Public Sector Contracts & Procurement Review
Setting the scene on Procurement Processes and Procedures when Tendering for Contracts
The UK Central government spends over £13billlion per year on buying goods and services, source:- (Office of Government Commerce, OGC). The UK Local Government spends £42billion per year. The National Health Service spends £11bn per year and the Ministry of Defence spends £10bn per year.
In the UK, Local Authorities have reduced the number of suppliers that they deal with, they prefer to buy from larger companies in an effort to; (a) to reduce the cost of procurement while at the same time - (trying to achieve "Best Value") because (b) they feel that larger companies offer greater security in terms of contract performance, and greater economies of scale, while at the same time, (c) central government has requested that all public sector agencies have in place a procurement policy that includes awarding contracts to small to medium enterprises.
In the UK - The Better Regulation Task Force, set up by the Office of the Deputy Prime Minister (ODPM), has shown that it is possible to make quite large cost savings by buying from smaller businesses, because:-
Smaller businesses often provide more innovative solutions.
They have lower overheads and can afford to sell at a lower price.
They are more eager to please, and usually try a lot harder to satisfy their customers.
Sometimes, larger companies merely buy from a smaller supplier anyway
Public Sector Contract and Procurement Procedures
The EU currently requires public sector contracts worth £100,000 or more to be publicly advertised. However for many small businesses this is still too high a contract value for them to stand a realistic chance of winning.
Many small businesses would feel more comfortable tendering for projects that are nearer £25,000.
The UK Government currently spends over £2.5billion a year on small business support services and 25% of all small firms supply some or all of their products and services to the public sector .
If this figure is extrapolated across the EU - it is reasonable to conclude that - The possibilities for the small to medium enterprise to derive revenues from the public sector is substantial. - Why should some of that business support available to SME's from the EU not come in the form of Tendering for Contracts training? -
However one of the main requirement faced by contract providers - apart from getting value for money, is the requirement to display accountability and transparency in the contracting and procurement process.
Barriers to SME Entry into the Contracts and Procurement Process
One of the main barriers to SME entry into this lucrative sector are;
- lack of appropriate resources that would ensure success
- lack of appropriate training in the contract and procurement process
- pre-conceived obstacles to wining a contract and time, lack of information,
- the perceived complexity of the contracting and procurement process, because of both the actual and perceived barrier to entry,
- SME's need access to top level training and mentoring support.
What type of training would be most suitable for Small to Medium Enterprises
Tendering For Contracts
Implementing Quality Systems
Managing Small Projects
Marketing For Contract Suppliers
Typical examples of course modules topics are:
Typical examples of market sectors that such training should cover?
To prepare the potential contract supplier to be able to submit an acceptable tender document, the training programme is divided into four main section, each section is further sub-divided into a number of sub-sections to facilitate easy learning.
One Example of the Document Preparation Training Module Sub-Section
Contract Tendering Check List
What is most important in a Proposal?
It depends on the case, in a normal business plan this is usually the cash flow analysis and specific implementation details. In a contract project the cash flow element is more or less guaranteed - it is the project management, quality and work flow elements that are most important.
SME's need to know their markets, customer needs, where they are, how to reach them, etc. Who does what and when - this should not stop here you need to review your progress against the plan at periodic intervals and amend the plan to suit any changes that might occur.
You need to develop an Action Plan and Schedule, emphasis should be made on setting review periods for each of your activities or tasks to help ensure you are on course to achieve your Contract Objectives.
Crisis Management occurs when you focus on a problem only when and where it manifests itself, rather than investing the time and resources to install a long-term solution, which would ultimately prevent the crisis from occurring in the first place.
Implementing Quality Management Financial Systems - example
If you purchase the computer in the first place and invest the time to learn how to use accounting software, entering sales activity once not only produces your invoices and statements automatically, it simultaneously creates the revenue portion of your accounting.
What do you learn from the "Tendering for Contracts Training" programme
Learn how to respond to tender notices
Be aware of tenders, as they are announced by the public sector
Learn about Procurement strategies and solutions
Research and Prepare and Submit Contracts Documents
Learn how to make contact with potential contract providers
Learn how to conduct tendering research documents
Learn how to prepare and present completed tender documents
Learn how to implement quality management systems
Learn "How to Market for Contracts"
Create a clear marketing formula, optimize
your product/market combinations, set clear goals and strategies,
perform success projections, create a time table, have a progress and
budget control chart, compare budgets using a variable values.
