Being an SME is an opportunity to win in the public sector

Find the RIGHT opportunities, and you can win in the public sector!

What is a win to you and your business? How do you define success? It could be based on your annual turnover or how long you’ve managed to stay in business. Or it could just be by how much you enjoy running your business. And that is totally cool.

For SMEs bidding on tenders in the public sector, defining success can be challenging. There are some tenders you are just not going to be able to win, and others you could win but the competition makes it a tough go. At The TenderHood we are all about helping you find the right opportunity by really focusing in on what your business strategy is and how that is aligned with your business capabilities.

(There will be a cheesy classic tune with every blog, so if you don’t have Spotify head on over and put that right)

It’s important to remember that you don’t always have to go it alone and bid on a tender to win.  There are other opportunities to “win” in the form of collaboration and subcontracting. The public sector is full of leads and partnership information that could be just as useful to you as spending a lot of valuable time and money on bidding for tenders you’re not well-positioned to win.  At least not yet!

What's your pain threshold?

So, how do you find the information that presents you with public sector opportunities?

First, some basics.  In a nutshell, whenever the public sector has a need to purchase goods, works, or services, they are required to publicly advertise this opportunity in what is referred to as a ‘Invitation to Tender’ or ‘ITT’, or what is more commonly known as a “tender”.

Depending on the value of that tender, there are a set of thresholds that determine how and where the notice of that tender should be published to ensure competition. Post-Brexit, UK public procurement thresholds are governed by the World Trade Organization’s (WTO) Government Procurement Agreement (GPA).

For the sake of simplicity (we like to keep things simple), these thresholds fall into one of two categories, above threshold tenders and below threshold tenders.

Above Threshold

Large contracts with complex procedures

High-Value Tenders, also known as “Above Threshold” Tenders, are those that exceed a certain value set by the GPA (which EU members also follow) and must be advertised on the Find A Tender Service.

Below Threshold

Smaller contracts with simpler procedures

Low-Value Tenders, also known as “Below Threshold” Tenders, have a value below GPA thresholds and solely controlled by the UK.  These are advertised within the country, typically on local government websites.

It’s those low-value, below-threshold tenders that we are super interested in as SMEs, because these contracts are much smaller and make a great starting point for businesses entering the market for the first time. The procedures for low-value tenders are simpler and provide valuable experience to help SMEs go after high-value tenders in the future.

How do you know you have a chance though?

So, doing business with the government could be considered high risk because of various scandals and perceived mistrust of political bodies, right? I mean, I did after all address it in my very first blog like this:

“Public procurement is shrouded in bureaucracy, favouritism, and a general lack of trust”

But, just like us (I wonder if they copied us), the UK Government realises the importance and potential of making it easier for SMEs to win more tenders. SMEs are the lifeblood of the economy (96% of all businesses in the UK have fewer than 10 employees), they keep the wheels turning and provide agile, innovative business solutions that larger companies are just not capable of.

The government has been forthright in stating they want and need more SMEs to win more of its tenders.

PPN means less pain

This became evident last year with the Government’s Procurement Policy Note (PPN) 11/20: Reserving Below Threshold Procurements.  With the UK’s exit from the EU, the government aims to simplify its procurement process and encourage its Buyers to reserve low value bids for SMEs or for suppliers in specific geographical locations.

Disclaimer! The government just makes these PPNs for political good will, but don’t actually figure out the practicalities first. None the less, let’s roll with it.

Location-specific

Reserved based on supplier location

Only suppliers located in a specified geographical area can bid. Location scope can be UK-wide or reserved by county.

Business-Specific

Reserved for certain business types

Only SMEs and Voluntary, Community and Social Enterprises (VCSEs) are eligible to bid for the work.

This gives SMEs a far greater chance of winning below threshold tenders, and generally speaking there are some very good reasons why SMEs should bid on public sector tenders:

  1. All contracts must be open and accessible – meaning no matter what size your business is, if you meet the criteria and can deliver the tender requirements, you have a fair chance of winning the work. This is different to private procurement where the buyer can be more selective about who they inform of their procurement needs, and who they want to do business with.
  1. The public sector wants to award work to SMEs – by 2022 the UK Government wants 33% of all public contracts to be awarded to SMEs. SMEs make up 99% of all UK businesses and are vital to engage to keep the economy growing.
  1. 30 day payment period – all invoices for government-contracted work must be processed by public bodies within 30 days of receiving them, ensuring businesses get paid promptly. Lengthy payment periods can be an issue within the private sector, where larger businesses can dictate when they issue payment.

Spread the risk, share the prize

OK, so low-value tenders are good for SMEs to bid on, but what else? Well there are even more opportunities for SMEs to have success in the public sector if you are up for a little bit of networking and some good old-fashioned lead generation.

Partnerships

Sub Contracts

LOTS

By creating partnerships and connections with other suppliers, you stand a much better chance of winning new opportunities associated with larger contracts.

Subcontracts are a great way to benefit from said relationships. Even if higher value public contracts go to large companies, SMEs can play a role in these contracts by being hired on as sub-contractors.

And then there are LOTS. In short, a “lot” is a contract, or part of a contract, that is exempt from the public procurement rules. A large contract can be divided into smaller, separate contracts to be awarded and performed by a number of different suppliers. Buyers are encouraged to split contracts into smaller lots to enable them to award parts of the contracts to SMEs. Whats more, the value of the lot must be below the small lot threshold, meaning it falls right into that SME sweet spot.

These types of opportunities are more likely to give you a better bang for your buck (or quid if you are being picky)

Lead generation?

As I mentioned in my last post, there is a really massive, gigantic, huge secret in public procurement. Are you ready for it???

“Public procurement information is totally free and available to anyone who goes looking for it. And inside that lovely free information are leads, lots and lots of leads.”

By looking at Contract Award Notices (CANs to us winners), you can find out who won a tender you were interested in and start a conversation (ideally through the TenderHood’s online Collaboration Tool, lovingly represented by the Pub icon). There may be an opportunity to partner on a larger contract with that winning supplier, or you could even make an early engagement with the buyer, knowing that the contract will likely be awarded again in the future.

So don’t sit on your hands waiting for the right time to play in the public sector. There are opportunities out there for you to win right now!  Start your journey with The TenderHood’s map.  We’ll help you find the right opportunities that match your strategy.

What do you do as part of your business strategy to win tenders as an SME? Do you have any tips on how to build better connections? What would you like to see The TenderHood doing to make your life as an SME in public procurement easier? Use the comments field below.

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