The public sector in the UK spends an incred
ible £290 billion per annum with third party organisations. Most of this spend is awarded through competitive procurement exercises.
In the current economic climate some existing markets are no longer viable or sustainable. This is causing many organisations to consider bidding to the public sector.
In this article, I will focus on eight key reasons why the public sector is a desirable client and why organisations should seriously consider bidding to the public sector.
1. Embracing public sector spend – the incentive to engage with the public sector is massive. Across the UK, £290 billion is spent by Government (including the devolved administrations of Scotland, Wales and Northern Ireland), NHS, Local Authorities and Higher Education. Housing Associations also spend billions every year through procurements many of which are run along similar lines to the public sector.
2. The public sector will not go out of business – in a time when some markets have contracted significantly or disappeared altogether, it is important to remember that a public sector client should never go bust. Even in times of severe cashflow difficulties, they will be bailed out by the government and pay money owed for services.
3. Prompt payment terms – the public sector is a client who is legally required to pay suppliers quickly. The average payment time for a public sector buyer to pay their supplier is well under 30 days. Much of central government and the devolved administrations are paying their suppliers in 10 days or less.
4. Transparent procurement process – there is transparency across the whole process. There is a transparent evaluation criteria and bid processes. Bidders have the legal right to access individual score, feedback and how close they were to competitors. There is also a great deal of information already released about how the public sector awards contracts. Most public sector organisations produce and publish annual procurement strategies and procurement reports, so bidders can find out what they are looking to achieve.
5. The value of public sector contracts to businesses – bidders who have guaranteed work from public sector clients have an actualised revenue stream. These contracts tend to be several years in length and so budgets and revenue can be viewed as more secure. For business owners who are focussed on the value of their company, their organisations will become more valuable with more retained work.
6. Due Diligence process can help organisations – the due diligence needed to win public sector contracts can help to strengthen overall robustness and resilience. Public sector buyers will look at various areas of an organisation such as economic and financial standing and credit rating. This is a positive because organisations do want to look good externally. The due diligence involved will also look at quality control processes, health and safety arrangements, environmental / sustainability credentials, social value and fair work practices. These due diligence processes look at areas which are the hallmarks of successful businesses and may highlight any gaps that need to be plugged.
7. Public sector commitment to Small and Medium Enterprises (SMEs) – the public sector tries to ensure that contracts being tendered out do not have unnecessary barriers for SMEs. In fact, the public sector want SMEs to bid for, win and deliver public sector contracts. Further to this, the Social Value Act 2012 mandates the public sector to take into account social value considerations through procurement.
8. Future opportunity to deliver other contracts – once organisations start to deliver public sector work, there are other opportunities for additional work through the existing arrangement or through other contracts. Public sector contracts can be used as references for other contracts in both the public and private sectors. These contracts can inspire confidence in buyers across these sectors because of the due diligence involved with winning a public sector contract.
To discuss how your organisation can start bidding for and winning public sector contracts, please contact AM Bid here