Supply Sme Guide


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Supply Sme Guide

  2. 2. THE NATIONAL SME ENGAGEMENT PROGRAMME THE PUBLIC SECTOR MARKETPLACE The public sector remains a key marketplace for SMEs, representing a valuable route to a market which each year procures around £175 billion of goods and services (about one third of all public spending). In today’s economic climate, the fact that public sector customers traditionally pay promptly makes them excellent clients, offering SMEs stability and business growth. Organisations across the entire public sector should be viewed as potential customers: • Local government spends around £27 billion on bought-in goods and services • Regional spend in the NHS is estimated to be around £12 billion • Civil government spend is estimated to be around £15 billion • Up to 600 new contract opportunities are published every week All public sector organisations buying in goods and services must get the best value for money. This means they must choose the bid that offers “the optimum combination of whole-life costs and quality (or fitness for purpose) to meet the user’s requirement”. It is important to realise that bids for public sector contracts will not be considered solely on the lowest price quoted. Some of the benefits of supplying the UK public sector are as follows: • Diverse requirements • Positively inclined towards SMEs as suppliers • Little or no risk of bad debt • Prompt payment terms • Potential for ongoing work • Responsibility to provide services irrespective of economic conditions Trading successfully with the public sector will also give you added credibility when dealing with private sector customers. The Government recognises that in the delivery of goods and services to public sector organisations SMEs can offer real benefits, including: • Better value for money – increased competition among suppliers pushes down procurement costs and SMEs’ lower overheads can also result in lower prices • Better quality of service – shorter management chains and a focus on specific markets and customers can mean greater flexibility and a more tailored, personal level of service • Innovation – SMEs can sometimes respond more quickly to changes in technology and/or develop new products to differentiate themselves from bigger market players Some SMEs, however, perceive the barriers to tendering for public sector contracts as insurmountable. This guide will help you to overcome these barriers. SME experience of public procurement: • Nearly three-quarters of SMEs rarely or never bid for public sector work • Over three-quarters of SMEs believe that there is a lack of visibility of public sector opportunities • Over half of SMEs feel that the process of tendering for public sector contracts requires more time and resource than their business can allow • Over half of SMEs expect the proportion of their revenue coming from the private sector to increase in the next two years but only one in five SMEs expects their revenue from the public sector to increase within the same period • On average, SMEs find the private sector easier to sell to than the public sector – their rate of success in winning private sector contracts is double their rate of success in winning public sector contracts • Nearly three-quarters of SMEs feel that the public sector is more difficult to deliver work to than the private sector, due to its greater formality, a lack of responsiveness and unrealistic timescales 2
  3. 3. THE NATIONAL SME ENGAGEMENT PROGRAMME Part 1 20 TIPS FOR BEING IN IT TO WIN IT Practical steps to increase SMEs’ chances of winning public sector contracts. Step 1 Be in the know If you don’t know about an opportunity you won’t win it; so ensure you are investing time in searching for and identifying useful contract opportunity gateways. Also, do your research and find out which public authorities have previously utilised the type of services you have to offer. Step 2 Be selective Focus your energy by being selective about those opportunities for which you wish to express an interest. The scattergun approach will only cost you additional time and ensure that you do not commit the correct level of attention and resource to each tender response. Step 5 Build strong relationships Seek to tender for smaller contracts first. This may help you to gain Getting to know your clients, their ethos and needs is vital as is building experience with the public sector and provide reassurance to other public personal relationships with key people within the public bodies you wish to bodies that you understand what is important to them. The requirements for work with. While SMEs have to work extra hard to engage in a personal smaller contracts may also be easier to meet. relationship with the potential client, they do have the benefit of being small Certain types of public procurement bodies, such as local authorities, are and therefore less impersonal than large organisations. more open to bids from SMEs and could be targeted as a priority. As a rule, local authorities are more likely than most central government bodies to Step 6 Develop an effective marketing campaign award contracts to SMEs as they are aware that the local economy can be Approaching public sector organisations before they actively advertise helped through contracting on a local basis. contract opportunities can be a good way to get on their radar and make them aware of the sort of products/services your organisation offers. Step 3 Size matters Upstream marketing with key public sector agencies will raise your profile so Remember