John Davison gives advice for self-employed and small businesses that are looking to obtain work opportunities from the Government or local authorities.

Issue

The Government is keen to encourage small businesses to obtain public sector contracts. It had set a target of 25% of government spending to be with small businesses and small and medium-sized enterprises (SMEs). This target has been exceeded and the Government has set a new target of 33% of government spending with SMEs and small businesses by 2022. There are increased opportunities for small businesses to win contracts. The UK Government spends over £242 billion a year on procurement and is the largest purchaser of goods and services in many sectors.

Simplified procedures

One of the problems with public sector contracts had been the onerous tendering process. The complicated pre-qualification questionnaires are no longer needed for lower-value contracts and the bidding process has been simplified. Large jobs are also often being split into smaller contracts to enable SMEs to bid.

Where to find contracts

Requests for tenders are listed on central websites. There are separate sites for England, Scotland, Wales and Northern Ireland. These can be found at www.gov.uk. These sites publish all contracts for central Government contracts in excess of £10,000 and other public sector contracts in excess of £25,000. An account can be created to get email alerts of any new potential contracts that are published. The EU also has a tenders website, but this may be of limited use following Brexit.

Local authorities also publish requests for tenders. Often websites only show requests for tenders where the value exceeds £10,000. It is recommended, therefore, for businesses to contact the procurement departments of local authorities and other public sector bodies, and establish a relationship to find out what contracts and tenders are available, particularly for those under the £10,000 threshold.

How to make a bid

There are four different types of tender process that are commonly used. These are the following.

  1. Open: The tender is advertised and interested parties can submit their tender.

  2. Restricted: A two-stage process were a shortlist is first established, often using a pre-qualification questionnaire. Shortlisted businesses move to the next stage and are invited to tender for the contract.

  3. Competitive Dialogue procedure: This is used for complex contracts where the entity awarding the contract negotiates with potential suppliers to develop solutions. An invitation to tender is then published for the potential suppliers to tender for the contract.

  4. Negotiated contracts: An infrequent process where the awarding entity negotiates with more than one supplier.

The most common for SMEs are the first two types.

Pre-qualification questionnaires have been mentioned several times. These are important for all larger contracts and are frequently required for public service contracts. They are seen as a way of creating a shortlist of potential suppliers. Consequently, it is important to complete these carefully as those that fail to meet standards are rejected. Completion of the form should be seen as a marketing exercise to demonstrate ability and skills. If the business has special skills, relevant experience or a track record in public service this must be highlighted. While these questionnaires are time consuming to complete, once you have completed one, a lot of the information can be replicated on other questionnaires.

The threshold for these questionnaires is currently set by the EU and a questionnaire is currently required for contracts in excess of £111,575 in central Government, and £172,514 for bodies outside central Government. Below these thresholds, most bodies will use a core questionnaire rather than the full pre-qualification questionnaire to help in the tendering process. While this process is based on EU procurement rules they have been incorporated into the 2015 Public Contract Regulations and will undoubtedly remain for the foreseeable future.

To be successful in the bidding process, no matter what process is used, it is expected that:

  • everybody in the supply chain meets 30-day payment terms

  • quality standards can be met and budgets and timescales will be met; ISO 9001 (Quality) certification can be a key factor and it is advisable that this certification is obtained prior to bidding

  • good financial performance can be demonstrated to indicate stability; the Government body will not want to award a contract to a business that will not survive the length of the contract period; a strong balance sheet and sufficient cash flow needs to be demonstrated; bank references and insurance certificates usually need to be provided to support claims of financial stability

  • environmental management policies (usually qualifying for ISO 14001 (Environmental)) need to be shown and it is advisable for this certification to be in place before a bid is made

  • the business must also show a good record in both health and safety and equal opportunities, OHSAS 18001 certification will help

  • credentials, testimonials and case studies need to be highlighted to support the claims to skills and abilities.

Writing the bid

Before writing any bid, the business should find out what the contract is for, what is specifically wanted. Often the published information does not give the full picture of what the awarding body wants. Get in touch with the organisation to clarify what they want from the successful bidder. Are there any special requirements, such as environmental issues or accreditations? Carefully examine any bidding documents to ensure that you can deliver the service or goods required and that you can do this in a cost-effective manner (in the way that the awarding body wants).

The bid should describe how your business can deliver what is required and why your business is the clear choice for this. You may know that you can easily provide the goods or services, but how do you demonstrate this to the awarding body? From experience, there is nothing more frustrating that a contract being awarded to a rival that you know does not provide as good a service as you do. Do not be shy of “blowing your own trumpet”, highlighting your expertise and showcasing your skills.

Clearly detail what is it that you can offer that differentiates you from other bidders. Describe the business’ experience in the area and the successes, and any relevant qualifications, CVs and biographies of the team that is to be used. Introduce the team that will be delivering the service and extol their skills and qualifications. Detail timings when milestones can be delivered and justify the pricing strategy.

Pricing is important. Experience shows that awarding bodies are price sensitive. If your bid is more expensive than a rival, why should they choose you? What makes you worth the extra expense? There is little comfort in knowing you are the best value (even if more in actual cost) if you do not get awarded the contract. You need to show that your contract is the best value. If an item is a commodity, it can be understood that the awarding body will go for the lower price, but where there are skills or expertise that are being purchased, how does the awarding body know that your skills are worth the extra cost?

Read through any paperwork that is to be sent — it is important to ensure that spellings and grammar are correct. It ruins any claims to professionalism, skill and attention to detail if your paperwork contains typos, or you misspell the person’s name that you are sending the bid to.

Pre-qualification

Only bid for contracts that your business wants and can deliver. Tendering takes time, do not waste it if you are not up to it. Numerous unsuccessful bids can destroy the businesses credibility to those awarding contracts.

Post-bid

Where a bid has been unsuccessful, the bidder should get feedback. Why was the bid unsuccessful, how can the bid be improved? If you are successful, see if the business can be added to the preferred suppliers list of the organisation, this improves the chances of getting future contracts and can reduce time in the future.

Conclusion

Obtaining government and local authority work is valuable. They pay on time and will not become insolvent. Also, they frequently renew contracts so there is often follow on work. There are, however, time costs to making bids and it can be hard to break into the bidding process as a first-time bidder. Established and previously used contractors have the advantage of a track record. Once you are experienced in making bids, this process becomes easier and more lucrative. Given the Government’s commitment to increasing the number of contracts awarded to SMEs, it is a good time to start tendering for these contracts.

Last reviewed 12 April 2019