Category: Public procurement

SMEs to miss out on £33.5bn worth of government contracts by 2020

houses-of-parliament

Small businesses could miss out on over £33 billion worth of UK Government contracts in the ten years to 2022, according to procurement specialists Millstream.

The Government has set itself a target of spending £1 in every £3 ‎on SMEs by 2022 through both direct and indirect spending as part of a drive to re-balance the economy. It procures around £50 billion worth of products and services a year.

However, according to Millstream analysis*, in the last five years direct government spending on SMEs has only grown by one percentage point from 10% to 11%.

The firm estimates that, if spending on SMEs increases at its current rate, the SME community is likely to have missed out on £33.5 billion worth of government contracts in the ten years to 2022 – at precisely the time that the government is hoping to attract more tenders from them.

‎Penny Godfrey, General Manager of Millstream, said: “This could be a real missed opportunity for the SME community. Despite a major push to redistribute spending amongst a larger number of smaller firms, current trends suggest that not enough SMEs are tendering for and winning government business.

“This is not itself a criticism of government: the target is there to encourage smaller businesses to apply for contracts. Doing so would spread risk for the government and improve its access to specialist businesses. Of course, it should also redistribute investment around the UK.”

According to Millstream, it’s not all doom and gloom, the UK government is on track to double the proportion of funds it spends directly on SMEs by 2022. In 2009, just 6.5 per cent of total government expenditure went to SMEs, but Millstream predicts it will hit 13% by 2022.

However, the government’s target is not exclusively based on the direct contracts it offers to SMEs, but on the total overall benefit to SMEs, which includes indirect contributions to the SME supply chain. By this definition, government spending on SMEs is actually decelerating.

Penny Godfrey added: “More must be done to encourage tender submissions from SMEs. Businesses must appreciate that the process needn’t be arduous. Buyers really want to see more small businesses getting involved. It is vital that we stimulate tendering for government work – SMEs must understand that the opportunities outweigh the risks.”

 


* UK government official data on SME spending available here (2009-14) and here (2014-16). 2016/17 data not yet available.

Millstream made the following presumptions in its calculations:

  • YoY increase of 3% on total procurement spending by the UK government 2016-2022
  • Improvement in the % of total (direct & indirect) SME spending follows the direct spending trend of the UK government from 2011-2015 onwards (=growth of 1% every four years)
  • To make the most conservative estimate possible, we used the highest % spent on SMEs available as starting point for projected spend from 2016 to 2022

Comment on De La Rue taking steps to appeal against passport decision

UK passport

With the recent news* that British company De La Rue are looking to initiate appeal proceedings against the government’s decision to award the contract to make UK passports to French-Dutch company Gemalto, Penny Godfrey, General Manager of Millstream, comments:

 

“There are great benefits to British companies that have the opportunity to bid for European contracts and our public sector has to reserve the right to invite bids from outside the UK – these principles could shape how competitive our economy will be after Brexit. In this instance we must be aware that this display of political or domestic preference could be riding roughshod over fair market principles.

 

“De La Rue has the right to appeal the Government’s decision, but will have to base that appeal on a breach of wider procurement rules. There is no clear definition of what constitutes an abnormally low tender offer, but the risks to the contracting authority of an unsustainably cheap offer are clear: poor performance, the potential for hidden costs, and, ultimately, incurring the additional cost of re-tendering if things go awry.”

 

*Related article: http://www.bbc.co.uk/news/business-43623750

Free Webinar: ESPD for Suppliers

ESPD for Suppliers

There has been a lot of talk about the European Single Procurement Document (ESPD) but what is it, what do you need to know about it and why are there so many versions of a ‘single’ document?

Join our webinar on Wednesday 18 April from 1.00pm to 1.45pm where you’ll find out:

• What the ESPD is and why is has been created
• How it is implemented across the UK
• How to create an ESPD
• What impact Brexit will have on the ESPD

Book your place

Free Webinar: Frameworks and Dynamic Purchasing Systems

Frameworks and DPS

The use of frameworks and dynamic purchasing systems (DPS) in the public sector is on the rise. They reduce the amount of work for procurement teams and simplify the tendering process for suppliers.

