Public sector contracts are at an all-time high for SMEs

Last updated: Apr 18, 2023 @ 11:12 am

Public sector contracts can be lucrative opportunities for your business. The UK public sector spends an estimated £284 billion annually on the procurement of goods and services. This means there is a massive market for businesses to supply a good or service to public sector organisations.

Important terms to know for public sector contracts

• The public sector – all government-run organisations and bodies financed by the British taxpayer, including local councils and the NHS, for example.

• Public procurement – the purchase of goods, works and services by public sector organisations.

• Public contracts – public sector job opportunities. Contracts are awarded to businesses that offer the most value for money, known as the most economically advantageous tender (MEAT). This does not mean the contracts goes to the lowest bidder. Rather, it means it goes to the bidder offering the best product for the price.

• Awarding authority – the organisation that is buying the good, service or work, advertising the contract and decides who wins.

Misconceptions about public sector contracts

There’s a common misconception when discussing public sector contracts that only big businesses can compete for work. However, this simply isn’t the case anymore. In fact, in recent years there’s been a drive for public sector organisations to actively award more contracts to SMEs.

The UK government has a target of spending £1 in every £3 with SMEs by 2022. The latest figures show that they are well on track with this target. Currently, the overall spending with SMEs represents 26.7%, suggesting they are well on their way to the targeted 33%. New data published (May 2021) shows government spending with SMEs at an all-time high at £15.5 billion in 2019/20. This is an increase of £1.3 billion on the previous years.

Cabinet Office Minister, Lord Agnew, said:

“Small and medium-sized businesses are the backbone of the UK economy, fuelling economic growth and providing employment for almost 17 million people.

“That is why we are determined to make sure the power of government spending supports this vital sector and helps bring forward the delivery of top-class public services.”

Figures for government spending with small businesses are measured both in terms of:

• Direct spending – where money goes directly from the government to small businesses. The total direct spend was £6.6 billion in 2019/20, compared to £6.4 billion in 2018/19.
• Indirect spending – goes through the supply chains of larger companies. The indirect spend was £9 billion, compared to £7.8 billion in 2018/19.

Advantages of tendering for public sector contracts

There are multiple advantages when tendering for public sector contracts. A couple of them include:

• Guaranteed pay

One of the biggest is that suppliers benefit from guaranteed pay upon winning a contract. Public sector organisations are bound by their contractual agreement to pay the awarded supplier. The Crown Commercial Service (CCS) must pay suppliers within 60-days of invoicing. This is to comply with the Prompt Payment Code. This can give peace of mind to new businesses with the guarantee of payment.

• Gain experience

Winning tender contracts can help you gain experience. Most contracts will require you to prove your experience and capabilities via past contracts that you’ve fulfilled. These are known as case studies and buyers can ask for as many as three in the last three to five years. The more contracts won, the more experience you have. More experience can then lead you to secure even bigger contracts, thus expanding your business.

Tendering for contracts as part of a framework agreement or Dynamic Purchasing System is an effective way to do this. Securing a place on one of these tendering procedures will save you time in the long run. It can also help you secure a pipeline of work for your business.

3 things to remember when tendering for public sector contracts

1. Contracts are awarded to the MEAT

As mentioned above, the public sector contracts are awarded to the most economically advantageous tender. This is referred to as the MEAT. The contracting authority will be seeking tenders that provide the most value for money while delivering the contract. The MEAT means that the buyer is evaluating more than just price. They could be considering a range of factors that can include, but aren’t limited to the following:

• Quality
• Cost
• Technical ability
• Sustainability
• Accessibility
• Innovation
• Environmental benefits
• Customer service
• Ability to deliver on time.

Each contracting authority will be seeking something different depending on their needs. The focus of what is required for each tender will be noted in the specification and tender documents.

2. Social value shouldn’t be glossed over

The Central Government Social Value Model is used by organisations in the public sector when tendering. As of 2021, there is a minimum mandatory weighting of 10% on social value within public sector contracts. Some may even be as great as 30%.

Social value is the social, economic and environmental aspects that should be considered during a public sector contract. It was launched with five key themes in mind that should be addressed where possible. These are:

• Tackling economic inequality
• Supporting COVID-19 recovery
• Fighting climate change
• Improving equal opportunities
• Showing commitment to health and wellbeing.

Social value is an opportunity for SMEs to differentiate themselves from their competitors, adding commercial value to their bids.

3. Address what’s in the specification

One of the reasons that SMEs don’t win a tender is that they don’t answer the questions in the specification. That along with not pricing their good or service right. It’s important when responding to public sector contracts that you address all the questions being asked in the specification. The contracting authority is asking them for a reason. These will help them understand whether your business has the capabilities and capacity to deliver the contract.