that public authorities will wish to be confident that you can that your business name will be in their minds when they tender contracts. deliver, so are unlikely to invest a high-value contract with a company with a relatively low turnover. As a rule of thumb, you could consider not tendering Step 7 Build a standard PQQ response for contracts that are worth more than 25% of your current annual turnover. The process that all public authorities will undertake has many similarities However, check how long the contract is expected to be let for – for example so if you have your responses to the common Pre-Qualification a contract with a value of £500,000 and a duration of three years has an Questionnaire (PQQ) material prepared in advance, you can then tailor this annual value of around £166,000 – which could be within your reach. information to answer the PQQ on a tender-by-tender basis and save time. Step 4 Invest before you bid Step 8 Build a tender toolkit You need to be clued up on the requirements of the public sector tendering To save time and resources, develop a tender toolkit from which you can process. Read the public procurement regulations and attend seminars and lift and amend sections of text as necessary. Although no two tenders are the events that provide an insight into the tendering process. A lack of same and there is no standard format used by central or local government understanding of the procurement process will undermine the quality of your organisations, many ask for the same information. After every tender, refine bids. your toolkit utilising lessons learnt. Always check to ensure that text you have Invest in putting together a dedicated team with the right skills and time reused is completely appropriate to the opportunity you are responding to. available to understand how the process works. This will enable you to maximise your chances of being successful. It is important that you Step 9 Engage with target clients familiarise yourself with the rules governing public procurement because the size of the contract will affect the method by which public organisations Suppliers that have shown interest and built strong relationships with procure their services. You also need to be aware that there will be subtle public bodies are those that stand a stronger chance of being considered variations between organisations – for example, where they set their limits – come bid time. It may seem quite obvious that a conversation with a person so that a contract which does not need to be competitively tendered for in will yield more information than the tender document but it is important not one borough might well require competitive tendering in another. to underestimate how true this is. Step 10 Identify and use support schemes SMEs should explore the use of national, regional, local government or independent support schemes that can offer advice, training or other support to SMEs looking to bid for public sector work. Step 11 Meet the client’s needs The rigours of the public procurement process demand that suppliers are incredibly diligent about meeting all the requirements of the procurer. Suppliers should ensure that they can meet all criteria, and their proposal should reflect this in detail. Step 12 Combine expertise with innovation There is recognition by government that new products can potentially deliver better value for money than those that are tried and tested, and so a more outcome-based approach to procurement – rather than simply 3
  4. 4. THE NATIONAL SME ENGAGEMENT PROGRAMME a cost-effective, single-solution approach – is being applied to contracts. Step 20 Invest in a high-quality service ethos It is recognised that SMEs are able to provide innovative solutions and Delivering a higher-quality service than is required will increase the value for money. If you have an innovative solution, seek the permission likelihood of contract renewal. Once the contract is won, SMEs looking of the client to offer it. However, ensure that when you present an to stay in favour and be considered for the next contract period must innovative solution it is not perceived as a risk. invest in meeting, if not surpassing, the service delivery requirements of their client. Your target should be to give your client the feeling that you Step 13 Address risk are their partner in trying to achieve and deliver their requirement. Make SMEs need to promote themselves not only as innovators but also as it difficult for them to consider alternative providers. experts in their field. Help and reassure your potential client by always identifying potential risks and showing how your proposal mitigates them. Any reduction of the risks perceived by the public sector to be associated with contracting with SMEs is likely to result in an increase in engagement with such companies. Step 14 Carefully match responses to the stated criteria Most public sector contracts involve a two-stage process – selection of tenderers, followed by evaluation of tenders. At both stages, the criteria for selection or award are clearly stated in either the original notice or the invitation to tender documentation. Ensure that you understand the relative weighting/scoring that the authority is applying to each criterion and make sure that your response addresses these criteria proportionally. Step 15 Consider engaging a specialist ‘Bid Writer’ Consider utilising the services of a specialist public sector bid writer. Specialist bid writers understand the procurement process and what it takes to make a successful bid. This approach may at first seem costly but