The art of winning public sector contracts
The public sector has opened up to you. Trevor Clawson finds a way into the corridors of power
If you're accustomed to concluding deals on a handshake then the prospect of selling to the public sector may be less than enticing.
For while the buying departments of central and local government certainly represent a huge market for businesses of every size and sector, it's all too easy to be deterred by concerns that pitching for contracts means becoming embroiled in stifling bureaucracy.
And there's undoubtedly some truth in that perception. Put in a bid for a government tender and you will inevitably engage with a maze of arcane procedures and protocols that would not have disgraced the Byzantine Empire. Indeed, it's not unknown for companies to spend months preparing a proposal only to see it rejected because a 50-page tender document has been completed incorrectly. Hardly surprising then, that a great many businesses tend to give public sector work a wide berth, and prefer instead to focus on the more straightforward process of selling to other companies.
But this could be a case of better the devil you know. After all, every market sector has its own written and unwritten rules – and to be successful you have to be aware of what they are and play the game accordingly. In this respect, the public sector is no different from any other. The tendering process can indeed be very formal, but if you're prepared to research the market thoroughly, it needn't be overly daunting.
The research starts with identifying opportunities. Public sector procurement is a catch-all term that covers everything from multi-billion pound orders for aircraft carriers down to contracts to clean the windows of local schools or supply flowers to the town hall. Every government department, local authority, LEA and health trust has its procurement officers and each has its own buying requirements.
The good news is that while contracts to supply national government tend to be awarded to large and long-established businesses, there is plenty of scope for relatively small companies to compete for local authority work. And as William Sargent, recently departed chairman of the Small Business Council, points out: “Businesses with under 100 employees tend to operate locally and local authorities often source locally.”
They do this for policy as well as practical reasons. Marc Wood, a director of Exor management services – a company that works with suppliers to ensure they have the necessary accreditation to sell to local authorities, notes that “local government bodies are under immense political pressure to support local business.”
So if the opportunities are there, what's the downside? Well simply that tracking down available contracts is a challenge in itself. Under EU rules all public sector contracts worth £100,000 or more must be advertised in the Official Journal of the European Community (OJEC to its friends), but below that level, there is no single source of information. To comply with the law, government bodies must advertise when they put work out to tender, but the ads could appear in a multitude of places, including websites, trade journals, the national press or local newspapers. And if you don't know where to look, you won't know that the business exists. “It's very difficult to find out about contracts,” admits a spokesman for the Office of Government Commerce. “They are advertised at local level and local authorities will also contact suppliers who have done business with them before. The problem is, if you haven't done business with a local authority, you won't be on the suppliers list.” In that respect, the system favours existing suppliers.
But you can take action to level the playing field. According to Jason Woodford, development director and owner of Academy Internet, a company that has won web-development and e-learning contracts from a number of government agencies, there is no substitute for good old-fashioned spade work. “I would encourage businesses to pick up the phone. Ring up procurement departments and ask where their contracts are advertised,” he says. And once you have that information you can begin to monitor the magazines and websites where the ads appear and respond when a suitable contract comes up for grabs.
Given the image of faceless bureaucracy that Whitehall departments, local government offices, assorted LEAs and health authorities tend to project, it may come as something of a surprise that cold calling for business is an option. “It's perfectly possible to ring up a local council and ask when a particular contract comes up for renewal and whether your company could be considered,” says Wood. Of course, the key to this is in getting to the people who actually make the decisions. “It's no different from making a call to a private sector business,” says Woodford. “But you do have to find the right person to talk to – and rather than trying to make a sale, think of it in terms of offering them a solution.”
Cold calling is part of a wider process of raising visibility. Given that public sector buyers will advertise contracts directly to suppliers that they already know, it is crucially important to firmly implant your business on their radar screen. “Public sector business is no different from any other,” says Ian Makgill, a director at public sector procurement consultancy Ticon UK. “If you believe you have the skills, then you have to put yourself in the shop window. The normal rules of marketing apply.”
Raising your profile
And aside from calling direct, there are numerous ways to raise your profile. Woodford recommends that you find out which trade magazines get read in public sector circles and either buy some advertising or – better still – work with a PR company to get your name in the editorial pages.
Woodford is also a strong advocate of online marketing. “It's amazing how many purchasers find out about you over the internet,” he says. It's not just a question of having a credible website, he adds. You also need to ensure that buyers can find you easily on the web. For Academy Internet that has meant optimising its website to ensure that it comes up near to the top of the list when purchasers run key words on any of the internet search engines and directories. “We have become experts in search engine marketing,” says Woodford.
In other words, it's all about being proactive. Sargent also stresses that while government should be doing more to widen its pool of suppliers, that businesses must act for themselves. “The government has a responsibility to make it easier for companies to engage with the public sector,” he says. “But it does not have a responsibility to come knocking on your door and say why don't you sell to me.”
Pitching for business
Once you've located any potential sources of public sector business, the next stage is to bid for a contract. More hurdles here I'm afraid, as public sector tendering rules are often cited as a huge deterrent to doing business with government.
In fact, following a report by the Small Business Council on the difficulties of selling to the public sector, the government has pledged to streamline the tendering system, but as things stand at the moment, winning a contract will require you to supply a lot of information and tick a lot of boxes.
To some extent, this is understandable. Civil servants and local government officials are under a huge amount of scrutiny and the one thing they want to avoid is placing an order with a supplier who will deliver a sub-standard service. For that reason, you will be expected to provide evidence that your company's finances are sound, that you have experience in providing similar goods or services to other clients and that you have public liability insurance.
