On average the UK Government spends £300 billion a year, more than a third of all public spending, on procuring goods, works, and services from external suppliers. In this post we explore the 6 reasons why you should include public sector contracts within your business strategy.
The Public Sector is typically made up of not-for-profit organisations owned by central, national and local governments, for the benefit of their citizens. They cover areas such as defence, education, fire services, healthcare, police and refuse collection.
As the public sector relies on public funding to make decisions, they are required to ensure their financial decisions are made respectfully, encourage free and open competition, achieve best value for money, and ultimately benefit the public.
All government contracts over £12,000 and wider public sector contracts over £30,000 must be publicly accessible online for any supplier to view and bid for. No matter what size your business is, if you meet the criteria and can deliver the tender requirements, you have a fair chance of winning the work. This is different to private procurement where the buyer can choose who to inform of their procurement needs, and who to do business with.
The UK Government aims to award 33% of all public contracts to SMEs, which make up 99% of all UK businesses. To help make this possible, policies were introduced allowing buyers to prioritise smaller businesses by creating SME-only contracts.
All invoices for contracted work must be processed by public bodies within 30 days of receiving them, ensuring businesses like yours get paid promptly. Lengthy payment periods can be an issue within the private sector, where larger businesses can dictate when they issue payment.
Nothing is hidden in public procurement. All supplies receive the same information, award criteria is shared upfront, and suppliers will receive feedback if they did not win a contract. Private buyers do not have to make their processes public, and have no obligations to provide feedback to suppliers.
MEAT is the chosen method of proposal assessment, meaning contract awards are not just based on price, and consider the wider aspects of tender submissions. Social Value is a major consideration in contract awards, and with the Procurement Policy Note – Taking Account of Social Value in the Award of Central Government Contracts, five key themes were highlighted for central government contracts: COVID-19 recovery, tackling economic inequality, fighting climate change, equal opportunity, and wellbeing.
Over 50,000 contracts are published each year by the UK public sector, many of these contracts require multiple suppliers and generate revenue over several years. Of these opportunities, 70% are Low-value tenders, meaning the market is very accessible for SME’s.