A buyer will often want you to demonstrate in your public sector contract response that you:

• Understand what they’re asking for
• Have the economic and financial abilities and resources to fulfil the contract
• Hold evidence of a track record in delivering similar goods or services to similar standards
• Have a qualified and professional team to deliver the contract.

Where can I find public sector contracts for my business?

You may be wondering where you can find public sector contracts for your business. There’s no shortage of websites offering multi-sector tendering opportunities and leads. Ideally, you should be searching for a sector-specific site that posts all unique, public and private sector opportunities.

Simply relying on CPV codes can result in missed opportunities as they are often mislabelled. Finding a portal that uploads and categorises tenders by keywords, location and budget and more can streamline the process. Our sister company, Hudson Discover, hosts 11 sector-specific tendering portals. One centralised and easy-to-navigate portal can help you save time, streamlining the process.

These sectors consist of;

• Creative Tenders
• Healthcare Tenders
• Facilities Tenders
• Construction Tenders
• Technology Tenders
• Logistics Tenders
• Research Tenders
• Consultancy Tenders
• HR Tenders
• Finance Tenders
• Hospitality Tenders

Once signed up, you’ll have access to your own dedicated Account Manager. They’ll be able to answer any questions you may have about public sector contracts. You’ll also get an email alert when new and relevant tenders are uploaded to your sector.

Need help when tendering for public sector contracts?

No matter the sector you’re in, the quality of your response matters. We understand that running your own business can be fairly time-consuming without having to deal with the tendering process. You don’t necessarily have the time or resources to write a winning response in-house. If this is the case, outsourcing to bid writing experts can help you win your next public sector contracts. Here at Hudson Succeed, we pride ourselves on being tender writing experts.

We proudly hold an 87% success rate and have over 60 years of collective bid writing experience. We offer four levels of bid writing support to suit every business need. Whether you’re completely new to tendering or need a response proofread before you submit – we can help with writing bids. Our services include:

Tender Ready

Our Tender Ready 4-week programme is perfect for businesses that have never tendered before. A Bid Writer will work with you to ensure you have everything in place to tender successfully. Tender Ready offers your business:

• A 12-month subscription to one Hudson Discover portal.
• Access to Global Bid Directors and Senior Bidding Professionals.
• An Organisation-wide Bid library, including 3 case studies, 5 CVs and policies.
• Additional flexible benefits.

Tender Improvement

If you’ve been tendering but aren’t seeing success from your current efforts, our Tender Improvement package can help. Our Bid Team will assess your previous responses and tender documents. They will work with you to improve for future submissions. This package includes a 12-month subscription to a Hudson Discover portal and additional tendering development services.

Tender Writing

Once you’ve found the perfect public sector contract for your business, send it our way. Our Bid Writers can take care of the whole thing for you they’ll even submit it on your behalf. They’ll let you know what they need from you, providing you with a full Tender Writing breakdown.

Tender Mentor

If you’ve written your own tender response and need it double-checking for errors, Tender Mentor can help. A Bid Writer will proofread your work for any inconsistencies, grammar or spelling mistakes. They will also ensure it’s in line with the specification before you submit.

Discover Elite

Upgrading to Discover Elite can help optimise your tendering efforts – even when you’re busy. Our two new time-saving tools can improve your competitor awareness and success rate when bidding for public sector contracts.

The Ultimate Time Saver package offers your business:

• A maximum of five tender breakdowns per month.
• An annual subscription to a maximum of two Hudson Discover sector-specific portals. This option can help businesses that overlap two industries such as Technology and Healthcare, for example.
• Pre-market and award engagement notices monitored on your behalf.
• Buyer portal management, including registration, password management, downloading documents and assessing viability based on your bid or no-bid strategy.
• Weekly phone calls with your dedicated Account Manager to discuss viable tendering opportunities.

The Become a Pre-Bid Master package also includes:

• All of the above.
• Up to seven tender breakdowns per month.
• A tendering strategy delivered by a Senior Bid Manager with a minimum of 5 years of experience. Our Global Bid Director will manage this.

Contact us to find out how we can help your business grow.

Find more helpful tips and advice in our blogs. We cover topics including:

• How to win a tender
• What is a Bid Writer?
• The tendering process
• Writing winning bids
• 7 tips for tendering for contracts
• Tips for bid management
• Bid writing services
• The types of tendering procedures
• Writing bids
• Bid writing consultants
• Submitting a tender response
• And many more.