However, it doesn't end there. While the specifics will differ depending on which agency or department you're dealing with, the chances are you will also have to demonstrate that you have equal opportunities and diversity policies in place and that your approach to environmental and community polices are in line with the buyer's own policies. As Wood puts it: “The information is business-related but there is a political overhang.” And you may feel that you need to go the extra mile to reassure your potential customer that yours is a business that conforms to best practice standards. “As part of our preparation, we made sure we had Investors in People accreditation – we knew it was something that would go down well,” recalls Woodford.
But it's not all about ticking boxes. As with any business relationship, you won't win the contract unless you understand the requirements of the purchaser – and public sector bodies can be specific in their needs. Makgill cites the example of financial software systems, which tend to be constructed with the private sector in mind. “Public sector bodies have zero rated VAT,” he says. “If a supplier offers a system that was designed primarily for the private sector it may have to be redesigned for the public sector – and that will push up costs.” Consequently, government and local authority buyers will tend to opt for suppliers who either already have public sector experience or who demonstrate an awareness of the buyer's specific circumstances. “You have to spend some time learning the sector,” adds Makgill.
Public sector buyers are clearly looking for value for money – indeed the phrase ‘best value' has become something of a mantra. But as Woodford points out, that doesn't necessarily mean that the cheapest bid will win the contract. “In one instance, we were competing against major IT companies and some low-cost foreign competition for a public sector contract,” he says. “We were by no means the cheapest bid but we won the contract.”
According to Woodford, mature buyers tend to look beyond the prices quoted as headline figures to factors such as the cost of maintenance or the likelihood of an apparently low-cost bid becoming more expensive once the project is implemented.
And onerous as it is, the tendering process plays a part in building that confidence. Makgill says the only way to deal with it is take a systematic approach. “I advise people to draw up a checklist: What does the client want? What are the requirements of the tender? What are the requirements for my business in terms of accounts and evidence of contracts? Put it all into the tender and don't leave anything blank without an explanation.”
If this sounds like too much work, there is an alternative – find a partner with whom you can develop a proposal. “You can buddy up with another more experienced organisation,” says Yasmin Halai, managing director of Ideal Solutions Systems, a supplier of fax and printer equipment to the private and public sector. “For instance universities are increasingly looking to forge links with industry both for R&D and to enhance their business provision and they tend to be very successful at sourcing and securing government funding.”
Once a contract has been awarded, selling to the public sector should become a whole lot easier. You will be on a suppliers list – although this may be local – and you will have the beginnings of a network. However, it's important to remember that there are rules of engagement. “There are very strict rules on how public sector buyers work with suppliers,” says Makgill. “For instance, if you take a group of civil servants out to celebrate the completion of a contract, they will have to pay for their own meals.”
Under an initiative that has just been announced by the Office of Government Commerce (OGC) – a body set up by the Treasury to promote more efficient public sector procurement – the process of identifying opportunities and submitting tenders is likely to get considerably easier in the near future.
Responding to complaints that small companies with limited resources often don't have time to research upcoming tenders, a portal is to be launched later this year, which will bring all the information together under a single web address. Interested companies will be able to search the database of live contracts and register their own details. The result will be a two-way information source for purchasers and suppliers alike, with the tendering process being streamlined by an online submissions process. What's more, the data will be captured and stored for re-use the next time a company wants to tender. “When you register your details on the site, you will be visible to government buyers,” says the OGC spokesman. “And you won't have to submit the same information twice.”
There are already private versions of this kind of scheme. For instance, Exor Management Services is building a database of accredited suppliers for local authorities who in return post information about their buying requirements.
This increasing use of the internet emphasises the importance that e-commerce will play in the public sector market. The government sees online trading as a way to cut costs and streamline processes and the expectation is that suppliers fall in line with this vision. Put simply, if businesses embrace technology as a means of submitting tenders, taking orders and processing invoices, they will thrive, otherwise the public sector could well be a closed door. “If you rely on the post and you can't accept credit cards, you will struggle,” says Makgill.
But if that is true of government commerce it is also true of trade with the private sector. While demands for e-commerce will put a strain on some, the ultimate effect should be greater access to public sector business and easier tendering procedures.
Contacts to contracts
With a client list that includes not only the North West Regional Assembly and the North West Development Agency but also businesses such as Littlewoods and Everton Football Club, web development and online marketing company Ripple Effect has won business on both sides of the public/private sector divide.
And according to managing director Hatton, pitching for government business isn't that different from pursuing contracts in the private sector – at least in terms of the tendering process. “There is a lot of work involved in tendering for public sector organisations but blue chip companies also require you to follow very strict procedures,” he says.
However, Hatton concedes that winning public sector work for the first time is to some extent a matter of luck. “We got some work for the British Chambers of Commerce (BCC),” he recalls. “Although that is a private organisation, it has connections with a lot of public bodies – so we made a lot of contacts.” And as a result of those contacts, Ripple Effect became aware of a contract to provide services for the area's Regional Assembly. “We got that work as a direct result of our involvement with the BCC,” he says.
In Hatton's experience, once you've secured one public sector contract it becomes easier to pitch for others, not least because you have a track record. However, while he stresses that case studies and testimonials play an important role in winning business, public sector procurement departments aren't solely interested in your work with other government bodies. “We always take along case studies that are relevant to the work we are pitching for – whether public or private sector,” he says.
? Research the market thoroughly. Check government and local authority websites, the European Journal, trade press and local and national newspapers to access information on recent public sector contracts
? Be proactive. Don?t be afraid to cold call local authorities and government departments to ask about opportunities
? Build a credible website. Many public sector buyers use the web to source suppliers
? Network. Attend industry events and talk to public sector buyers about their requirements
? Ensure that your business is compliant. Public sector bodies will require proof that your business has sound finances, experience in providing the services you?re offering and that it is compliant with regulations such as the requirement to have public liability insurance
? Think in terms of e-commerce. If you can?t do business online, you will be increasingly excluded from public sector work