The public sector are actively encouraging SMEs to bid for contracts. Self-certification, framework agreements, value bands and lower thresholds are all steps that have been introduced by the government to extend contract opportunities to SMEs.

Why does the public sector want to work with SMEs?

You may hear various news stories about billion-pound contracts for national infrastructure and the like, however, while a minority of high-value contracts dominate the public view of tendering, in reality SMEs have a huge role to play in the public sector.

Central and local government alike actively looking for ways to extend more opportunities to smaller providers.

SMEs encouraged to bid

Local authorities have a duty under the Public Services (Social Value) Act 2012 to consider the economic wellbeing of the local authority when commissioning services and works. By awarding contracts and places on frameworks to SMEs based within the area of service delivery, authorities can ensure that local jobs are created or protected, and that wealth doesn’t ‘leak out’ of the community to national providers based elsewhere.

The main aim of any tender process is to seek best value for money. SMEs’ innovative approaches to service delivery may support authorities in achieving cost savings or driving forward quality. Creating a level playing field, whereby SMEs are not unfairly disfavoured by the process, means full and fair opportunity for bidders of all sizes to present their proposals.

Buyers throughout the public sector have realised this, and are taking action to include SMEs in their supply chains.

What has the public sector already done?

Central government has already taken great steps to break down barriers that might preclude an SME from participating in a tender:

  • Self-certification: Tenderers were previously expected to submit a large number of policy and procedure documents as part of their bids, especially within the PQQ/SQ stage. In most cases, tenderers can now simply ‘tick the box’ to confirm that they meet the required standards.
  • Large frameworks are split into value bands: This allow bidders to tender for different lots, based on project values. As well as allowing a more value-appropriate evaluation of bidders’ suitability to deliver the works, this means that SMEs are not ‘blocked’ by larger bidders from accessing opportunities that are suitable for them.

What are the next steps?

There is still more work to be done before the playing field is truly level for SMEs.

In many cases, buyers still request high volumes of narrative responses for contracts with relatively low values. While this is a challenge for everyone, SMEs are less likely to have the resources available to bid, and may therefore be unfairly excluded from certain exercises. Ensuring proportionality between the requirements of the contract and the requirements of the tender would help to remove this barrier.

Article by Amy Forshaw of Executive Compass.

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