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Small firms given fighting chance to win Government contracts

Today’s Telegraph includes an article about the new Public Contracts Regulations 2015, which will come into effect at the end of this month. As well as implementing the European public contracts directive (Directive 2014/24/EU), these new Regulations introduce a number of measures, collectively known as the Lord Young Reforms, that aim to help small firms win more government contracts.

One of these reforms, the removal of the pre-qualification questionnaire (PQQ) process, while undoubtedly well intentioned will instead significantly and adversely affect the ability of small firms to win public sector contracts.

All firms being considered for a government contract will still require to be qualified, e.g. to have adequate financial strength, appropriate levels of insurance, quality management processes and a track record of having successfully completed similar contracts. The ban on PQQ’s, simply moves the qualification process from a separate preliminary stage and instead embeds it in the first stage of the full tender evaluation.

This means that instead of completing a relatively short questionnaire to demonstrate their qualifications, a candidate for a public contract will have to provide exactly the same information as part of their tender, but will also have to complete a full tender proposal. A full tender proposal will often consume a very significant amount of time and resources.

If a company would have failed the qualification exercise under the PQQ system they will still fail, but the process will have cost them much, much more. In my view it is inevitable that over time this will lead to far fewer small companies submitting tenders for public contracts.

There will also be a much greater cost imposed on the public bodies who are evaluating the tenders submitted. Instead of evaluating perhaps 5 or 10 tenders from qualified candidates, they will have to carefully evaluate all of the tenders that are submitted to them.

Categories: Uncategorized

4 replies »

  1. Hi Tim,

    Context:
    We are a micro organisation (3 people strong in London and a small offshore team). We are into digital product management – UI/UX design, requirements definition, digital strategy, product development, and training.

    We are very new to government bidding and in the past 3 months have applied for 6 bids – i.e. provided PQQ and ITT response, technical response, solution presentation and of the 6 got called for interview in 1 bid (Digital Catapult). But we have not been successful in getting awarded the contracts. We very confident in 2 projects and have asked for a De-brief face to face session to get feedback.

    Type of project applied for: Drupal site revamp, agile product management training, IoT / Digital consulting, research & analysis, Digital transformation strategy, Applications review
    Bid budgets – £30,000 to £100,000
    Type of govt – council, parliamentary digital service, IWM, Digital Catapult, NGOs

    My question:
    1) Do micro organisation like ours have any chance of winning 1st-time government bids, as our competition will always have more experience to pull.
    2) What needs to be done to get our 1st government contract – any advice from your professional experience would help us.

    Thanks,
    Himani Tiwary

    • Hi Himani,

      Yes you do have a chance of winning government contracts. In fact government departments have targets for the number of small companies that they award to.

      Hopefully the debriefs you have asked for will be helpful in improving your chances next time.

      I have two suggestions:
      i) try to identify potential clients in advance of them starting a formal tendering procedure. If you can talk to the end user or the procurement officer you can tailor your proposal and/or allay any concerns they may have.
      ii) while I hesitate to suggest this, you might consider dropping your price in order to get a public contract in your portfolio. Contracts are almost always awarded on a price/quality basis. So if you are light on experience you might be able to offset this with a reduction in price.

      Please do persevere. It may take a while to break in, but public sector clients will often have repeat business and are reliable payers.

    • Hi Jamie,

      Thanks for highlighting this point.

      Regulation 111 (http://bit.ly/Regulation-111) states:

      (1) A contracting authority shall not include a pre-qualification stage in a procurement.

      But Regulation 109 (http://bit.ly/Regulation-109) says that Reg 111 does not apply to any procurement under the Official Journal thresholds, which are as follows:

      • Public works contracts – £4,322,012 (€ 5,186,000)
      • Public supply or service contracts awarded by central government authorities – £111,676 (€ 134,000)
      • Public supply or service contracts awarded by sub-central contracting authorities – £172,514 (€ 207,000)
      • Public service contracts for social and other specific services – £625,050 (€ 750,000)

      Regulation 109 also says that it doesn’t apply to contracts with a value of less than £10,000 for central government and less than £25,000 for the wider public sector.

      Regulation 111 then goes on to say that the ban on PQQ’s only applies to works contracts and service contracts for social and other specific services, under the same thresholds as apply to supply or service contracts, i.e. £111,676 for central government and £172,514 for sub-central authorities.

      In summary, the answer to your question is that a local authority is prohibited from including a pre-qualification stage in the competition for any Works contract with a value between £25,000 and £172,514.

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