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Size matters in public sector procurement

The UK lags behind other European countries in awarding public sector contracts. Is this a missed opportunity to transform some of the most deprived regions? We’ve noticed an increasing number of video contracts being put out for tender; however, often the requirements are not relevant to the need and ask for unnecessary substantiations – such as professional indemnity insurance where it isn’t required, or have unrealistic budgets. That said, there are more opportunities and it’s perhaps more feasible as times moves on to invest some effort, and money, into tenders. We do however look at them quite carefully before expressing interest as a lot of time can be wasted filling in forms only to find you are disqualified due to a bit of small print at the end! We recently withdrew from a tender for something we were more than capable of fulfilling because part of the tender process required us to actually originate a full length video on the subject of the tender project as part of the tender documentation without any recompense of costs. For a £25K budget of the calibre requested that really wasn’t feasible but sounded a good way of getting some great ideas from video production companies.

It seems big companies still grab the biggest share of the £220 billion UK public sector procurement market, and the smaller firms struggle to get a look in, says Chris Bovis, Professor of International Business Law at Hull University Business School, who is a specialist in public sector procurement. Our experience has found that unless your turnover is in excess of a million you don’t stand much of a chance. And despite it not being ‘legal’ to discriminate on geographical location, we have also found tenders that specify a need for the successful contractor to be within Central London, or elsewhere – which for a framework agreement where we are within 40 minutes of target, but not in Central London, and not charging Central London prices, is a bit irritating.

Germany and Italy give over half of their public procurement to SMEs, while in Sweden it is closer to 70%.
“UK authorities pay lip service to the notion that small business can compete,” he says. “In Europe, it’s a strategic priority to award a bigger share of public expenditure to small local businesses for very good reason. It has huge benefits for employment, social cohesion and industrial and commercial development.”

“Flourishing local businesses invest capital, create jobs and developed a skilled workforce, which in turn produces wider social benefits. This would transform the economies in some of the most deprived regions.

“UK authorities have a fixation that small firms won’t be up to the task; that they’ll go bust; or won’t have sufficient resources or the financial backing to see a contract through.

“Authorities make it too hard for small firms to compete – with over demanding selection and qualification hurdles.

“Smaller firms put more into research and development to find innovative solutions. Larger firms are more focused on securing a return for shareholders.”

SMEs could do more to help themselves by understanding the rules and requirements for selection and qualification.” Professor Bovis states.
New legislation has been enforced which is designed to make it easier for SMEs to win work not just in the UK but across the whole of Europe, but small firms have got to learn how the legislation can be harnessed to their own ends if they want a share of the public sector procurement. As we said earlier on, reading the tender carefully is essential and making a balanced judgement as to feasibility of expressing interest. It is quite possible to be successful with framework agreements and yet still not get any money in the bank business from your efforts – and our experience has shown that government organisations are often rather naive about the cost of video production, well actually it’s not the video production that costs, it’s the management of the approval process that eats into a budget. However, you can get all your ducks in order of course, by way of insurance and contingency plans, testimonials from satisfied clients and policy documents – once you have those tendering does become a bit easier although why a number of organisations still require a hard copy of the document instead of electronic is a bit of a mystery. Maybe 2015 will be the year that government organisations stop paying lipservice to making opportunities available to small companies, and actually start investing in them – well you never know – there are a few signs of change happening!


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