Public sector contracts
Article Date: May 31 2006
Winning a contract to supply central or local government can be a great way to grow your business and enhance your reputation. But be warned: it’s a lot easier said than done.
You may well provide the best product or service around but that will count for little if you cannot prove to procurers of public sector contracts that you are a good supplier. The public sector is under intense scrutiny to spend taxpayers’ money wisely and will ask prospective suppliers to go to great lengths to show they are worthy. However, if you can jump through all the hoops successfully and get on an approved supplier list, it could well lead to further contracts in the future.
Getting a foot in the door
‘It’s very hard for a small company to compete with bigger players for public sector contracts,’ believes Nic Birtles, executive chairman of PTC Software, a provider of software products to local government. ‘Such organisations tend be risk-averse. A lot of small companies have innovative products, but big companies don’t want to change. They have a programme and a set way of doing things. It’s time-consuming and not easy to get a foot through the door – but persevere. Once you have won a Government contract, it’s a way of opening doors.’
However, getting a foot in that door is the hard part. ‘The first step is to get your house in order,’ according to Ruth Brothwell, who runs workshops for SMEs wanting to supply to the public sector for Business Link for London. ‘Procurers will want to see evidence of quality in several areas so there is no point in bidding for a contract before you’ve sorted that out.’
You will need evidence of some, or perhaps all, of the following, depending on the individual contract:
- A reference from your bank stating their opinion of your trustworthiness in regard to doing business of a certain amount.
- All necessary insurance, including employers’ liability and public liability insurance.
- For limited companies, the most recent full year audited accounts along with accounts for the last three years. Sole traders and partnerships must provide the most recent accounts. Even if you are not legally required to have your accounts audited, it may still be worth doing so to prove the probity of your business.
- A written health and safety policy that is made known to all employees. Those employing fewer than five people are not obliged to do this but it may aid their cause to do so.
- A written equal opportunities policy covering all current legislation, such as discrimination on the grounds of race, sex, disability and age.
- A formal quality accreditation, such as the internationally recognised ISO 9000, can be invaluable. If there is no official accreditation, a written quality policy should be put in place.
- Policies concerning customer care, environment and corporate social responsibility may also be asked for.
‘There is an increasing move towards e-procurement,’ explains Brothwell, ‘so it is a good idea to be able to invoice and order through the internet as eventually this will be the way all public sector contacts will be fulfilled.’
Start early
Do not underestimate how long the whole process can take. From ‘putting your house in order’ and filling in the extensive questionnaires through to winning the contract can take months if not years. And to get your hands on the plum contracts requires an established track record of supplying the public sector. So, if you are after a slice of the Olympic pie (contracts for which will be up for tender in 2009), Brothwell advocates starting to work towards it now.
Though this is a good way of growing your business in a low-risk fashion, avoid putting all your eggs in one basket, she adds. ‘Don’t bid for contracts that represent more than around 20 per cent of your turnover.’
