How SMEs can demonstrate value in government contracts
The number of public sector contracts being awarded to SMEs continues to rise and services are frequently being broken down into smaller contracts to facilitate SMEs. However, where SMEs may not have the funds to offer free value adds or perhaps offer the lowest price, it’s vital that they clearly articulate how they can deliver value.
When a public body procures goods or services, it must ensure that the procurement meets the required principles of transparency, equal treatment, non-discrimination and proportionality mandated by procurement legislation. Depending on the complexity and financial threshold of a procurement project, different procedures and rules will apply to achieve these principles.
For contracts above certain thresholds (as revised by the Cabinet Office every two years), the full procurement regime under the Public Contracts Regulations 2015 will apply. These procurement opportunities can be found via the newly introduced 'Find a Tender Service' on the Government website, which publish and advertise procurement notices for high value contracts (usually above £118,000).
There is no formal tender process for contracts below the financial thresholds. However, to achieve the transparency principle and opening the market to SMEs, these opportunities can also be found on sources such as the Digital Marketplace or Contracts Finder (for contracts worth over £10,000).
Regardless of the value of an opportunity and the process being followed, one of the key goals in public procurement is the value that the outsourcing of services can bring, with public bodies under increasing scrutiny and tight budgets. Understanding this goal could help SMEs to navigate the contracting process and secure public sector opportunities for the provision of goods or services.
What are the values?
The Public Services (Social Value) Act 2012 requires contracting authorities to consider how the procurement can improve the economic, social and environmental well-being of their services to the public.
As the value could be wide-ranging, identifying what an authority is looking for will help SMEs to evidence how it can deliver this value in its pitch. For example, a contract for an e-receipt system could help an authority reduce their carbon footprint, time and costs of handling paperwork.
How to demonstrate value
The following are often key considerations for public sector entities:
- Pricing: public bodies, like most organisations, are having to work within tight budget parameters and may have specific constraints that they need to operate within, for example, perhaps they need to utilise budget within a particular financial year and therefore structure payment to allow for this. Work with the public body to understand their pricing needs and try and consider pricing options that work for them. It’s not all about the cost itself but the payment plan and terms surrounding payment. If they have a need to evidence an outcome consider whether you can link part of the payment to delivery of that outcome to reassure them that you can deliver tangible results.
- Quality: it is important that you have clear, realistic and quantifiable performance indicators and appropriate remedies available to the authorities if you can’t meet them (e.g. service credit or, delay deductions). The authorities may also set out their performance expectations and you should consider how you can meet them while making sure that it’s financially viable for you.
- Cooperation: ongoing support throughout the contract duration is important. You should clearly articulate how you will work alongside the public entities in-house teams, how you can adapt to change requests and importantly how you will work with the organisation to deliver changes or additional services in a cost effective manner.
- Exit: it’s not something suppliers like to consider, but for a public organisation that might be heavily reliant on third party providers, ensuring it gets the right support to facilitate a transition and exit will be important. Demonstrate that you can provide them with the necessary assistance while still protecting your business interests (e.g., providing information while protecting your commercially sensitive information).
The resources for government contracts are available and you can sign up to receive regular updates. If you’re interested in an opportunity, drill down to the core value of what that public body is seeking to achieve.
There’s no blueprint for winning contracts with public bodies but understanding the value of a procurement and clearly evidencing how you can deliver that value should be the guiding principle.