Make sure you’re prepared to bid for this type of work – join our free webinar to find out what a framework or DPS is, how they operate and what work needs to be done once you are on them.

Date: Thursday 22 March
Time: 1.00pm to 1.45pm

During the webinar we’ll cover:

  • A description of what a framework is and how it operates
  • A description of a DPS and how it differs from a framework
  • An explanation of how to find these opportunities
  • Examples of ‘call-off’ mini competitions from frameworks and DPSs
  • An overview of how to write great bid responses

Book your free place

Free Webinar: Finding and Winning Low Value Tenders

Low value tender webinar

Low value tenders can prove to be a great business development tool for public sector suppliers.

However, as low value tenders do not have to adhere to the full raft of procurement regulations, the challenge is knowing where to find them and how to win them.

Join our Head of Training and Consultancy, Gemma Waring BA (Hons), for this free 45 minute webinar where we’ll outline what rules and regulations govern low value tenders, advise how to win these tenders, plus lots more.

Date: Wednesday 21 March
Time: 1.00pm – 1.45pm

Book your place

Free Webinar: Social Value in Procurement

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Calling all buyers! Social Value has been part of procurement legislation since 2013, but what is it? And, more importantly, how should these types of questions appear in your procurement documents?

If you would like a firmer understanding of the topic then join our Head of Training and Consultancy, Gemma Waring BA (Hons), for this FREE webinar.

Wednesday 28 February, 1.00pm til 1.45pm

The webinar will cover:

• A high level overview of the Social Value Act 2012

• An explanation of how it can be implemented in procurement documents

• Examples of Social Value questions

• Advice on how to evaluate them objectively

Book your space

Free Webinar: Social Value in Tenders

Millstream Social Value Webinar

Social Value has been part of procurement legislation since 2013 yet it is just starting to filter down into tender documents on a regular basis – sometimes accounting for up to 20% of the total evaluation.

But what is it? And, more importantly, how can you prepare for it?

If you would like a firmer understanding of the topic then join our Head of Training and Consultancy, Gemma Waring BA (Hons), for this FREE webinar.

Tuesday 27 February, 1.00pm til 1.45pm

The webinar will cover:

• A high level overview of the Social Value Act 2012
• An explanation of how it is being implemented in the public sector
• Examples of Social Value questions that have been seen in recent tenders
• Advice on how to prepare for answering social value questions in tenders

Book your space

 

 

Public Procurement thresholds 2018/2019 – updated

New Public Procurement thresholds 2018/2019

New Public Procurement thresholds 2018/2019

Public Procurement thresholds 2018/2019 – updated

With the ongoing uncertainty over whether or not Brexit negotiations will result in an agreement, changes to public procurement remain a distinct possibility (see our blog on the UK Government’s contingency for e-procurement in the event of a “no-deal” scenario).

Despite this, it is important to remember that the regulatory framework for public contracts will remain in place in the UK for the foreseeable future regardless of the outcome. EU Public Contract Regulations were passed into UK law in 2015 and will remain in place unless or until they are repealed and replaced.

Considering the time frames involved in formulating and ratifying new legislation, the thresholds detailed below will almost certainly remain in effect until the end of 2019 regardless of the outcome of the negotiations.


When procuring goods or services over the financial threshold a public authority must do so under the Public Contracts Regulations 2015 in England, Wales and Northern Ireland and the Public Contracts (Scotland) Regulations 2015. These regulations transposed the European public contracts directive (2014/24/EU) into national law.

The main point of interest from our readers’ perspectives is that buying organisations must advertise any requirement over the new thresholds in the Official Journal of the European Union (OJEU), rather than just advertising it nationally. The calculation of the estimated value of a procurement shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.

Between the 2016/2017 thresholds and the 2017/2018 thresholds we have seen a small increase in the thresholds in both Pounds Sterling and Euros. Due to the relatively small increase it is unlikely that buyers or suppliers will notice much change in the size of contracts advertised at European level.

