Our five tips to improve public sector procurement
The Federation of Small Businesses recently found that SMEs are awarded just 19% of public sector technology contracts. This is a far cry away from the 33% goal aimed to be reached by 2022. These figures aren’t helped by the fact that only 23% of UK tenders received just one bid, meaning that SMEs are either not interested in working with the public sector or they struggle to apply for or find relevant opportunities.
Incentivising smaller businesses to work with the government is a crucial element to improving the health of the economy and growing a more innovative ecosystem.
In this piece, we will investigate the five most important steps that the public sector should take to incentivise more SME engagement and help create a thriving environment for innovation in the UK.
1. A single directory for public sector opportunities
Bidding for tenders, as it stands today, is an arduous process with around 300 different open portals, all requiring separate application phases.
Where larger, incumbent organisations have the resources to allocate towards locating, tracking and applying for tenders in this way, SMEs do not.
What can help tip the balance, is a single directory that aggregates all available opportunities and is searchable by government organisation, location and type. Complementary features would include visibility of the entire application process, including the duration of previous bids, feedback timeframes and technical prerequisites required.
This single source of searchable opportunities can become a one-stop-shop, where SMEs can find, track, and apply for relevant contracts. This step would help eliminate a significant hurdle that small businesses typically face and can start to level the playing field against larger organisations.
2. A simplification of the requirements and bidding journey on applications.
Tender application processes are often plagued with technical requirements, certifications and bureaucratic jargon that many cannot decipher, let alone work out whether the bids are within the means of their business.
Visibility over the entire application stage, including duration and technical prerequisites, is critically important information for SMEs so they can understand what resources will need to be invested and for how long.
Moreover, information about feedback and timelines for bids is often missing, giving little idea of the duration of the entire process. This also varies from one government body to another, making planning and applying for other tenders unpredictable.
An effective method for curtailing this problem is creating bidding roadmaps. A promising example of this is the Scottish Government “Supplier Journey,” which guides SMEs in applying for all public sector contracts in Scotland. It guides companies step by step and includes an outline of what is required, tips on how to complete each stage and expected timeframes for receiving feedback.
3. Create a supportive ecosystem around engaging and helping SMEs in public sector bidding.
Many SMEs find working with the public sector a daunting task with applications steeped in bureaucracy and process. They report that the time and effort required to get through the application phases can be overwhelming and rarely result in the award of a contract, discouraging companies from applying for tenders in the future.
To counter this, the public sector needs to create more of an understanding of the SME landscape and how these types of businesses operate. One option is to map out the companies that have worked previous tenders with other commissioners, and consider the types of challenges those firms applied to. Another is to work with Innovation Managers to give recommendations of relevant companies to reach out to for challenges.
Simply mapping the landscape is not enough however, engagement is the key. Whether it be early stage, scaleup or SME, the idea that any company can at some point engage and help innovate in challenges must be central. A good method for this is by creating support structures for SMEs, giving advice to make the process of procurement as familiar and seamless as possible.
4. Break down the silos of commissioning by placing commercial, innovation and policy teams at the centre of decision making.
A common criticism is that tenders show a disconnection between innovation and commercial teams. Elements like wording and requirements can be strict and unfriendly to SMEs and do not allow for the openness that innovation requires.
To counter this, It’s crucial that all parties work together to make the release of the opportunity as relevant and engaging as possible. Procurement needs to be involved at every step of the way, considering a wider array of solutions and engaging with new suppliers earlier in the process to help foster new ideas.
Close proximity between these teams means that innovation can permeate the entire commissioning journey, helping to move from solution-based to outcome-based procurement. Armed with this mindset, spotting opportunities to work with SMEs will become easier.
5. Utilising PCR 2015 to the fullest degree by testing new ‘Innovation Partnerships’
A significant piece of legislation came within PCR 2015, giving the legal framework for design contests to be held between companies and the public sector for research and development purposes. In contrast to the GLA innovation challenges, a PCR 2015 Innovation partnership can award a contract based on the original brief and design, rather in the form of funding.
For the public sector, this can encourage engagement with the SME ecosystem and prompt a shift from the traditional prescriptive solution-based procurement model to an outcome-based approach. This can help bring innovation to the centre of the challenges that face society.
More needs to be done to give local councils the confidence to exploit the underutilised procurement technique that is facilitated by the ‘Innovation Partnerships’ section of PCR 2015.
This is key to enabling councils to engage with SMEs to solve key challenges.
Where do we go from here?
Whilst there is no singular step to make engaging and working with SMEs easier, there are ways that procurement departments can make themselves more attractive and open to innovation. As outlined above, there needs to be a dramatic culture shift, one that doesn’t work in isolation of government offices, but rather engages with the ecosystem.
The current procurement process is broken and heavily skewed towards incumbent organisations, by taking a holistic view of the status quo, the public sector can begin to evolve and open itself up to organisations who work entirely differently to itself. Ultimately, increasing SME friendliness remains a challenge and more understanding needs to be gained to enact the changes that will completely remove friction from the process.