Winning Public Sector Business - a rough guide

2. Why is it so hard to win public sector business? - continued

2.2 Because getting a contract from a public sector organisation will take time and effort

The rules under which public sector organisations operate are far more onerous than those for most private sector companies.

Only the smallest contracts can be awarded at the discretion of the staff with no competition. This can be set at £5,000 but might be as little as £500 – each organisation sets its own rules. Above that, buyers have to obtain at least three competitive quotes and show that they have acted fairly to award the business to the supplier offering Best Value (we will deal with this in more detail later).

Any contract over a set value (typically £5-10,000, but it can be as high as £20,000) must be tendered. That means at least three formal bids in writing that are then opened and evaluated before a contract is awarded.

Above a set value (currently £154,000 for products and services or £3.86 million for works) all contract opportunities must be advertised in the Official Journal of the European Union (OJEU). This requires companies to go through a complicated two-stage tendering process, first to pre-qualify and then, if selected to be included on the short-list, to bid. Because of the lack of uniformity between public sector organisations, it is rare that pre-qualification to work for one organisation is accepted when bidding for other work – see 5.3 below).

All this can mean a lot of work putting the bid together with no guarantee of any business at the end of the process. And it can take months: from spotting the opportunity to winning the contract can take up to 6 months for OJEU contracts and even for lower value work, decisions may have to be approved by councillors, which can add months to decision timescales. So don’t make plans based on your experience of commercial decision-making lead-times.

There are some categories of work, such as IT, where you may not even get the chance to bid, because national framework agreements are already in place and buyers are encouraged to use them. In these cases you may have no choice but to look for a sub-contracting role (we will discuss again this later).

Next page: 2.3 Because the public sector works under strict policies and regulations

For information or help in breaking into this sector or improving your market share, contact us for a free initial consultation.

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