Training Programme Content - Example Competitiveness Audits (Summary)
Implementing Quality Systems
Marketing Products & Services Strategies
The Management of Projects.
Tendering Research, Preparation, Submission
A typical training workshop might include:-
Training Programme Philosophy
The philosophy and objectives of the training should be based on supplying SME's NEEDS with innovative training SOLUTIONS that deliver business BENEFITS.
Training Programme Bennefits
The training programme should contain adequate information that is relevant to the SME, enabling the small firms to;
Research and Prepare Contracts Documents
Implement Quality Management Systems
Manage Projects Effectively
Market Products & Services to Potential Contract Providers
How would a training programme - aimed at providing the required level of expertise to small to medium enterprises help?
A recent UK Federation of Small Business Research report suggest that there are four core areas of importance to contract providers, these can be summarised as follows;
The quality of documentation received from potential contractors
The ability of the potential contractor to deliver a quality product or service
The ability of the potential contractor to have in place or be able to implement all the policies that are required (e.g.) health & safety, equality, staff welfare, etc, etc.
The ability of the potential contractor to successfully manage the contract
The ability of the potential contractor to add value to the contract project
The ability of the potential contractor to actually complete the contract on time and on budget
Who are the stakeholders in the Contracts and procurement process?
There are two main stakeholders, (a) the public sector contract provider - who utilise public funds to purchase goods and services and (b) the contract supplier - who receives these public funds in return for the supply of the specified goods or services
Critical Success Factors - Mission Statement
At the end of the training course, the SME will be able to: - We suggest the following this 8-step approach
Practical Example of a Typical Training Programme
- Segmented, well structured and easy to learn materials
- Researching and developing contract provider contacts
- Contracts Tender Database - information sources
- Tender Proposal Design and Development
- Technical, Procedural and Administrative processes
- Communication - Verbal and Written
- Use of Computer Systems for Marketing
- Organisational issues
Successful SME Support & Mentoring
- Free telephone support for
- Tender Proposals Preparation and submission
- Discussion of any previous Tender submission
- Discussion of Contract Requirements
- Management and Supervisory skills
- Discuss Presentation Practices and Techniques
- Discuss Human Resource Management
- Contract Best Practices and Procedures
- Discuss the Implementation of Quality Systems
- Applying good management practice to projects
- Assessment of training and mentoring process
- Using Success Assessment Questionnaire's
Contracts / Tendering Processes & Procedures
- Getting started - How to?
- Establishing Tender for Contracts Objectives
- Defining individual SME Market Sectors
- Unravelling complex problems in relation to Contracts
- Implementing Quality Management Systems ISO 9000
- Implement Best Practice in the Management of Projects
- Effectively Market Products and Services to win Contracts
- Obtain support from the training provider through
- Mentoring to enable them to win contracts
What should Public Sector Agencies responsibilities be?
Some areas may include;
Encouraging the use of technology to promote efficiency and cost savings
Providing centralised access to sources of information
Creating a central contact point for SME's
Encouraging SME's to attend public sector information briefings
Emphasizing quality control procedures
Assisting in the creation of an approachable atmosphere
Making use of technology to improve the efficiency and cost savings in the supply chain
Outline procurement strategy to small to medium enterprise
Set target for contracts awarded to SME's
Provide wide access to tender information
Simplify the tender evaluation and information process
Provide a Single Contact Point that Communicates with all SME's
Provide feedback to all contractors equally to build trust and transparency
What should the SME Contractor responsibility be?
Deliver goods and services that surpasses requirements
Attend public sector information briefings
Make use of technology to communicate with partners and contract providers
Make use of technology to plan project workflow
Make use of technology to control and deliver quality
Make use of technology to implement and monitor change
Make use of technology to improve business process
Make use of technology to improve business practices
Make use of technology to improve revenues and profits
Make use of contracts support and technology to improve the flow of business information
Small to Medium Enterprise Operations
Running a small business requires wearing multiple hats and it is sometimes difficult to balance all of the tasks necessary to make a business successful. Every good business project requires thorough research and a business plan.