you will increase your chances of success and fast track your learning Part 2 so that you will not need their skills in the long run. FINDING OPPORTUNITIES Step 16 Price matters There are a variety of methods for finding opportunities through both the Remember that most tenderers will have similar capabilities to achieve public and private sectors. Some of these are described below. the technical requirements of the tender. Where this is the case, price will public sector contract information portal become increasingly important. Where price is weighted at 25% or over, is the Government’s UK-wide contract opportunity portal, then it may be difficult to win unless you are providing the lowest or close created to provide small businesses with access to lower-value (typically to the lowest price. below £100,000) public sector contracts which fall below the EU thresholds. Step 17 Learn from the debrief The portal provides a platform for buyers across the entire public sector The chances are that you will lose tenders before you win them. The to advertise their lower-value contracts free of charge, and has been cited more tenders you respond to, the better you will get at tendering, but only as a best practice means of advertising below threshold notices by HM if you ensure that you do not make the same mistakes time and time Treasury and the European Commission. again. So ensure that your tendering activity is a rewarding learning curve Once registered on, you can search the online database by seeking information from the awarding authority after every free of charge to access lower-value contract opportunities nationwide and unsuccessful tender to determine why you were not selected or why you benefit from the free Contract Alert service in a local area of your choice. were unsuccessful at the invitation to tender (ITT) stage. Most importantly, There are also a variety of guidances and resources available from the learn the lessons for the next time. If the successful tender proposed a website, making it a good place for SMEs to start looking higher price, remember that you have a right to know what the winning bid for potentially rewarding opportunities to sell to the public sector. was and why it was better than yours. Even if you are successful it still pays dividends to attend the debrief, since you will discover where your bid was stronger than the competition, and possibly also learn about Government Opportunities areas of weakness. Government Opportunities (GO) magazine is a publication and website ( focused on the public procurement industry. It is Step 18 Act as a subcontractor aimed at procurers and suppliers alike, and provides news on public Generating revenue through the public sector need not mean working procurement, information for businesses, reviews of procurement events directly for the public sector. Increasingly, public bodies are hiring large and analysis of trends and activity within the sector. firms that contract out work to smaller suppliers. SMEs should be aware BiP Solutions – the publisher of GO – also provides a business that acting as a subcontractor to larger private sector organisations with intelligence service called Tracker, which publishes over 122% more public public sector funding may be a faster route to public sector revenue. sector contract opportunities than the Official Journal of the European Winning subcontractor business also provides a useful reference should Union (OJEU). Tracker offers unrivalled access to a worldwide database of you wish to work directly for the public sector in the future. public and private sector contract opportunities of all values, providing Step 19 Consider Framework Contracts instant notification of the latest opportunities matching your profile, and delivers key market intelligence tailored to your unique business needs. Although it may be time-consuming initially, getting onto a framework agreement should result in many relevant opportunities over the lifetime of the framework – normally two to five years. Framework contracts are also a useful way of identifying who your competitors are. Once a Procurement process training framework contract has been awarded you will be able to see all the Supply provides a range of roadshows and workshops around the companies that have been successful in securing a place on it; some may country to help SMEs better understand the public procurement process be known to you but some may not. and win tenders. 4
  5. 5. THE NATIONAL SME ENGAGEMENT PROGRAMME Bid-writing courses • SMEs may also be more willing and able to tailor a product or Bid-writing is the aspect of the procurement process which SMEs tend service to meet specific customer needs than a large firm that to find most difficult. However, organisations such as BiP Solutions' sells an established offering; Procurement Advice and Support Service (PASS) offer training specifically • Many SMEs, including social enterprises, Voluntary and covering how to complete tender responses. This can be helpful to SMEs Community Organisations (VCOs) and Black and Minority which do not have experience in this area and/or do not feel in a position Ethnic-owned enterprises (BMEs), supply higher quality to hire a specialist bid writer. specialist products or services than larger suppliers, either because larger suppliers are discouraged by the limited Meet the Buyer and networking events demand, or because the SME has skills, originality and Networking and Meet the Buyer events are useful ways in which commitment in that field greater than those found in SMEs can form and develop