For many smaller businesses, winning a Government contract can appear to be something reserved for large
companies with specialist bid teams and substantial resources.
That could be about to change.
In August, the Government announced changes to its approach to public procurement that place greater emphasis on British jobs, local skills and opportunities for smaller businesses.
The Government says public contracts represent a market worth approximately £90 billion a year, and businesses bidding for contracts will increasingly be assessed on how they contribute to local employment, skills and apprenticeships. At the same time, some requirements that previously made it harder for smaller businesses to compete are being removed.
For SMEs, this could represent an important growth opportunity.
Why public procurement matters
Government procurement covers far more than large construction projects.
Public bodies buy a huge range of goods and services, including:
- Professional services
- IT and technology
- Consultancy
- Facilities management
- Training
- Marketing
- Construction
- Catering
- Maintenance
- Specialist business services
This means many smaller businesses may already provide services that public-sector organisations require.
The challenge is often knowing how to identify opportunities and demonstrate that the business can deliver.
A new emphasis on British jobs and skills
The Government announced on 5 August that businesses bidding for Government contracts will be judged partly on their commitment to creating high-quality British jobs, addressing local skills shortages and supporting young people through apprenticeships and work placements.
This changes the conversation around public procurement.
Businesses may increasingly need to demonstrate not only what they sell, but also the wider economic and social contribution they make.
For an SME, this could mean highlighting:
- Local employment
- Apprenticeships
- Training
- Staff development
- Local supply chains
- Community involvement
A business that already invests in these areas may have a stronger story to tell when competing for contracts.
Smaller businesses may have an advantage
The Government has also said it is removing some areas that businesses previously had to prove they were acting on, with the intention of making it easier for smaller firms to bid for contracts.
This is potentially important because the procurement process can be intimidating for SMEs.
A business may have the right expertise and capacity but decide not to bid because it assumes the process will be too complicated.
Reducing unnecessary requirements could encourage more smaller businesses to participate.
Preparation is essential
However, businesses should not assume that winning public-sector work is simply a matter of finding a tender and submitting a price.
Procurement processes can require substantial evidence.
Businesses may need to demonstrate:
- Financial stability
- Relevant experience
- Quality management
- Data protection
- Cybersecurity
- Insurance
- Health and safety
- Environmental policies
- Business continuity
- Relevant accreditations
This means preparation should begin before a suitable contract appears.
Get your business “bid ready”
A useful exercise is to create a central library of information that can be reused when responding to tenders.
This could include:
- Company information
- Policies
- Certificates
- Insurance documents
- Case studies
- Client references
- Staff qualifications
- Financial information
- Security documentation
Keeping these documents organised can save considerable time when a tender opportunity arises.
This is particularly relevant to professional businesses where compliance documentation can be extensive.
Think beyond price
Businesses should also consider how they demonstrate value.
Public-sector buyers may increasingly be interested in the wider outcomes a supplier can deliver.
For example, a small technology business could demonstrate how its services will:
- Create local employment
- Train apprentices
- Develop digital skills
- Support other local suppliers
A professional practice might highlight its contribution to local businesses and communities.
The ability to articulate this value clearly could become an increasingly important part of successful bids.
The opportunity extends beyond direct contracts
There is another reason SMEs should pay attention.
Large Government contracts are frequently delivered through supply chains.
A smaller business may therefore have an opportunity to become a supplier or subcontractor to a larger organisation even if it is not ready to bid for a major Government contract directly.
Building relationships with larger contractors can provide a route into public-sector work.
Is your business ready?
The Government’s new approach creates an opportunity, but businesses need to be proactive.
September is a good time to ask:
- What Government or public-sector organisations buy our services?
- Are we registered on the appropriate procurement platforms?
- Do we have suitable policies?
- Are our certificates and insurance current?
- Can we demonstrate relevant experience?
- Do we have case studies ready?
- Can we demonstrate our contribution to jobs and skills?
Businesses should also consider whether their internal information systems make it easy to retrieve the evidence required during a tender.
A potential new route to growth
The public sector represents a substantial potential market.
For smaller businesses, the combination of a £90 billion annual procurement market, a stronger emphasis on British jobs and skills, and measures intended to make bidding easier could make public procurement worth investigating.
The opportunity will not be right for every business.
But companies that have previously assumed Government contracts were only for large organisations may want to reconsider.
The key is preparation.
A business that has its documentation, policies, financial information and evidence of capability ready can respond much more quickly when an appropriate opportunity appears.
For ambitious SMEs looking for new sources of revenue, public procurement could become an increasingly important part of the growth strategy.