A Fresh Start For Procurement

Public sector procurement is currently subject to a shift of emphasis from grant and trust funding to tendering. The public sector is tendering more business from SMBs and SMEs too, in line with government targets to spend £1 of every £3 on smaller businesses.

Tendering is a different process to grant funding and is bound by domestic regulations as well as EU law, despite Brexit. Tendering has long provided a rather unique approach to procuring business that fits the public sector well due to its emphasis on transparency and due diligence, but it isn’t uncommon in the private sector either.

Since a greater number of smaller businesses are now likely to enter the fray of public tendering, it’s important that your business is ‘tender ready’.

Public sector tendering relationships are very different to most private sector business relationships and the process is quite unique given the complex rules, regulations and laws in place. With that said, the tendering process is only ever becoming more accessible and streamlined to help SMEs and SMBs to get involved in projects where bigger businesses would once hold sway.

Public Sector Procurement in the Modern Era

Public sector procurement is heavily regulated. In fact, there are some 350 different pieces of procurement regulations spread over many industries. The government now intends to break down some of the barriers to swift, agile and accessible public sector procurement.

A parliamentary briefing note said that a new 2021 procurement green paper would make public sector procurement “more accessible for new entrants such as small businesses and voluntary, charitable and social enterprises to compete for and win public contracts”.

Part of the process is enabling enhanced access to tendering for smaller businesses that are now better able to demonstrate their commitment to providing social value.

What is Commissioning?

Commissioning precedes procurement in the public sector and is aimed at evaluating what services, goods or works are needed for public purposes and how they can be delivered.

The commissioning process is the process whereby organisations in the public sector make a needs assessment of an area. This assists them in creating a specification, e.g. renovation and regeneration, cleaning and maintenance, building new infrastructure, etc.

Commissioning is usually preceded by a consultation stage that involves various stakeholders from across the local area, including central government departments; the Police, Primary Care Trusts, Educational institutions, etc.

Procurement Definition

Procurement in a public sector context is the process whereby goods and services are purchased by the public sector using money from the public purse. The goal is to award the best provider the contract, though the criteria for what constitutes the ‘best’ is often a blend of objective and subjective rationale. In a general sense, the services, works or goods should be good value for the contract, but should also create social value.

Tendering is standard practice for public procurement, meaning public sector contracts will be available to business bidders via services like the Contracts Finder. Tendering is the main public sector procurement process or procurement strategy in the UK.

Social value, again, is fairly subjective, but in broad terms, the business awarded the contract will need to demonstrate value beyond the material works themselves. The main emphasis of social value is providing benefits to the local area, economy, employment prospects, etc. It also includes environmental responsibility, waste management and sustainability.

What is Tendering?

Tendering is a formal, transparent process of requesting bids for contracts to provide goods, services or works in public procurement. The business or organisation that requires works, goods or services makes an invitation for businesses to bid for that work, thus providing them with a selection of bids from various businesses.

These bids are then scrutinised in accordance with industry or sector regulation, due diligence and other criteria, including that relevant to the Social Value Act.

The Digital Marketplace

One of the newest tools available for public sector procurement is the Digital Marketplace. The Digital Marketplace intends to modernise procurement of digital services, many of which are only required on a short-term or ad-hoc basis. Businesses can register for a supplier account here.

The Digital Marketplace provides the following categories:

• Find an individual specialist, for example software developers and researchers.
• Find a team to provide a specific digital outcome, for example a software admin system or audit
• Find a research studio, for example, to research digital products and services in depth
• Find cloud hosting, software and digital support, for example, accounting software, CMS and other cloud-hosting
• Find physical data centre space, for example, for storing critical data
• Find user research participants, for example, to test UI and UX design

How to be ‘Tender Ready’ as a Small Business

Small businesses that are interested in public sector contracts should aim to be ‘tender ready’.

Ask the following questions to gauge whether your business is ready and able to start formally bidding for public sector contracts:

• Is the business operationally able to deal and manage the contract?
• Does the business have a portfolio of proven skills and projects in the sector/industry?
• Can the business demonstrate a track record of compliance?
• What types of social value can the business provide; community schemes, work experience, local employment, environmental responsibility, etc?
• How are these distinguished from larger contractors?
• Does the business have adequate cash flow to manage the contract?
• Do internal policies and governance meet expectations?
• What sorts of risk management and health and safety policies help ensure that the contract runs smoothly?

Summary: A Fresh Start for Procurement

Procurement has gone through a multi-stage development over the last 10 years or so with a view to modernising the process so it’s fit for agile 21st-century supply and demand.

Part of this has been enabling smaller businesses access to competitive contracts that were once essentially reserved for bigger companies. The government realises the innovative social value and benefits that can be provided through smaller companies. As such, there is now a rather lucrative new opportunity for SMEs and SMBs to ply their trades in the public sector.

Tendering and public sector procurement is complex and at-time convoluted, but smaller contracts accessible via the Contracts Finder or through Local Authorities provide a good starting point. The Digital Marketplace is also well worth a look for companies that provide digital services and would like to explore public sector contracting.