The UK government contract market remains to be big business, with public sector procurement reaching over £393 million in 2022/23. Of this spending, there is a fairly even distribution across education, social protection, economic affairs, public order and safety, defence, and general public services. Health, however, is much larger by several orders of magnitude.
There was a £25 billion increase in spending compared to the year prior, proving that this is a growing opportunity not just for large businesses, but businesses of all sizes.
Government contracts have proven time and time again to be a strategic tool for growth through stabilising income and winning big-ticket contracts. They’re ways into long-term relationships with a growing government appetite.
Are government contracts only suitable for corporations and large businesses?
In recent years, there have been some efforts to make public procurement more accessible to small and medium-sized businesses (SMEs). The Procurement Act 2023, which is coming into force next October this year, is further streamlining the process to give SMEs more opportunities to compete fairly.
By speeding the process up and making it simpler, smaller firms can have the means to bid. For example, the act means that proof of insurance is going to be required after winning a big, as opposed to during a bid, meaning SMEs needn’t sink as much time and money into a bid of which the outcome is uncertain.
The Act also helps by focusing on value for money, which can be something that SMEs employ in their bidding strategy. However, the most direct way it helps is by emphasising the importance of SMEs for the British economy and stating that smaller, more tailored contract lots be created, as well as making the tenders and contracts more visible.
Ultimately, the government has made it clear that it wants to increase the involvement of SMEs. SMEs won £21 billion worth of bids in 2022, which was a record amount and equated to £3,800 per small business in the UK. Local government has been more successful in engaging SMEs, and there has been another breakthrough policy to benefit SMEs: Prompt payment. This ensures suppliers are paid within 30 days, something that didn’t exist before and was a big concern for SMEs, who tend to suffer from cash flow difficulties.
Types of contracts
While the industries that public sector contracts cover vary broadly, so do the contract types. The four main types to be aware of are:
- Fixed-price contracts: These set a specific price for the work regardless of the actual costs incurred along the way
- Cost-reimbursement contracts: This is where the government pays for all allowable expenses plus a fee
- Time-and-materials contracts: Payment is made on an hourly bases with a given labor rate, as well as material costs
- Indefinite delivery/indefinite quantity (IDIQ): These allow for unspecified quality of suppliers/services during a given period.
- Management consultancy: these involve giving strategic advice and expertise to certain departments in the government. This may be within business development, but it could also be IT consultancy.
- Research and development consultancy: these contracts are centered around innovative projects to help either inform government policy or develop new solutions.
One example here is the recent NHS contract of £500 million, which comes in the form of a framework agreement for the supply of medical equipment. This type of contract allows multiple suppliers to be selected, giving flexibility to NHS trusts.
For technology, the Home Office issued a £100 million contract for cloud migration and support services. This shows that the government is interested in digital transformation, but cannot do it in-house.
These aren’t only large firms winning contracts. Elemental Energy, 6point6, and Learning Pool are three companies that continue to win countless government contracts, all of which have under 500 employees.
Free government tenders search
Tender searches are at the crux of businesses securing government contracts. By actively seeking them out (not passively), companies have the chance to stay ahead of their competition and position themselves as frontrunners. Government contracting is becoming faster-paced since its digitisation, and so the growing market requires firms to take searches seriously as it allows more time for preparation and research to create a compelling bid.
- Contracts Finder: The official UK government website listing contracts over £10,000 from central government and £25,000 from wider public sector organisations.
- Public Contracts Scotland: For opportunities specific to Scottish public bodies.
- Sell2Wales: Dedicated to Welsh public sector contracts.
- IntelApp: The only platform offering free access to government tenders, allowing businesses of all sizes to find opportunities without fronting a cost
While the official Contracts Finder page does have the full listings, it’s somewhat rudimentary and it’s what your competitors may well be using. To gain an advantage, using a user-friendly platform like IntelApp — or a paid alternative — can help create alerts and provide detailed analytics on government spending patterns. By utilising such a resource, you will have a first-mover advantage in terms of preparation.
Four tips on how to win a bid
Winning a government contract requires a strategic and measured approach. Below are three tips.
Understanding the evaluation criteria
Before writing your bid, it’s important to thoroughly review the tender document to fully understand how it will be scored. Most UK contracts are awarded based on the Most Economically Advantageous Tender (MEAT) principle. It considers both cost and quality together, which is known as value. Focusing on value by understanding the criterion can help you provide more purposeful and compelling evidence of your capabilities.
Leverage competitive intelligence
Strategic planning is crucial to outmaneuvering competitors and boosting your bid success rate. By using tools like IntelApp’s competitive intelligence, which analyses past contract awards and price trends, you can focus on identifying your competitors’ strengths and weaknesses and how to exploit them.
Demonstrate value for money
As mentioned, the government is increasingly focused on value for money – so don’t just use a low-cost strategy. While price is important, it’s important to show that your cost-saving measures can still provide high-quality results, or that your price is worth it for such innovation, and outline the benefits you specifically provide. Around 10% of marks in most contracts are now based on social value factors too (i.e. creating local jobs or reducing environmental impact), so this needs attention too.
Provide evidence
Back up the claims you make. This may be with a recent case study, statistical data showing recent performance (even better if it’s on previous contracts), testimonials from clients, and CVs of key team members. Don’t be verbose or long-winded when presenting this evidence, as it needs to be digested easily.
Winning contract bids is a tricky business, but it’s becoming increasingly achievable for SMEs thanks to a pivot in policy, lowering the time and costs of applications, and an explicit target to involve more SMEs.
