Four Reasons Why Public Sector Contracts Can Be Lucrative For Your Business

 Four Reasons Why Public Sector Contracts Can Be Lucrative For Your Business

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Many UK SMEs are missing out on a golden opportunity in the form of public sector contracts. If you run a small or medium-sized business, you may believe that public sector contracts only go to the ‘big boys’ you cannot compete with. This couldn’t be further from the truth.

Ask yourself this: Would you like a client that spends around £306 billion a year – over a third of all public spending – on sourcing goods and services from external suppliers, pays on time and is guaranteed never to go bust? Of course, you would!

Yet, a surprising 75% of SMEs choose not to bid for public sector work, missing out on a potentially transformative source of revenue that could help establish and grow their bottom line and business reputation.

In this article, we will explain the public sector and explore four excellent reasons for pursuing public sector contracts and how they can benefit your company.

What is the Public Sector?

The public sector comprises organisations funded by the government to provide essential services to their infrastructure. These organisations are not-for-profit and operate under the oversight of central, national, or local government bodies.

Critical areas within the public sector include education, fire services, NHS healthcare, policing, and waste management. Other organisations, such as universities, construction and maintenance, and utility companies, use similar procurement methods.

Public sector procurement also extends far beyond simply acquiring services. The public sector encompasses many needs, and a wide range of products are sourced alongside services. This can include office supplies, work vehicles,  medical equipment, construction materials, and office furniture.

Given their reliance on public funds, public sector organisations are obligated to ensure financial prudence, transparency, and value for money in all their decisions. They must promote fair and open competition whenever possible to serve the public interest effectively. If you need a deeper understanding of the bidding process, we are happy to answer any questions you may have.

It is also interesting to know that around 1,500 new contract opportunities are issued each week and that around 60 per cent of contracts are awarded to SMEs in the UK. With this in mind, here are four reasons your business should start bidding for public sector contracts ASAP.

Stabilising Cash Flow Now and Beyond

Winning public sector contracts presents many benefits for SMEs, one of the most important being securing a predictable cash flow. Many public sector service contracts extend for a minimum of one year, and the majority of small suppliers will receive prompt payment within 30 days of submitting accurate invoices (frequently within just 14 days). This reliability injects a high level of financial stability and security into your business operations.

The public sector’s scope is vast, offering a wealth of potential opportunities. Beyond core bodies like central government, local councils, and the NHS, specialist providers can pursue contracts within the police and fire services. Additionally, institutions such as universities, construction companies, and utility providers often follow public sector procurement practices, further broadening the landscape.

The Public Sector loves SMEs

Contrary to the common belief that the government only favours large corporations, UK SMEs are actively sought after within the public sector. This recognition stems from several key advantages that SMEs bring to the table:

SMEs are renowned for their cost-effectiveness, delivering high-quality goods and services while maximising value for public funds.
Personalisation and responsiveness are hallmarks of SMEs, leading to superior customer service experiences for public sector bodies.
SMEs possess an inherent agility that allows them to swiftly respond to changing needs, pivot strategies, and adapt to complex procurement requirements.
Free from the bureaucratic issues that can sometimes hinder larger firms, SMEs often spearhead innovation, introducing cutting-edge solutions that benefit the public sector.

The government’s appreciation for these strengths translates into deliberate efforts to increase SME participation in public procurement, creating a competitive market that ultimately benefits taxpayers.

Better able to meet the MEAT requirement

Under the Most Economically Advantageous Tender (MEAT) assessment framework,

public sector contracts are awarded based on a comprehensive evaluation of tender submissions, extending beyond mere price considerations.

The legislation outlines a broad range of criteria that public sector bodies may use to evaluate tender submissions. These include but are not limited to, quality, price or cost-effectiveness, technical strengths, design elements (aesthetic and functional), accessibility, social impact, environmental sustainability, innovation, after-sales support, and delivery terms.

It is also useful to know that some public sector organisations may opt to structure the procurement process so that suppliers compete solely on quality criteria, with a fixed price or cost already established. This can help when assessing your budget to see if the contract is profitable enough to be worth bidding on.

Social Value also carries significant weight in the decision-making process. To boost your chances of success, clearly articulate how your business actively contributes to positive outcomes within the communities it serves. Emphasise initiatives that combat economic inequality address climate change, provide equal opportunities, or offer broader community benefits.

Transparent Procurement in the Public Sector

The UK public sector’s commitment to open procurement is reflected in the mandatory online publication of government contracts exceeding £12,000 and broader public sector contracts exceeding £30,000. This transparency ensures that businesses of all sizes have the opportunity to discover and compete for these contracts.

Unlike private sector procurement, where buyers can hand-pick potential suppliers, the public sector process prioritises fairness. If your business demonstrates the ability to fulfil the tender requirements, you have an excellent chance of securing the work, regardless of your company’s size or public visibility.

Access public sector contracts with ease

With our Contracts Finder search tool, Public Sector Tenders can help you to uncover the most lucrative public sector contracts. Our comprehensive tender alert services curate and deliver relevant opportunities directly to you, eliminating tedious manual searches and maximising your bidding potential.

You can focus on crafting winning proposals while we handle the time-consuming task of identifying the most promising contracts for your business.