Benefits to Your Business
As most companies know, customers from the public sector offer a number of benefits which can be considered critical to the financial security and business development of small or medium sized enterprises (SMEs), especially those companies still in their infancy stage where a stable cash-flow and new sources of work are essential. These include:
- Guaranteed payment – there is no chance of public sector customers being dissolved and not able to pay invoices
- Prompt payment – all public sector customers are required to pay invoices within 30 days, with some paying in as little as 7 or 14 days
- Large requirements – public sector customers vary in size and scale, from the large central governments departments to the smaller arms-length bodies, which means that their requirements can often be considered a substantial opportunity to any business
- Supporting SMEs – public sector customers are required to increase the percentage of their business that is awarded to SMEs, which means that SMEs now have a higher chance of being awarded contracts
Overcoming Difficulties Faced by SMEs & Start-ups
Although public sector customers are attractive, it is often difficult for SMEs and start-up companies to break into the public sector market. This is often due to the rules and regulations which govern public sector procurement, however we hope to share our experiences with you to highlight 3 important things that need to be considered when preparing to bid for public sector opportunities:
(1) Know where to look to find out about opportunities which are appropriate for your business
See our blog post about finding tender opportunities in the public sector, for details of where you can look and register for opportunities and alerts.
(2) Review information regarding the procurement before deciding whether to bid
When publishing details of an opportunity, public sector organisations are required to provide certain information to bidders to explain the process that will be followed. This includes:
- the type of procedure that will be used in cases where the opportunity is published in OJEU
- the type of contractual arrangement that will be put in place
- the methodology that will be used to evaluate bids
- the number of companies that will be awarded the contract
It is only upon a full review of this information that a company would be able to determine whether an opportunity is worthwhile. For example, if a public sector organisation awarded a framework agreement as opposed to a contract, this would mean that the company would need to firstly be successful in the procurement to be appointed onto the framework agreement, and secondly, be successful in any further competitions that organisations undertake to ‘call off’ goods or services from the framework agreement. This requires more time and effort being invested to win work through the framework agreement, which is exasperated in cases where there is a large number of companies appointed onto the framework agreement for the same category (or ‘lot’) of goods or services.
Similarly the type of procedure that will be used to manage the procurement is important for opportunities published in OJEU, as this will dictate the number of stages involved in the procurement process and therefore the time, effort and cost associated with preparing a bid. For example, a ‘restricted’ procedure involves companies responding to a ‘pre-qualification questionnaire’ with information regarding their background, organisational capability, and capacity. The public sector organisation will review this and allocate a score to each company and it is only those companies that score higher than the minimum score required, or those that fall within the top specific number as published in the OJEU advertisement that will be shortlisted to take part in the second stage and receive a subsequent ‘invitation to tender’.
An ‘open’ procedure however requires companies to complete a ‘selection questionnaire’ and an ‘award questionnaire’ (including commercial information) and submit them at the same time. However, it is only if a company’s response to the selection questionnaire meets the minimum requirements that their response to the ‘award questionnaire’ will be evaluated. This ultimately means that a company could spend a great amount of time and effort preparing responses to both questionnaires, when the company is then excluded from the procurement process as they did not meet the requirements of the first ‘selection stage’.
(3) If you decide to bid, ensure that you have the necessary information and operations in place in order to comply with the requirements of the procurement
Within the majority of public sector contracts, a minimum level of assurance is required in relation to aspects such as: – financial stability; health and safety; quality assurance; environment and sustainability; equality and diversity; fraud and corruption; and tax compliance. In order to meet the requirements of questions related to these subjects, companies often need to have certain processes and procedures in place, or have certain accreditations, trade memberships, or a minimum credit rating.
In view of this, companies need to take note of the evaluation methodology set out within the procurement documentation to determine whether they meet the requirements of any pass / fail questions, and establish whether they would obtain a reasonable score for the remaining questions (especially those with a higher weighting). This means that a company can determine whether they have a fair chance of being successful which means that the time and effort preparing the bid will not be wasted.
We hope after reading this you feel more prepared when bidding for public sector opportunities in the future. However if you would like further support during the procurement process, or assistance in the development of processes and procedures in preparation for a procurement, please do get in touch:
Tel: 0800 917 7884