Over £250 billion in public sector contracts is tendered out annually across the UK. These contracts represent major opportunities for businesses to win contracts with a guaranteed income stream from reliable customers. However, if you’re thinking that public sector buyers will only be interested in working with large scale providers, think again! There’s never been a better time for SMEs to bid on public contracts and take advantage of these opportunities. Here’s 6 reasons why:
1. Many public sector bodies have stated targets to increase the amount of work they deliver through local SMEs in their supply chain. These targets are often quantifiable objectives in their Procurement Strategies, underpinned by a commitment to help stimulate the growth of local SMEs who provide local training and employment opportunities. Help them meet their targets by bidding for their work!
2. Social Value and Community Benefits offerings are becoming an increasingly important part of public tendering. Local authorities and other public sector organisations want to know what their contractors will do for their local communities if they are awarded a contract. SMEs often have very strong networks and established partnerships in their local areas, alongside the infrastructure links to deliver more compelling social value propositions than their larger competitors.
3. Bigger is not always better. As we have seen recently with the example of Carillion, awarding work to large national providers operating on very small margins is far from risk-free. Many public sector buyers may now prefer to spread their work (and risk) across several smaller providers. They may even be prepared to pay more to use SMEs to deliver where large organisations would previously have won the work at low (and potentially unsustainable) rates.
4. SMEs are typically more agile and responsive than large organisations. The ability to mobilise and respond quickly to changing requirements is a significant benefit for public sector buyers, who are more often looking for bespoke solutions to fit their unique requirements, rather than an ‘off the shelf’ delivery model.
5. Public sector buyers like to know they have a route to the top. Will a large-scale, national provider offer the Managing Director’s mobile number as a point of contact? Unlikely! SMEs can back up their delivery promises by offering contact details for their Founder, Partner or Director as a point of escalation. This reassures buyers that they will be a valued customer and that they will be able to contact key decision makers quickly, should they need to.
6. Demonstrating sustainable business practices is of increasing importance to public sector buyers. It can be challenging for a large organisation to demonstrate how they will deliver sustainably at a local level, particularly if they have no previous experience or infrastructure in the locality. SMEs can usually demonstrate local supply chains, employee presence, office premises and a far smaller carbon footprint compared to large scale suppliers.
So, if you’re not already registered to receive notifications of relevant public contracts in your sectors, what are you waiting for?! Look to identify suitable contract opportunities where your SME status can be advantageous and develop a compelling proposal which considers the 6 factors above. Whilst public tendering can be time consuming and a little daunting for SMEs who have never won work this way before, the size of the prize can be considerable, and potentially transformational for your business.
Written by David Gray, Bid Development Director at AM Bid Services