy Digital Public, which has a number of
public sector customers.

A clear understanding of individual public
sector customer requirements can allow small firms to outperform their larger

Form a Consortium

Goal: Join forces with other small bidders to create a virtual consultancy.

Small firms and independent consultants can
improve their chances of a winning bid by joining forces with industry
peers or complementary partners. Virtual consultancies are now a real contender for
contracts. A primary consultant secures the business and writes the proposal, then brings in
seven or eight suitable independent consultants for the job.

There are clear benefits to the buyer –
fewer overheads mean more competitive pricing.
But their real edge is their versatility. “Until recently, you might have avoided revealing
your virtual status. Now, the consortium approach can be pitched as a benefit,” says Michael Herson, founder
of The Strategy Works, who used the approach to win a contract with the Universities and Colleges Admissions Service.

Another option for small firms is to tap into the pitching power of larger suppliers by joining their supply chain.
Previous obstacles to this approach –
greater margin pressure and disproportionate delays in payment –
should have improved as a result of the Glover Review.
It recommended that larger businesses, which currently win the lion’s
share of public sector work, should provide sub-contracting opportunities
through a single online portal by next year.

Case Study

Rob Watling, founder of
Nottingham-based consultancy Momentum Associates, has used the consortium
approach to win contracts in the arts, heritage and health sectors.“Where a contract is too big or
requires too broad a range of skills for one consultant, I can call on several
independent associates who I’ve worked with before,” says Watling. He also uses
online network Skillfair to access hundreds of management consultants around the country – a benefit
in contracts where local cultural knowledge are needed. Watling is careful what he pitches for, but estimates he
wins one in three bids. “We have certainly never
lost a bid through being an ad hoc team.”

Find the Work

Goal: Identify where bids are advertised – and how to get advance notice of contracts.

Public sector contracts are advertised in a
variety of places. Those valued over the 100,000 threshold set by EU
procurement law are published daily in the Official Journal of the
European Union (OJEU)
supplement and in Tenders Electronic Daily (TED) , the online
version of OJEU. At Buying Solutions,the national procurement
portal for UK public sector, suppliers
can research current framework requirements, express an interest or, in
some cases, tender direct, if the contract procedure allows.

There are also dedicated sector sites for suppliers – for example, Constructionline or NHS-specialist
NHS PASA (Purchasing and Supply Agency)

Contracts below the EU procurement threshold
can be found at as
well as in the trade and national press. This takes time smaller firms may not have.
“You can spend an awful lot of time trawling
the OJEU and the OGC websites, but the opportunities are not blindingly
obvious, ” says Colin Craig, regional consulting director of IT
consultancy Compass. So it is particularly useful for smaller bidders to cultivate good contacts.
Get to know people in local authorities or other likely sources of public sector business, and you may get
advance notice of contracts and frameworks.

Some organisations in the public sector may not
advertise lower value contracts at all. “For contracts below the
EU procurement threshold, but above our own, we might invite bids from three or
four suppliers,” says Birmingham’s Evans. “Below this limit, we often work with suppliers with who we have
established links and can demonstrate that their products or services represent
value for money.” According to Neil Malpas, if the first time you see an opportunity
is in print, you are almost certain not to win it.

Hot tip

Benchmark before you pitch–
Put yourself in the position of the procurement client. If efficiency is one of the qualities, benchmark yourself first.
Get ahead of the game by working out which other suppliers you would partner if asked and which one you wouldn't. Have procurement models ready.

Get feedback and prepare to bid again.

Goal: If at first you don’t succeed, find out why.

Win or lose, feedback on your bid from the
buyer is crucial if you want to improve your future chances of success.

Even successful pitches will have some areas of
weakness that can be improved on, or in the case of failure, flaws that can be
avoided next time. Common errors include questions not being properly
understood or answered in enough detail, missing documents, and submissions
that could be presented in a better way.

Assuming the work is worth bidding for, you might find the cost of hiring a consultant
to prepare the tender justified if the task is too onerous to be done properly in-house.

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