In an effort to recognise small and medium-sized enterprises as crucial to the success of the British economy, the government has developed an initiative to ensure that businesses are given the opportunity to grow and expand by becoming a government supplier. In a new ‘Government is Open for Business’ campaign, it pledges to spend one third of its commercial budget for goods in services with SMEs by 2020.
Emma Jones, the newly appointed Small Business Crown Representative, spoke to Global Britain about the initiative. ‘It’s a campaign to focus minds on the government target to spend £1 in every £3 with small businesses by 2020,’ she told us. ‘The campaign is external in terms of promoting the opportunity of selling to government to small businesses, and internal in that it offers guidance to government buyers on how best to engage with SMEs and ease the procurement process.’
This campaign gives the government means to actively help small businesses grow. ‘One of the finest ways in which government can support small business growth is through procurement i.e. offering a sales route. In addition, the government has recently published its Industrial Strategy setting out a position on supporting businesses to scale through exports, innovation and access to finance. There’s also an Entrepreneurship Review about to get underway which may uncover further opportunities,’ Jones said.
So what exactly are the benefits of becoming a government supplier? ‘There are many!’ Jones said. ‘Selling to government delivers a new revenue line, credibility with other customers, and prompt payment, as government pays 80 percent of undisputed invoices within five days and 100 percent within 30 days.’
Businesses who have become government suppliers have seen remarkable increases in their revenues and expansions in their workforce as a result of winning government contracts. Property consultancy Montagu Evans, for example, have increased their annual turnover from £26.5 million in 2012 to £40 million today as a result of winning a contract on the government EPS Framework project.
Working with the government
The government hosts its tender opportunities on the Official Journal of the European Union (OJEU), and it is only by responding to these alerts that businesses may tender to become a supplier with the government. Businesses will only be awarded a position on the contract agreement once they have been successful in the OJEU tender process.
Businesses should identify whether they want to work directly with the government, or to sell via one tier suppliers, recommends Jones, as this will influence their next steps. ‘If selling to government direct, source opportunities on Contracts Finder (the single platform where all contracts valued over £10,000 appear), meet buyers at supplier events and when it comes to completing tenders, study what the buyer is after and follow the exact guidance set out in the Invitation to Tender,’ Jones explains. ‘If the approach of selling via tier one suppliers is your preferred option, identify which large contractors are winning business through sourcing information on contract portals which show who has won bids, and approach them with how you could add value in their supply chain.’ The government updates its procurement pipeline on a daily basis and, besides Contracts Finder, businesses can register for Tender Electronic Daily (TED) alerts, too.
Recent studies have shown that the government (or public sector procurers) view SMEs as flexible and quick to react to opportunities in comparison to large companies, offering alternative options and better prices for services. To become a government supplier, it is important to reflect this perception of your business from the offset. Use pre-market engagements (such as newsletters) to answer questions that procurers have, and show evidence that you offer value for money. Be careful to evidence your company’s strengths and highlight how it will be best able to complete the project. If this is your first time submitting a tender to the government, consider asking for professional advice before completing the paperwork.
Currently, there are no charges or joining fees to show interest in becoming a supplier. In addition, suppliers will only need to pay an average of 0.33 percent commission based on the value of sales made through an agreement.
Tips on winning government contracts
Taking the time to research is crucial to becoming a government supplier. The government provides a wealth of literature and information in blog posts, guides, webinars and case studies.
The government suggests signing up for email alerts, monitor PINs and registering interest in future procurements. Businesses should make a point of attending information days and register with the government’s eSourcing tool to be in the loop with future opportunities.
Businesses may not be successful in their tender, particularly with first time applications. ‘If at first you don’t succeed, ask for feedback as this will highlight areas for improvement in your next attempt,’ Jones advises.