With government commitment to SMEs and several access routes, including the G-Cloud framework's online marketplace 'CloudStore,' the public sector market is now within the reach of small businesses.
Is it a market worth getting into?
Conducting business with public bodies represents a significant opportunity for all businesses. In the most recent fiscal year the public spending total was £729 billion, split between £560 billion spent by central government and £169 billion spent by local authorities. A large proportion of this expenditure is spent on goods and services and an increasing proportion of these services are IT based. Accessing this market can be difficult for SMEs, as many think public sector contracts are out of their reach.
Working for public sector bodies can be extremely beneficial for SMEs. Transparent tendering, detailed information, fair processes, strict adherence to contractual terms and payment on time are just some of the benefits companies conducting business with public bodies enjoy. There is also a vast range of public bodies that can potentially become customers for small businesses. Local Authorities, Emergency Services, the National Health Service, the Armed Forces and Universities are all public bodies that small businesses can benefit from establishing good commercial relationships with. Central government bodies like the Ministry of Defence, HMRC and the Transport Department are also in need of a wide range of goods and services, both specialist and otherwise.
The government's commitment
The government is committed to enabling small businesses to compete successfully for public sector contracts. Encouraging the UK SME base to take on public sector contracts stimulates the economy, as SMEs are extremely significant in terms of their contribution to output and employment. SMEs operate in all sectors of the economy, performing a range of functions that are continuously expanding. More than 27,800 small and medium sized businesses deliver more than 33% of the total commercial contribution to the UK economy. Across the 'EU four' (UK, Germany, France and Italy), the mid market represents about 1.5% of all companies, yet it generates more than 33% of private sector revenue, employing the same proportion of the countries' workforce.
The usual method public bodies operate when purchasing goods and services is by tendering. The public sector body provides an outline of its requirements so that all potential suppliers can bid with the details and cost of their solution. The main reason for this is fairness and visibility. The process is open for scrutiny and review and offers each participating company a chance to compete equally, as well as finding the best value for money solution. This process allows small businesses to compete with larger organisations for government contracts and prevents long-term deals being made without competition.
The Government initiative 'Contract Finder' is a free online service that enables SMEs to search for all government contract opportunities worth more than £10,000 and some worth upwards of £100,000. The service also offers a host of email alerts, e-books and advice on securing public sector contracts. The service also shows the range of sub-contracting opportunities to work with larger businesses that have already secured high-value government contracts. It is ideal for small businesses looking to move into the public sector market, as it offers advanced searches that can specify location, the type of work required and how much the contract is worth.
Along with Contract Finder, there are a number of other places small businesses can look for public sector contracts. For small businesses that are seeking to expand their business reach across the EU, the Official Journal of the European Union (OJEU) lists a great deal of the contracts available, with the added benefit of a wider range of opportunities. Tenders Electronic Daily (TED) is an online supplement to the OJEU, which can be accessed free of charge to search for up to date opportunities and register for live updates. The Small Business Research Institute (SBRI) is a more unique facility, as it lists challenges set by public bodies for SMEs to come up with innovative solutions for specific problems that current solutions cannot solve. As well as presenting these opportunities, the SBRI also offers funding, partnerships and future support to the small businesses that want to undertake the challenges.
Some methods of bidding for public sector opportunities can take a long time to complete. Official processes can have set time tables and complex projects could take years to arrange before work can begin.