How to apply for public sector tendering as a small business

The public sector, including the government and local authorities, spend around £284bn each year on goods and services. Yet 75% of small businesses never even apply for public sector contracts. Melanie Bryan guides you through the process.

Demystifying public sector tendering

Would you like an introduction to a client who:

  • Spends around £284bn each year on goods and services?
  • Issues around 1,500 new contract opportunities each week?
  • Pays on time and won’t go bust?
  • Wants SMEs to be suppliers – awards around 59 per cent of contracts by value to small businesses?

Well, the good news is that you can – that client is the public sector. No wonder Lord Young named the public sector as the client to target for micro-businesses that want to grow.

Winning public sector contracts can also help stabilise your cashflow. For example, contracts for services are usually for at least a year and most small suppliers get paid within 30 days of submitting an accurate invoice and many are paid within 14 days.

And remember that public sector is quite wide; for example, it includes government, local authorities, NHS, police and fire services. There are also several other organisations who use similar procurement processes including universities, construction, and utility companies.

What’s more the public sector recognises that SMEs can offer better value, higher quality service, greater flexibility and can be more innovative than larger companies. Therefore it wants more to become suppliers and has set targets to achieve this. Yet around 75 per cent of SMEs don’t bid for this work, missing out on a potentially significant income stream, and others struggle to consistently win contracts.

SMEs can, and regularly do, win this work but to be successful you do need to know:

  • Where to find contracts
  • How to navigate the procurement processes
  • Which contracts to bid for
  • How to write a winning bid
  • Why bids most commonly fail
  • How to prepare your company to be “tender ready”

And this can feel daunting. But it doesn’t have to be.

How do I find contracts?

The good news is that all government contracts over £10,000 and all local authority contracts over £25,000 have to be advertised. In practice most local authorities advertise contracts over £10,000. So all you need to do is register your business on the portals, make sure you have enabled the notification option and selected the types of contracts you want to see, and you will receive a list of potential opportunities most days. Registering on the portals to find opportunities is free.

Some useful ones to start with are:

For government contacts over £10,000

For high value government and utilities contracts (typically over £118,000)

For regional local authority opportunities

There are then other portals for emergency services, NHS, utilities, construction, universities, etc. A Google search will find these for you.

How do I navigate the procurement processes?

Public sector procurement is governed by legislation that means commissioners, (the buyers), must follow strict processes.

For example, once a tender has been published, the commissioner will only communicate with you via the portal, so that there is a clear audit trail.

If you ask a question, they have to provide the answer to all bidders who have registered for that opportunity, which they usually do through the portal.

There are several different processes that public sector can use, but the most common one requires you to:

  • Complete a supplier selection questionnaire
  • This asks for information about your company that lets the commissioner decide whether you are a business that public sector could contract with and whether you meet the basic requirements for the contract
  • For example, you will be asked for information on your accounts to ensure you have the financial capacity and stability to deliver the contract
  • Only if you pass this stage will your responses to the rest of the tender be evaluated
  • Answer a set of questions to ensure you have the “technical” capability and capacity to deliver the contract
  • Complete price schedules

You may also be asked to attend an interview or deliver a presentation as part of the tender process.

Helpfully, public sector organisations always explain how they will evaluate your bid, including the marks and weightings for each question.

One thing that many businesses don’t realise is that contracts with a value of less than £10,000 are not subject to the same procurement rules. Usually public sector simply needs to obtain three proposals. This is where the relationships you build with buyers are important as these opportunities do not have to be advertised.

>See also: Why are smaller businesses still struggling to win government contracts?

To bid or not to bid?

Deciding whether to bid is a commercial decision. Some things you will want to think about include:

  • Do we understand the specification?
  • Do we meet all the criteria?
  • Are the contract terms and conditions acceptable?
  • Can we make a profit?
  • What are the risks?
  • Can we deliver it if we win it – and do we need to work with other companies or freelancers to deliver it?
  • Are we clear on why they should choose us?
  • Do we have the time and skills to write a winning bid?

How do I write a winning bid?

Perhaps surprisingly, research consistently shows that the two main reasons why companies don’t win tenders are that they don’t…

  • Answer the question that has been asked
  • Back up claims with evidence

It’s important to remember that all questions are being asked to understand whether you have the capability and capacity to deliver the goods or services set out in the specification which the commissioner has provided.

