Home Business Insights & Advice Public sector contracts as a catalyst for business growth

Public sector contracts as a catalyst for business growth

by Sarah Dunsby
7th May 24 10:24 am

The goal for all UK companies, regardless of size and industry sector, is sustained growth. Businesses that create and nurture a culture of ongoing improvement and refinement are better equipped to address new challenges as they arise and adapt to changes in the business landscape. This gives them a competitive advantage over competitors in their given field and delivers long-term success.

However, driving consistent business growth is easier said than done and can be a significant challenge. While many approaches exist, from forming strategic business partnerships to product or service diversification, what works in the long run will depend on each business’s unique circumstances. This begs the question: how can companies identify the course of action most likely to yield the most substantial results?

One solution often overlooked despite its potential to deliver a lucrative stream of business income is public sector tenders. This involves securing valuable contracts from within the public sector through a bidding process. When you consider that the UK’s public sector spends, on average, around £300 billion a year on goods and services procurement from suppliers, this is an unmissable opportunity for UK businesses to further their growth.

What is public sector tendering?

When a public sector institution, such as the government, police and fire services, the NHS, schools, or universities, wants to source products or services, it typically issues a contract for suppliers to bid on—this is known as an open tender.

Public tenders frequently involve infrastructure projects, such as building roads, bridges, or buildings. Construction companies with a proven track record are strong contenders for this type of public sector contract.

Another common tendering sector is for IT and technology service providers. Many public institutions require technology solutions from companies specialising in software development, cybersecurity, or data management.

Many public sector organisations also need help from professional consulting firms with policy development, project management, or strategic planning. However you do not need to have specialised training for some contracts. Plenty of public sector organisations need anything from office supplies to medical equipment. Companies manufacturing or supplying niche products can often find very lucrative, targeted public tenders.

Suppliers are invited to bid on a tendering opportunity they are suitably qualified to deliver. While bidding on a contract may seem complicated, especially if this is your first time, the process is relatively straightforward. The steps include looking online for public sector contract advertisements and checking the details to ensure it is something your company can provide. You can find more detailed information in this guide to public sector contracts.

How does the tendering process work?

Each tender will list the name of the contracting authority, describe their requirements, and list the contract duration, estimated values, and the terms and conditions of the agreement. To eliminate risks, carefully review the contract terms to fully understand each party’s responsibilities and potential consequences of non-performance, including the conditions under which the contract may be terminated. It is important to note that the bidding process can be competitive and time-consuming, and there may be costs associated with preparing and submitting a bid.

It is usual for a business wishing to bid on a contract to undergo a pre-qualification questionnaire (PQQ) to ensure it meets the contract requirements. The PQQ helps the public body shortlist qualified suppliers suitable for the job by assessing their background, including their financial standing and technical ability to deliver what is needed.

The next step will be the invitation to tender. Shortlisted businesses are asked to create a document responding to the questions raised within the tender pack. This usually means detailing how the company will meet the contract’s requirements. Each application will be carefully reviewed before a decision to award a contract is made.

It is important to note that preparing a bid can be time-consuming, particularly for larger contracts. However, the potential benefits, such as increased revenue and industry recognition, can often outweigh this concern.

Depending on the value of the contract, the awarded contract may also contain a legally required ten-day waiting period. This waiting period allows unsuccessful applicants to challenge the decision should they feel the bidding process did not meet the requirements of the Public Contracts Regulations 2015. Once the waiting period has elapsed, the contract will be forwarded for signature by the successful applicant.

The benefits of winning public sector contracts

Businesses can increase revenue and opportunities by tendering and winning public sector contracts. Landing public sector contracts come with many benefits for providers, including:

  • Improved cash flow and revenue generation: Public sector contracts often provide predictable payment cycles, enhancing financial stability and contributing to revenue growth. Winning a public sector contract can provide a steady stream of income, helping to offset the potential fluctuations in revenue from other sources.
  • Contractual reliability: Public tenders ensure a reliable pipeline of work through formalised contracts.
  • Transparent and equitable procurement: Public sector bodies follow rigorous guidelines designed to promote fairness and transparency in the tendering process. Public procurement policy encompasses the directives, regulations, policies, and guidance that govern how the public sector purchases supplies, services, and works.
  • Prompt payment terms:  Statutory regulations often mandate that public sector organisations settle invoices within 30 days, providing timely payment for businesses.
  • Enhanced industry reputation: Successful delivery on public sector contracts can boost a business’s reputation, increasing its standing within its industry. Winning a public sector contract can demonstrate your company’s capabilities and commitment to delivering high-quality products or services, enhancing your credibility and attractiveness to other potential clients.

The government recognises the substantial benefits businesses derive from public sector contracts. This recognition is reflected in the significant proportion of public expenditure, approximately one-third annually, allocated to procuring goods and services from external providers. After the government’s Procurement Act received Royal Assent, small and medium-sized businesses could win a more significant share of the massive £300 billion spent annually on public sector contracts.

Public Sector Tenders offers an efficient and practical approach to the public sector procurement landscape. With its Contracts Finder service, you can easily Find a Tender, boosting your chances of securing lucrative public sector contracts. This user-friendly platform helps to simplify the search for contracts, saving you valuable time and effort while increasing your potential for success in the public tender market.

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