In 2011 the coalition government set itself the challenge of ensuring 25% of all government business would be awarded to SME suppliers. Four years on how has the government responded to the mounting pressure for public sector procurement reform, and what can small businesses do to increase their chances of a successful bid?
When the government announced its ambitious project, Stephen Alambritis, chief spokesman for the federation of small business, stated that the SME market was winning around 2% of the public sectors £100bn annual turnover.
Considering that the SME market accounts for around 50% of turnover in the UK economy, changes to the public sector procurement process was both justified and welcomed. The often-lengthy process can be extremely costly for many SMEs and the strict guidelines often inhibit smaller firms from completing a bid.
According to RIBA (Royal Institute Of British Architects), it is estimated in their Building Ladders For Opportunity report that architects in the UK spent £40m a year when preparing government bids. A further 85% of all bids were rejected due to minimum turnover requirements.
The contention among many small businesses was trying to adapt to a procurement process that was the same process regardless of bid size, a strict framework that tended to favour larger organisations to the detriment to the SME market.
Further challenges for many SMEs was having the necessary resources to put together a dedicated “bid team”, or lacking the financial clout with which to employ ex-government employees who could consult and help with the often complicated tender documentation.
In a bid to diversify the number of suitable bidders the Prime Ministers advisor on enterprise and small business, Lord Young of Graffham, recommended in 2013 reforms that the public sector procurement process would allow SME’s to gain a larger percentage of public sector contracts.
The cabinet office proposed a number of changes to the process and the 17th of October 2014 saw the closing deadline for feedback on these new reforms for 2015. The key amendments that have been implemented to ensure public sector procurement becomes more accessible to the SME market can be found in their report, but the key highlights include:
PQQs (Pre Qualification Questionnaires)
The government has now abolished the cumbersome pre-qualification questionnaire for low value central government contracts that fall below the EU threshold. They’re also standardising PQQs for contracts above this threshold, making the process easier and more efficient.
Accessibility Of Tenders And Transparency Of Successful Bidders
A new mandate states that all public sector contract opportunities are now accessible on Contracts Finder. The publication of any successful bid will also be available on the site, in conjunction with the spend and if the budget is going to a small business or Voluntary Community and Social Enterprise. The increase in transparency will allow the success of these reforms to be seen by everyone and no doubt questions will be raised if they fail to deliver on the governments promise.
The Division Of Larger Bids Into Separate Lots
While the cabinet office did consider breaking large tenders into separate lots, the ultimate decision on whether or not to divide the tender into lots will be left to the discretion of each contracting authority on a case-by-case basis.
If and where authorities and government organisations decide not to divide into lots, they will be required to explain their decision in the procurement documents or report. Hopefully encouraging authorities to actively consider the possibility of “lotting”.
While the changes may speed up certain aspects of the procurement process and provide greater levels of transparency, the process still looks to be resource intensive and we can still expect an involved process that requires significant investment from the bidding party.
If you still decide to go ahead with a bid, there are a number of steps SME’s can take to try an increase your chances of being successful.
Find Out Key Contacts And Speak To Them Directly
If government authorities have never heard of you before, “cold” bids can often be associated with a certain amount of risk. Without seeing your personalities, enthusiasm and without assessing your organisations credibility, the unknown factor can often work against you.
Many local authorities are now holding “get to know you sessions” where you can informally meet the procurement team and understand more about the bid before you start putting together your pitch. Finding out when these sessions are being held and attending them in person can really help improve your chances of a successful bid.
It’s very likely that the government wants to reach its target for 2015, so even if you’ve been unsuccessful before, you may find a more amendable approach to queries if you’re an SME supplier. Every department in central government now has a small firms champion and a small firms minister, picking up the phone and speaking directly to these individuals may prove to be more effective than in previous years.
With the large numbers of public sector bids available it’s important to be selective in which ones you decide to go for. The bid must be carefully aligned with your business strategy and you have to prove that you will be able to deliver successfully, on time and at a good price.
Even with the reforms the tendering process can still be long and arduous, taking up valuable company resources and time. Where possible, select one or two bids and focus all your efforts on these as opposed to going for everything in the anticipation that one will be successful.
Focus Your Efforts On SME Friendly Local Authorities
Individual councils will have differing internal policies that ensure some are more amenable to working with SME’s than others. A report compiled by The Centre For Entrepreneurs has put together a nationwide analysis looking at the state of spending with small businesses among local authorities over the past three years.
The percentage spent with small businesses differs widely across the varying local authorities. Monmouthshire Council spends 25.6% of its budget with small firms compared with only 4.17% at Barnsley Metropolitan Borough Council.
Selecting councils with a track record of working with SME’s may turn out to be more successful than others.
Complain If You Think The Process Is Unfair
If you believe the process is unfair, biased or asking unnecessary demands during the tendering process you can give your feedback to the governments “Mystery Shopper Service”.
Of the 700 complaints received so far, 80% of them have resulted in a change to the individual tendering process. Complaints are anonymous so it won’t affect your bid. Often councils may be unaware that the process is unfair, in the vast majority of cases they want to get the process right and will be open to discussing your queries and concerns.
You can contact the service at email@example.com or you can call them on 0345 010 3503.
Part of achieving a successful bid is learning how to reply to tenders and what the government authorities are looking for. If you’re unsuccessful, ask for feedback that can help define any future strategy or bid you make.
The public sector is often risk adverse in nature and rightly or wrongly the SME market is often viewed as a more risky alternative to larger organisations. With the decline of Lehman Brothers, HMV, Woolworths and Blockbuster, this mind-set has come under increasing scrutiny over the last few years and many are starting to realise the potential for excellent service and cost-effectiveness that the SME market can provide.
While the changes and reforms going some way to ensuring a fairer process, we can take heart from the fact that the government has an active interest towards increasing the spend allotted to the SME market and doesn’t want to be seen to fail. Time will tell if these reforms have proven to be successful and public sector organisations have achieved their goal of 25% by the end of the year. The time for change is now.
This post was written by Joe Black Coffee roasting coffee for over 50 years in Liverpool and Manchester. We’re dedicated to helping the local economy through advocating local public sector procurement to create employment and local sustainability.