The commissioner wants you to demonstrate that you:

  • Understand what they are asking for
  • Can evidence a track record of delivering similar goods or services to the standards they have specified
  • Have the right team and resources to deliver the contract

This is where a great bid writer is worth their weight in gold, particularly when you are starting out. Not only can they help you navigate the procurement process, but they also know what commissioners are looking for, can help you avoid the pitfalls and showcase your capability to best advantage to pick up maximum marks. They also save you time.

For example, a common line I see over and over again written into bids is “we are experienced in …”. My immediate response is, prove it! Anyone can say they are experienced, but if I am the commissioner how do I know whether you really are?

So, if I was going to answer this for myself about tender writing I would say something along the lines of:

I have over 10 years’ experience of helping SMEs to win public sector contracts. I have supported over 500 to win over £172m of contracts and have trained over 1,000 to improve their tendering skills.

 “I have been commissioned by organisations including local authorities, police, universities and infrastructure organisations (and I would name a selection) to help them understand the issues SMEs face when bidding for their contracts, diversify their supply chains and increase SME tendering knowledge and skills.

 “I have represented the views of SMEs on tendering to organisations including the Local Government Association and Cabinet Office Strategy Group. The quality and impact of my work has been recognised through several relevant awards including Government Excellence in Procurement, Best Supplier Engagement and UK Top Business Advisor.”

Hopefully this illustrates the difference that evidence makes to the strength of your answer.

Writing a winning bid takes time.

Running my own small business, I completely understand the challenges this brings. But you usually only have four weeks to write a bid, and, if you want to win it, you do need to make it a priority, ensuring you free the right people and time to it.

>See also: How to write a successful tender

Why do bids fail?

Interestingly the main reasons haven’t changed since I first started bidding 30 years ago – and they are all entirely avoidable. Business don’t…

  • Follow the instructions
    – They clearly set out what you need to do – if you don’t then you risk being disqualified
  • Answer all the questions and don’t answer them fully
    – A rough rule of thumb is that you can gauge the detail they are looking for by the number of words they permit you for each answer. If they set a limit of a thousand words and you have only written 700, then you probably haven’t provided sufficient detail
  • Provide evidence to support their answers
    – You need to ‘prove’ that you have the necessary experience and expertise
  • Write clear answers that the commissioner can understand and award marks for
    – This isn’t about your writing style, but more about a tendency to assume that others understand what you do, how you do it and your internal jargon and abbreviations. Commissioners can only award marks for what’s actually written in the answer. Always get an independent person to read through your answers to ensure they make sense
  • Pick the right people to attend an interview or presentation
    – It’s far too common for businesses to take team members who haven’t read or understood the tender, and therefore can’t answer the questions asked or contradict your submitted response
    – As an aside do be wary of over enthusiastic team members. The presentation or interview does form part of your submission. Don’t offer something during these that you can’t deliver within the price you have already submitted.

What can I do now to get my company tender ready?

If you think that public sector tendering could be for you, there are several things you can do now to start to get your company tender ready:

  • Find the help you need
    – Depending on your level of experience you may need a lawyer to check the contractual terms and conditions, an accountant to help you with the pricing schedules, tender training, and a bid writer to help you navigate the process and write a winning bid
    – You will also want to build relationships with other companies or freelancers if you would need to partner with them to deliver a contract
  • Register on the portals
    – Remember to select the notification option and choose the types of contracts you want to see
    – Start to request documents for contracts similar to those you are interested in to familiarise yourself with the supplier selection questionnaire and types of questions that are asked
  • Review your public profile and goods or services through the eyes of a public sector buyer
    – Do you appear to be a company they could do business with that has the right capability and capacity?
  • Understand your competition
    – Although you probably know your usual competition well, have you considered who you might be competing against for these types of contracts?
  • Get to know your potential buyers
    – Do you know what they buy and why? Understanding what matters to them and the context within which they are buying helps you build relationships and write winning bids
    – If you are interested in contracts under £10,000 then building relationships with potential buyers is extremely important
  • Sort out the basics
    – Do you have the right policies in place?
    – If you need them do you have up to date accreditations or registrations?
    Do you have electronic copies of key documents including accounts and insurance policies?
  • Gather your evidence
    – Facts, figures, testimonials, case studies

Winning public sector contracts can be a great way to grow your business. Could it be right for your small business?

Melanie Bryan is founder of business, charity and social enterprise consultancy WhyNotChange

Further reading

150 UK small business grants to apply for right now – UPDATED


Melanie Bryan

Melanie Bryan OBE is founder of business, charity and social enterprise consultancy WhyNotChange.