Selling to Government: new guidance for SMEs
In support of "Small Business Saturday" on 4 December 2021, the Government published a guide (the Guide) for small and medium-sized enterprises (SMEs) on how to bid for and win Government contracts.
The Guide was published by the Cabinet Office and brings together key information to assist SMEs considering bidding for government contracts. This is in support of the Government's wider aim to increase its procurement spend with SMEs and give SMEs better access to public contracts. The most recent figures quoted by the Government show that SMEs won about £15 billion of a total of £50 billion worth of public contracts.
The guide brings together key information about:
- Where SMEs can look for Government contract opportunities, including on Contracts Finder and the Find a Tender Service.
- Accessing government opportunities in different ways, including approaching larger suppliers which work with government for contract opportunities, competing to join a government ‘framework’ or ‘dynamic purchasing system’ or attending supplier engagement events.
- How SMEs can make sure they are showcasing their strengths during the bidding process, with a "top ten tips for tendering".
- Other ways in which the Government is tackling procurement obstacles for SMEs, such as paying suppliers within the 30-day payment window set out in regulations and publishing SME action plans for each government department which look at what that department is likely to buy over the next few years and the role of SMEs in those markets.
One key area of focus in the Guide was on social value and the need for SMEs to deliver on its three main strands of social value outcomes: economic, social and environmental. The Guide highlights the requirements under PPN 06/20 for central government to include social value factors when deciding on the award of its higher value contracts (typically over £123,000). At least 10% of marks awarded when scoring the bid will focus on social value.
In order to adopt a consistent approach when doing this, a new Social Value Model has been applied to all new central government procurements since 1 January 2021. The Guide states that the Social Value Model is designed to enable SMEs to effectively compete with larger organisations on social value because it focuses on the quality of the actions taken to meet social value outcomes, not the volume. You can read more about PPN 06/20 and the Social Value Model in our previous insight here.
Reserving low-value contracts for local suppliers and SMEs
The Guide also highlights the requirements under PPN 11/20 for central government procurements for goods, services or works where the contract value is below the current relevant financial threshold. Since 1 January 2021, central government can choose to reserve these contracts for bidders based in a specific region and/or bidders who are SMEs and voluntary, community and social enterprises (VCSEs). Other contracting authorities such as local authorities, housing associations and ALMOs may also apply these principles on a voluntary basis. You can find more about PPN 11/20 in our insight here.
The Government's approach to SMEs and VCSEs in the Transforming Public Procurement Green Paper
The Guide is focussed primarily on central government procurement, but the Government has stated that it is making changes to the wider procurement process "to level the playing field for SMEs". The Transforming Public Procurement Green Paper (the Green Paper) places emphasis on structuring procurements to enable SMEs and VCSEs better access to public sector opportunities. For example, some of the key proposals in the Green Paper (as clarified in the Government's Response to the Consultation (December 2021)) which are aimed at doing this include:
- Consolidating the four sets of procurement regulations (the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concessions Contracts Regulations 2016 and Defence and Security Public Contracts Regulations 2011) which the Green Paper states are "particularly burdensome for small businesses" into a single set of regulations for the UK;
- Replacing the existing seven award procedures with three procedures which the Government states will make it easier for "new entrants to public sector markets to access…. opportunities on an equal footing";
- Creating one single central platform which suppliers have to register on, so they only have to submit their data once to qualify for any public sector procurement;
- Extending the current procurement rules on prompt payment of the supply chain by allowing contracting authorities the right to investigate payment of suppliers at any tier in its supply chain and allowing businesses a direct right of communication with the ultimate public sector client.
- Creating a new statutory objective (alongside other new procurement principles and statutory objectives) of maximising the “public benefit” to support wider consideration of social value benefits, which chimes with the other recent outputs from Government which are of relevance for SMEs and VCSEs (as set out above); and
- Enabling unsuccessful bidders to access certain redacted evaluation documents (from the winning bid only) so they can compare the "relative advantages" of the winning bid against their own – which will allow them to pursue a challenge but also consider feedback on what they need to work on to improve. This should be beneficial to SMEs and VCSEs (although this is the same feedback approach adopted for all bidders, regardless of the size and resources of those bidders – and some commentators have indicated that this may increase the administrative burden for SME and VCSEs).
You can read more about the Green Paper's proposals and progress in our latest insight.
In its response to the consultation on the Green Paper, published on 6 December 2021, the Government reiterated its goals in relation to SMEs and VCSEs. It noted that there was "strong representation" from SMEs and VCSEs in the consultation responses and it is clear that the Government has listened to its consultees on a number of points, particularly where concerns were raised about the potential burden of the proposed transparency obligations on smaller businesses and organisations. However, it remains to be seen whether these changes will have the intended effect of making public sector procurement more accessible to SMEs and VCSEs.
For more information about the Guide, Green Paper and the Government Response please get in touch.