Get Smart; SMEs Can WIN Their Share of Public Sector Contracts.
By Mike Bradley I
n November 2010 Cabinet Office Minister Francis Maude created a great deal of excitement in the UK economy by stating in the House of Commons that “The aspiration is for 25 per cent of government contracts to go to SMEs”. This was, and still is, great news as it represents several thousand pounds for every SME
business in the UK. With 25% of the Public Sector £200bn budget aimed at companies with less than £50m turnover this would be a healthy contribution to the revenue of smaller UK companies in the current bumpy economic climate.
Understandably the reception by SMEs was mixed. On the one hand, euphoria! A fraction of those telephone number public expenditure budgets would look very attractive in any company revenue line or bank balance. Likewise organisations representing the business community such as the Institute of Directors, Chambers of Commerce and Federation of Small Business were also interested and even excited by the prospect of so much business becoming available to their members. By contrast there was also scepticism and to some extent groans considering the burden of bureaucracy and resource expended in the tendering process: many of those SMEs have neither the time nor the resources to commit to searching, resourcing, responding and then, fingers crossed, winning Public Sector contracts. For example, Andrew Pearce, CEO of Powwownow; suggest “SMEs have to first make sure they are accredited before they try tendering for public sector contracts. There are various accreditations, from health and safety to customer service but all of which are costly and time consuming to apply for. Companies also have to have an SLA (service licence agreement) which stipulates if the suppliers’ service or product goes down or breaks the customer will receive compensation, usually monetary. This again is a problem for many SMEs who cannot afford the risk of potentially having to pay out money. Often it’s not their service or product itself which holds a company back, but rather the red tape and large expense which many small to medium size businesses cannot justify.”
However, a three to five year contract worth several hundred thousand pounds is worth seeking, then fighting
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for and winning - but how can this be achieved? That is the challenge SMEs face. How do they go about engaging with and succeeding with the Public Sector tender process? The Prime Minister, David Cameron, recognised the scale of the challenge when he restated the ‘25%’ objective at the Strategic Supplier Summit earlier this year. Winning these contracts has proved more difficult than many envisaged. Who is offering what contracts? What is the usual tendering process? How much time is involved for the SME supplier? Where do they go for help with the difficulties of responding correctly to an invitation to tender? Do they even qualify for Public Sector contracts? How much will participating in this process cost when set against the potential benefits?
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