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04 Apr 2014

How can Small Businesses compete against Larger Companies and win Public Sector Contracts?

How can Small Businesses compete against Larger Companies and win Public Sector Contracts?

For small businesses the idea of winning a public sector contract can seem impossible, with the process of winning a contract being both lengthy and costly, many wouldn’t know how to find what public sector contracts are available or even if they are allowed to apply. 

Over the years there has been a decline in the number of public sector contracts being won by small businesses; only one in five small businesses winning the coveted contracts. The tendering process to win the contacts are notoriously time-consuming, bureaucratic and complex, with small business being daunted by all the paperwork involved and the fear that they just cannot compete with the larger companies.

So why should small businesses go to the effort of trying to win public sector contracts? Public sector contracts can been seen as small businesses bread and butter, being both lucrative and offering stability; with the contracts being long term (three or four years at a time) and the money budgeted year on year. Another thing that small businesses don’t have to worry about with public sector contracts is that the money will always be there and most often paid on time, with most public sector clients within ten days of the thirty day time limit.

For those small businesses not intimidated by the thought of competing with larger companies and feel that they can handle all the paperwork, the first step is to find what public sector contracts are available. The government has launched a Contracts Finder Website where contract opportunities worth over £10,000 will be searchable,  all the organisations needing to do is specify which contract they are interested in and the details are emailed free of charge. Another useful site to use is Tenders Direct that gives its users daily updates on available contracts.

Public Sector Contract Finder Website

After you have found a contract you often have to go through a pre-qualification stage to find out if you are eligible to bid on the contract or not. This stage typically involves answering a pre-qualification questionnaire (PQQ), which askes for financial information, previous experiences and references.

The next step small businesses need to take if they are eligible to bid on the contract is often considered the most arduous; the tendering process.  When taking on a tender it is important that the bid team is aware any and all deadlines given for certain document submissions and have a clear understanding of the scope of the project and any compliances’ that need to be met.

It is wise to have technical experts and skilled writers on your bid team who can present clear and technical sales documentation, with a singular proof-reader to ensure continuity and be responsible for checking the tone, flow and formatting of the overall proposal and for ensuring that key themes and business strengths are included throughout the documentation. Some companies are known to outsource the writing of the bid to tender-writing companies, some of which are known to charge thousands to write a bid and want a cut of any business secured.

The tendering process can be very time consuming, with days spent on a tender that could be spent on business, so it is important that you are prepared for the time and money sacrifices that come with a tender before you decide to bid on a contract.

In a bid to alleviate the disadvantages small businesses face in trying to win public sector contracts, the government has introduced a new approach to assessing companies and organisations who want to do business with the government. The first changes the government are seeking to make are the removal of PQQ’s for all central government procurements under £100,000. Another change the government are making is the way businesses can submit their prequalification data; instead of submitting the same data time and time again wasting both time and money for both parties, businesses can now submit their prequalification data once for all procurements in common commodities.

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