What is Most Important in a Business Plan?
It depends on the case, in a normal business plan this is usually the cash flow analysis and specific implementation details. In a contract project the cash flow element is more or less guaranteed - it is the project management, quality and work flow process elements that are most important.
How can the Public Sector Contract Provider and the Small to Medium Enterprise derive greater benefit from the contracting and procurement process
The most important ingredients are dialogue in the form of information flow between the public sector agency and potential contractors and potential contractor knowledge base.
The information flow from the public sector to the sme is clearly stated in EU law, however there is no pre-requisite for the potential contractor to attend training -
One outcome is a lot of wasted effort and frustration - on the part of the sme in the form of wasted effort in the preparation and submission of contract documents - that are not suitable and wasted time and frustration on the part of the contract provider- in going through these document as required - by statute, only to reject them as unsuitable
The second outcome is the frustration on the part of the potential contract provider in doing all this work - only to be rejected and there get nothing for his efforts - i.e. no contract
The net outcome is that where national governments may have policies that encourages their public sector agencies to award contracts to small to medium enterprises, it is often not possible to fulfil this policy objective on the grounds that the potential contract suppliers are not in the most part suitable.
On the other hand is the reluctance of many small to medium enterprises to take full advantage of the benefits to be gained from the public sector - on the perception that they will not be successful - due in the most part to lack of proper training, lack of understanding and information.
What should be the philosophy of such a training programme which is targeted at SME's?
The philosophy and objectives of such a training should be based on supplying SME's NEEDS with innovative training SOLUTIONS that deliver BENEFITS, the training should be segmented and specifically structured for easy learning.
In addition the training should be holistic in approach, empowering the SME to;
Be aware of tenders, as they are announced by the public sector
Be prepared to complete tender documents
Establish partnerships to compete more effectively
Use tender responses to "differentiate" themselves and increasing their chances
Build relationships with larger organisations as sub-contractors.
Build effective relationships with public sector agencies
Essentially the Tendering for Contracts Training should prepare the SME to be competent in?
Tendering for Contracts, prepare and assist SME's who wish to increase revenues by entering into the public sector procurement process.
The core content of the training programme should be capable of empowering the small to medium enterprise and provide additional business support training - (eg.) an holistic approach.
Conclusion - Small Business Operations Summary
SME's need to be flexible and wear many hats if they are to be successful, small businesses requires that the owners/managers must possess and enhance their cross-functional abilities and it is sometimes difficult to balance all of the tasks necessary to make a business successful. Through good business project research it is possible for small to medium enterprises to be very successful in obtaining contracts and hence profits from conducting business with the public sector.
Understanding your industry, the potential for obtaining customers from the public sector and the specifics of your own business will enable the SME to more effectively submit tender proposals and to react more efficiently to any problems or issues that arise.
If EU public sector policies are to be meaningful, they must address the fact that small firms who wish to enter into the public sector contracts and procurement process - need to be properly trained - if they are to make a significant impact in terms of getting value for money and embracing the philosophy of inclusion, and adding value to the supply chain.
EU or national government policy statements alone will not achieve the objective of getting EU small to medium enterprise engaged in the public sector procurement process - we need to square the circle - by providing the appropriate level of training to SME's - that will empower them to succeed, while at the same time lowering costs and improving the quality of the goods and services delivered to the public sector.
The Tendering for Contracts Training Programme was first developed in 1998 and piloted between 1998 and 2000, In 2002 the programme was endorsed by the Small Firms Enterprise Development Initiative - (SFEDI) - a UK government accreditation agency, it was described by the Chief Executive as innovative and fit for the purpose, We are also in discussions with the UK Office for Government Commerce and the UK Small Business Service
EU Programme Delivery Partners
Tendering for Contracts Training - hope to form collaborative delivery partnership with other members of ECSB to enable a more cohesive approach to be made to the delivery of tendering training to small to medium enterprise throughout the EU, interested members should get in touch with Tendering for Contracts Training at the address below.