Raising Finance

How to win a public procurement contract

12 min read

28 July 2015

Compared to other EU countries, a smaller percentage of SMEs take part in public procurement contracts – so we rounded up some tips on how you can improve your chances of getting a piece of the action, and help the government achieve its spending goals.

According to a 2015 briefing paper from the House of Commons, 74 per cent of SME employers said they had not done any work for the public sector in the past year. This was echoed by a 2013 survey by the Federation of Small Businesses, which looked at the reasons its members gave for not bidding on public sector work. These varied – for some, public sector contracts were perceived as being irrelevant (44 per cent), others were not aware of suitable opportunities (31 per cent), found the process too time consuming or costly (20 per cent), or thought they could not compete with other suppliers (13 per cent).

A look into Lord Young’s 2013 review on growing micro businesses, further noted that small suppliers faced difficulties in accessing public procurement: “Chief amongst the criticisms from SMEs about public sector procurement is the complexity, cost and inconsistency when trying to sell to more than one authority.” He therefore recommended the creation of a simpler and more consistent approach to procurement across all public sector agencies. 

This led the government to set itself a target of allotting 25 per cent of central government procurement spend to SMEs by the end of 2015. The rationale for the 25 per cent SME target was set out in the introduction to “Making public sector procurement more accessible to SMEs“.

“SMEs are a crucial engine for growth: 99.9 per cent of the UK’s 4.8 million businesses are SMEs; which are responsible for over 14 million private sector jobs,” it read. “There are also many good examples of small suppliers delivering significant benefits to the public sector through greater innovation and at a comparatively lower cost base than large, incumbent government contractors.”

The government implemented a range of measures to achieve this including: introducing a Crown Representative for SMEs; preventing departments from ruling out financially sound bidders because of low turnover; introducing a mystery shopper service to allow suppliers to raise concerns anonymously; breaking up large contracts into smaller lots; and the simplification of bidding procedures.

With the government changing the way that public sector procurement contracts are awarded in an effort to make it easier for SMEs to win them, here are some tips on how to secure one of your own. 

Do your research

If you have a specific sector in mind, contact the appropriate public body to see what contracts are available. These are also sometimes advertised in the national, local or trade press. A survey by the Centre for Entrepreneurs found that it was best to start pitching to councils known for working with SMEs. It cited Monmouth County Council, the Council of the Isles of Scilly, and the Royal Borough of Windsor as being the best to approach first. To find out about public sector contracts worth over £10,000, visit Contracts Finder. You can also search the EU contracts and tenders database on the EU website.

Some local authorities hold “get to know you” sessions. Sally Collier, government deputy chief procurement officer, said: “It is always good to talk. If you put in a bid cold and the authority has had no knowledge of you at all and no idea of what you are about, that is probably going to put you at a disadvantage at the start. Be proactive. Ring up and speak to someone. It is only then that you will be able to fine tune your strategy.”

Be picky

Focus on a select few contracts instead of going for every one that sounds promising.

According to Collier, it becomes temptation for a new small firm to bid on the first thing that comes up. “Be clear about what your business strategy is and whether it is right for that,” she said. “Are you looking to expand across a neighbouring border? Where are you likely to have the most fruitful relationship?” 

Be selective because as a small firm you haven’t got the resources to simply bid for everything. Once you’ve located any potential sources of public sector business, the next stage is to bid for a contract. 

How to stand out from the crowd

One of the biggest hurdles a business will struggle to overcome is how to differentiate itself in the sales process. But in the public sector, when so much of the process is “on paper” how can companies stand out from the competition? 

Stephen Bentley, CEO of Granby Marketing Service, claimed it was highly important to make sure companies had all relevant industry standards and accreditations. It takes significant resources and commitment to get these badges of excellence, but if you’re serious about winning public sector contracts it’s worth making that step, he said. It proves to the outside world that your company is credible.

He further suggested that a “can do” or learning “on the job” mentality will not cut it. It has to be based on proven experience and absolute assurance that you can deliver what the government is looking for.

Jason Woodford, development director and owner of Academy Internet, claimed that it was all about online marketing. “It’s amazing how many purchasers find out about you over the Internet,” he said. It’s not just a question of having a credible website, he added. You also need to ensure that buyers can find you easily on the web.

Making a pitch

Public sector buyers are looking for “value for money”. But Woodford pointed out that it doesn’t necessarily mean the cheapest bid will win the contract. “In one instance, we were competing against major IT companies and some low-cost foreign competition for a public sector contract,” he said. “We were by no means the cheapest bid but we won the contract.” 

Woodford suggested that mature buyers tend to look beyond the prices quoted to factors such as the cost of maintenance or the likelihood of an apparently low-cost bid becoming more expensive once the project is implemented. The only way to deal with this, according to Ian Makgill, director of Ticon UK, is to take as systematic approach. “I advise people to draw up a checklist: What does the client want? What are the requirements of the tender? What are the requirements for my business in terms of accounts and evidence of contracts? Put it all into the tender and don’t leave anything blank without an explanation.”

Yasmin Halai, managing director of Ideal Solutions Systems, said the best solution was often to buddy up with a more experienced organisation. “For instance universities are increasingly looking to forge links with industry both for R&D and to enhance their business provision and they tend to be very successful at sourcing and securing government funding,” Halai said.

There is no excuse not to give the tender application your full attention

With the government having removed the pre-qualification questionnaire for low value central government contracts, you can concentrate your full attention on filling it in properly. Answer each question and don’t leave blanks.

Collier said: “Don’t just play lip service to the tender. You have to pass the exam. Don’t miss questions out. You would be amazed at how many SMEs don’t fill it in properly.”

Mark Bowers, CEO of Redfern, offered some tips from his experience as an SME winning a major government contract. Redfern, according to Bowers, has a fairly formulaic approach to bid writing. He stressed that identifying what the questions meant was absolutely crucial. 

“We spend a significant amount of time making sure we understand the question,” he said. “This can often take between ten to 15 days.”

The company then allocates questions amongst three of its “most senior people” – who will write down the original draft. It will then go to the next person for cleaning and another person for a final rewrite. In this particular case, Redfern employs the service of a bid writer – not to write the bid but to give it the final tick. Effectively, they act as the evaluator, and go as far as to actually mark each question. If the company doesn’t score maximum marks, Bower claimed it goes back and rewrites everything.

Complain if you’re not satisfied

If a procurement proposal has come up with some unrealistic or irrelevant demands, then call the government’s mystery shopper service. Of the 700 complaints received so far, 80 per cent have resulted in changes being made. Collier said: “Don’t be afraid to query. You don’t need to feel like the odds are stacked against you. We really want to get this right.”

Below is a video in which Collier further discusses the mystery shopper scheme.

Be realistic, but don’t give up

Don’t tender for contracts your business is unable to fulfil. However, government procurement is in the process of undergoing significant changes, so don’t give up if previous attempts have failed.

Collier said: “Even if you have tried before, please try again, because the message from government is we want you to come in. Hundreds of firms are now benefitting from a different approach to commercial activity. There is much more transparency and visibility of opportunity. Firms should get a much better reception in central government when they ring up and say ‘hello will you talk to me’ because every department has a small firms champion and a small firms minister and a set of activities that says we are open for business.”

If unsuccessful, ensure you ask for feedback. Public-sector bodies are obliged to provide you with one within 15 days of your request.