those all-important personal relationships their large company competitors. with the public sector. Ask your local authority for details or visit: Innovation: For details of the Supply workshops, which are held at locations around • SMEs can bring innovation through, for example, the early the UK, visit: exploitation of new technology, providing products or services in new or underdeveloped markets, or by using innovation to Financial support differentiate themselves from established market players. Winning public sector contracts can sometimes seem like an uphill Despite outlining these potential benefits of SME involvement, BIS is struggle for inexperienced SMEs or those firms which lack the time and keen to point out that these are not necessarily true in all circumstances. resources to dedicate to the process. However, there may be financial The size of the benefit might be hard to quantify, which may explain why support available for your business. You should ask your local the benefits are not necessarily recognised by public sector organisations. Businesslink or local authority for advice. This is also perhaps because the gain from using smaller suppliers comes in the form of a ‘willingness to go the extra mile’, and this is an intangible and unquantifiable quality. Summary Remember, there are huge opportunities for SMEs to sell to this marketplace; local government alone spends £27 billion per annum on bought-in goods and services. With ongoing requirements across all industry sectors, opportunities really can be quite diverse, so it is important to monitor the marketplace to ensure you do not miss that one opportunity which may prove vital to your business. Understand the market and your potential customers Knowing your market and gaining an insight into the procurement procedures public bodies are required to follow will better position your company to take advantage of potential opportunities. So, do some Part 3 research, build strong relations and network with prospective customers by attending conferences and Meet the Buyer events. GOVERNMENT’S PERCEPTION OF THE BENEFITS OF PROCURING FROM SMEs Monitor the market for potential opportunities The Office of Government Commerce (OGC) and the Small Business Tender portals offering contract alert services will inevitably save you time Service (now the Enterprise Directorate, part of the Department for and effort. The public sector is vast, and with a focus on value for money Business, Innovation and Skills (BIS)) have produced several documents and increasing efficiency, there could potentially be an increase in the outlining the benefits of procuring public services or goods from SMEs. number of smaller contracts advertised. Due to their lower values, they could prove to be a more viable focus for your business. These fall broadly into the following three categories: Moreover, working with the public sector indirectly as a subcontractor can Better value for money: also be a great way to increase reputation and gain valuable experience, and • Bringing in more suppliers will often stimulate greater may be a faster route to securing public sector revenue. competition in the marketplace, thereby reducing the costs of procurement from all suppliers; Finally, be selective! The timescales set for expressing your interest can be short; however, it • SMEs have lower administrative overheads and management is important to spend time carefully evaluating opportunities which may costs than larger firms. Depending on the nature of the appear relevant. Read what is being asked of you and then read it again to procurement, this can result in lower prices. ensure you understand all the requirements. Do not spend valuable time and resources preparing a bid if you are unsure that you can deliver. Better quality of service: Public bodies are aware of the real benefits working with SMEs can offer • SMEs have short management chains and approval routes, so them. Government spend is crucial to the future competitiveness of the they can respond quickly to changing requirements. SMEs may economy and accelerating our recovery from the recession. Procuring using also be highly focused on particular markets, making them processes that are open, fair and transparent not only allows the public particularly responsive to changes in those markets; sector to achieve cost savings through obtaining value for money, but also • Business from large organisations is important to SMEs. This ensures the market is opened up to competition, presenting real can result in a better, and often more personal, level of service opportunities for many businesses to help the entire public sector drive its and in a better relationship with the supplier; efficiency agenda and assist in delivering cost savings. 5
  6. 6. FREE ENTRY 9-10 March 2010 National Exhibition Centre, Birmingham Connect with the PROCUREMENT COMMUNITY Access new MARKETS Build your KNOWLEDGE Procurex National is your one-stop shop to network with the UK’s buying community, including some of the most influential public sector buying consortia. This highly interactive, FREE event will also include over 20 free training workshops aimed at helping private sector businesses to improve their understanding of public sector procurement, including how to put together winning tenders. Why attend Procurex National? Network with key public sector decision makers Attend free procurement training workshops Find new opportunities for your business Access bespoke business advice and consultation REGISTER FREE TODAY AT PROCUREX NATIONAL PARTNERS INCLUDE: ORGANISED BY