The government claims to have hit its target of 25% of government contracts going to SMEs by 2015. But how does it look on the ground? Is it really easier for small enterprises to win government contracts? What are the biggest obstacles between SMEs and success?
I’d like to share a few of the experiences we’ve had supporting SMEs to win significant public sector contracts. You might find these helpful if you’re planning to bid for opportunities or struggling to find a formula for success.
There’s no doubt that the share of government business carried out by SMEs has increased steadily. The Contracts Finder website also makes it much easier for SMEs to find bidding opportunities.
But it’s not all plain sailing. Winning public sector contracts is still challenging for most smaller businesses.
You might have to do it anyway
Even if you’d rather not get into formal tendering you might find you have no choice. As local authorities struggle to balance budgets they often look to consolidate smaller contracts. Work that might have been commissioned through minor contracts with local suppliers through a simple proposal is increasingly likely to be wrapped up into a single larger contract.
Formal bidding to retain existing work is becoming more common as purchasers try to minimise the number of individual contracts and suppliers they manage.
Suddenly the process of winning business is more structured and demanding. And the size of the contract will attract regional or national providers. The rules of the game are different and your opposition has much more experience of playing to them than you do.
‘Matching the big boys’ was an issue for an electrical contractor we supported in the South West. Two authorities combined housing association maintenance contracts into one huge tender. This tender incorporated much of their existing work.
Here’s what our client discovered:
- The volume of information that has to be provided is significantly larger for a formal tender than a proposal. They quickly concluded they needed help to put it all together.
- Having fully compliant and up-to-date policies is essential. You need to understand the specific detail that will be expected within each policy or there’s no point submitting a bid.
- Presentations to the procurement panel need a lot of preparation.
The contractor was successful because they met all of the requirements of the process and were then able to play to their strengths. They stressed the benefits of using an established local supplier.
These arguments were highly persuasive. But they would have counted for nothing if the bid had failed on any of the basic tendering procedures or requirements.
Shift the focus away from price
Playing to strengths also helped a business that supplies food to schools and care homes. They were bidding against a large national contractor and could not hope to compete on price.
Where they had an advantage was in using a high proportion of locally-sourced produce and smaller, environmentally-friendly vehicles to make deliveries. They also have a very strong customer service ethos.
They’d assumed that the procurement team would know all about them, their track record and how they worked. They thought they wouldn’t need to explain the advantages of a local solution.
This would have been highly risky. We helped them spell out the benefits and successfully shift the basis for the decision away from price towards the areas where our client was stronger.
You are starting from scratch
You have to assume that the procurement team knows nothing about you. They are not the people you’ve been dealing with and they probably won’t know anything about your track record. This means that it won’t count in the decision making process unless you include it in your submission and spell out the following:
- How it is relevant to the contract being tendered
- How your experience and approach will be beneficial both for the contract delivery and for any wider policy objectives the client might have.
Whatever government targets might say, individual procurers don’t always have an incentive to work with SMEs. Life is easier if they can minimise the number of suppliers they deal with. There’s also less perceived risk with working with large, well-known contractors (‘nobody ever got fired for hiring IBM’).
In spite of that, SMEs have a number of advantages:
- local knowledge and presence;
- flexibility and a ‘can do’ attitude
The secret is to bring all of these into the decision making process while making sure you are watertight with all of the basic tender requirements. You have to do a much more professional job of presenting your business and your solution than you’ve needed to do in the past.
Success with significant tenders is entirely possible for SMEs. You just need to be realistic about the effort involved and understand how decisions are made.
Ian Smith, Winning Tenders.