Despite the government's high profile spending cuts, public sector contracts present SMEs with unique opportunities to expand revenue streams outside its traditional markets in the private sector. Indeed, public sector contracts hold massive advantages over the private sector - financial stability, longer term contracts, better payment terms to name a few.
However there is a significant difference between the two sectors on how contracts are won and maintained. Stephen Bentley, CEO of Granby Marketing Service lays out the facts that every business looking to win contracts in the public sector should know.
The biggest difference between the public and private sector is the tender process. Unlike commercial organisations that choose which suppliers they work with, companies looking to win public sector contracts worth over £100,000, first have to go through a pre-qualification process.
All contracts worth over a certain financial threshold according to EU legislation, have to be published on OJEC and OJEU. This essentially means the net is cast much wider and you'll be facing a greater variety of competitors, both in terms of quantity and quality.
The Pre-Qualification Questionnaire (PQQ) is a lengthy document in which you have to prove you have the capabilities to meet the contract's specifications. All encompassing, you will need to demonstrate everything from your financial stability, to environmental and CSR accreditations and standards.
Your financial figures are important as they are often used to judge whether you have the capacity to carry out the job successfully.
The good news is that the government has announced that it is establishing a central database of pre-qualification questionnaires which means that a supplier has only to complete a single form rather than having to submit a new form for each individual tender.
The art of successfully winning public contracts is being ruthless on which opportunities you pursue. Thoroughly read and digest the requirements completely before you make your submission.
Even though the government's changes to the procurement of public sector contracts has made it easier to apply, you need to be 100% sure that you have the capabilities and resources to do the job. As contracts are put out to tender on OJEC, too often companies get lured into applying for contracts that in reality they have no hope of winning.
One of the biggest hurdles many businesses struggle to overcome is how to successfully differentiate themselves in the sales process. In the private sector an engaging, face-to-face pitch from your charismatic sales director or a recommendation from a trusted peer can make all the difference when it comes to winning new business. But in the public sector, when so much of the process is 'on paper' how can companies stand out from the crowd?
Making sure you have all relevant industry standards and accreditations is important. It takes significant resources and commitment to get these badges of excellence, but if you're serious about winning public sector contracts, and indeed private contracts for that matter, it's worth making that step. It proves to the outside world that you are a creditable company.
In the private sector the level of scrutiny against accreditations may not be as great, with the commercial benefits/ROI taking precedent. However, when there's such a major spotlight on how tax-payers' money is spent, the government want reassurances that they've got the best solution in place to guarantee delivery for an economic cost - standards and accreditations do exactly this.
Once those companies that meet the required specifications have been identified they are then sent an Invitation to Tender (ITT). At this point you've got to work very hard at putting a detailed solution together; again this requires a lot of information and quite lengthy document.
To win a public contract they need to have absolute confidence in your ability to deliver the service. A 'can do' mentality or learning 'on the job' will not cut it. It has to be based on proven experience and absolute assurance you can deliver.
At the tender submission stage you should in theory have your best and final offer, so compared to the private sectors there's little room to negotiate. Whilst there's not much difference in the T&Cs in public and private contracts, there are noticeably differences in Service Level Agreements (SLAs). This means far more management information is required and there's a greater scrutiny of fundamental aspects of service delivery such as quality control and security control.
Although easy to say in hindsight, preparing for the possible loss of big government contracts is really important. You may win a four-year contract but often these are subject to political changes which means they can easily change.
Whether you deal with public or private sector contracts, every business needs to be prepared for change. This means doing everything you can to expect it before it comes, and reacting in a strategic and intelligent way when you're faced with it.
Going for public sector work is not for faint hearted - it's time consuming, takes a lot of resources and needs a certain amount of resilience. However the financial stability it affords, along with the credibility is almost certainly worth it.
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