Public sector contracts can be a huge boon for small and medium-sized manufacturing and engineering companies. However, the bidding process is onerous and often contains criteria that inadvertently rules out SMEs.
“It has been made very difficult for SMEs to bid,” said Ray Gambell, principal consultant at procurement and supply chain consultancy Brian Farrington. “The pre-qualification questionnaire seeks to filter out companies that aren’t capable. However, they don’t make it very easy for SMEs. It pushes towards the big boys,” he added.
Gambell adds requirements such as showing you’ve undertaken ten contracts in three years, and the time and resources to fill out the documentation create a barrier for smaller firms.
Each of the companies and experts featured in this article mentioned how difficult it is for SMEs to bid for these contracts, and the expense and time involved means it’s important SMEs are selective in the projects they bid for.
Phil Bullimore, ERDF programmes manager at the Manufacturing Advisory Service, which provides enterprise support to manufacturing SMEs, said: “Public sector contracts can be fairly complex and manufacturing SMEs must make sure they are selective over the ones they go after, otherwise they could waste a lot of time and money bidding for a tender they were never going to get.”
Steve Hale, managing director of engineering firm Crofton Design, said SMEs often make the mistake of trying to bid for everything: “We have a process of only trying to bid for work that fits within our expertise, for instance, if there’s a school programme and we can demonstrate we’ve worked in this area previously.”
Hale added a bid can take 30-40 hours and cost the company £3,000, with a success rate of winning one in six projects.
The public sector contract bidding process starts with a pre-qualification questionnaire. Hale said this part of the process can be dreadful: “There’s a real capacity and quality issue in the public sector. Over time they’ve got less and less technical and they’re written by procurement and they don’t have the understanding of technical information. There’s a whole series of questions that don’t add value.”
More on public sector contracts:
- SMEs should take a proactive approach to securing government contracts
- Government to widen SME access to public sector contracts
- What procurement rule changes mean for your business
Brian Farrington, managing director of Brian Farrington, advises companies to pay particular attention to the requests for policies and procedures, adding: “Look at the evaluation criteria and weightings to recognise where the buyer’s focus is and whether these are strengths or weaknesses for the SME.”
The team at Brian Farrington advises SMEs to make sure the roles and responsibilities for the bidding process are allocated to members of staff at the outset, adding it’s useful to have an in-house database of answers to standard questions.
Hale’s gone down this route and is experimenting with software that keeps a bank of answers from previous tenders which can be used for reference. This programme ranks the quality of the answers’ relevancy and notes whether the bid they’ve been used in previously was successful.
Farrington recommends SMEs have an independent eye scrutinise the first draft of PQQs or tenders: “If it’s the SMEs first attempt, consider retaining the services of a specialist writer who has experience of the SMEs goods or services being provided.”
Another route to winning public sector contracts is to work as a subcontractor with a larger provider. Steve Osbaldeston, managing director of rail, civil and structural engineering firm BCS Design, said the firm often supports larger companies through the bid process as a sub-contractor.
This can provide a strategic advantage for smaller companies because the larger organisation will generally have more credibility with finances, quality management and sustainability policies. And Farrington adds that it can require lower levels of insurance and terms and conditions.
Crofton started working as a subcontractor and later leveraged this experience to bid directly for projects. Hale said around 40 per cent of Crofton’s turnover is from public sector work, with 60 per cent of this working directly with the client and 40 per cent as a subcontractor.
It’s also possible to set up joint ventures with other SMEs, particularly when contracts are multi-discipline.
Cost saving measures mean the NHS has become more likely to place tenders will large multi-discipline teams, according to Hale, making it difficult for smaller suppliers. Crofton set up assured partnerships with a number of companies to tackle the problem and bid for these contracts.
When bids aren’t successful getting feedback can be help SMEs to develop offerings and ensure they are successful in the future.
Bullimore said: “Whether you are successful or not, manufacturing SMEs should always ask for feedback as this will be very useful for compiling future opportunities. It’s important to see the process as an exercise for securing future opportunities.”
Farrington adds it’s possible to request a face-to-face debrief and that public sector organisations must comply, as many limit replies to unsuccessful bids to cursory letters. Osbaldeston said this process is particularly useful for rail contracts, with the specific areas of price, environmental and technical can provide a useful marker.
While the bidding process favours larger companies, many SMEs, including the ones featured in this article, have been successful in bidding for public sector work either as by bidding directly or as a sub-contractor. Establishing a structured approach to the process that allocates task to individual employees and takes advantage of lessons learnt from previous tenders is a crucial part of this process.
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