 

Public Contracts

Supply, Services[1] and Design Contracts
Works Contracts[2]
Social and other specific services[3]
Central Government[4]
£118,133

€144,000

£4,551,413

€5,548,000

£615,278

€750,000

Other Contracting Authorities
£181,302

€221,000

£4,551,413

€5,548,000

£615,278

€750,000

Small Lots
£65,630

€80,000

£820,370

€1,000,000

n/a
[1] With the exception of the following services which have different thresholds or are exempt:
– Social and other specific services (subject to the light touch regime) Article 74.
– Subsidised services contracts specified under Article 13.
– Research and development services under Article 14 (specified CPV codes are exempt).
[2] With the exception of subsidised works contracts specified under Article 13.
[3] As per Article 74. Services are listed in Annex XIV.
[4] Schedule 1 of the Public Contracts Regulations lists the Central Government Bodies subject to the WTO GPA. These    thresholds will also apply to any successor bodies.

 

Social and other specific services are subject to the ‘light touch regime’ as described in a previous blog.

 

Utility Contracts

Supply, Services and Design Contracts Works Contracts Social and other specific services
Utility Authorities £363,424

€443,000

£4,551,413

€5,548,000

£820,370

€1,000,000

Defence and Security Contracts

Supply, Services and Design Contracts Works Contracts Social and other specific services
Defence and Security authorities

 

£363,424

€443,000

£4,551,413

€5,548,000

n/a

 

Clarifications

Concession Contracts

For the first time Concession Contracts are covered in EU Law under a separate directive and therefore separate regulations in the UK.

The EU Directive is found here:

http://eur-lex.europa.eu/legal-content/GA/TXT/?uri=celex:32014L0023

The UK regulations here:

http://www.legislation.gov.uk/uksi/2016/273/contents/made

The UK Directive outlines how the value of a concession contract should be calculated:

http://www.legislation.gov.uk/uksi/2016/273/regulation/9/made

The thresholds for publication in the OJEU refers to Article 8 (1) of the EU Directive which is:

  1. This Directive shall apply to concessions the value of which is equal to or greater than EUR 5 548 000.

The Sterling equivalent is £4,551,413

Calculating Estimated Value

The calculation of the estimated value of a procurement exercise shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.

Contracts Subsidised by Public Funds

All applicable contracts which are subsidised by 50% or more of public funds must be advertised in the OJEU. From time to time a public body may part fund a project and request that the recipient of funding must advertise the procurement in line with public contracts regulations even if their contribution is less than 50% of the overall value. As such any recipient of public funding on a project should verify with the funding body what is expected of them in procuring for the project.

What are Small Lots?

Read our blog about small lots.

How do I Know if a Contract is Classed as Works?

Many contractual requirements are a mixture of works and services. Whichever element is the highest in value should be taken as the contract nature when determining what threshold to apply. If you are unsure whether a specific element is classed as works or services then you can refer to Schedule 2 of the regulations which lists all activities which constitute works by CPV code:

http://www.legislation.gov.uk/uksi/2015/102/schedule/2/made

If the CPV code which fits your requirement is not in that list then it is not classed as a Works contract.

 

Tenders Direct can alert you to suitable public contracts as soon as they’re published. Visit our website or call us on 0800 222 9009 to learn more.

 

Meeting voluntary standards to maximise the triple bottom line

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The new ISO 20400:2017 focuses on ensuring procurement has a positive environmental, social and economic impact.

Although this new standard is voluntary, sustainable procurement and careful management of supply chains are vital to achieving a triple bottom line ‘people, planet and profit’.

Millstream’s General Manager, Penny Godfrey, comments further at infrastructure-intelligence.com

Why we love low value tenders

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Low value tenders are those which aren’t published in the Official Journal of the European Union (OJEU) as they are below the EU threshold set at £106,047.

More information can be found about thresholds in our blog post, but what are the key benefits of low value tenders?

For SMEs and companies who have no experience of working in the public sector, low value tenders are a good starting point. Securing a few low value contracts allows smaller suppliers to build up a body of work that can help them go after high value OJEU notices in the future.

The five key benefits of low value tenders

Continue reading “Why we love low value tenders”

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