How The UK Procurement Act Will Benefit SMEs

It seems like everyone in public procurement is talking about the UK Procurement Act, especially regarding the inclusion of Small and Medium Enterprises (SMEs). In fact, many of the changes mapped out in the UK Public Procurement Act are designed specifically to make it easier for SMEs to compete in the public sector and access government contract opportunities.

What’s Holding SMEs Back From Cashing In On Public Sector Contract Opportunities?

Traditionally, SMEs think that government tenders are off-limits, but those limits are self-imposed.

Now, the government has clearly opened up the public sector and actively encourages SMEs to participate and bid for lucrative contracts. 

We’re going to explore some of the benefits the Procurement Act has for SMEs that want to extend their reach from the private sector to encompass public sector opportunities. 

How Is The Government Making The Public Sector SME-Friendly?

Some key changes to the public procurement process are particularly beneficial to small businesses and startups. Eight of the myriad benefits of bidding on UK government tenders and contracts are discussed below.

1) Lower value contract opportunities for an attractive price

One of the reasons SMEs have stayed clear of public sector procurement is the high price of contracts. 

The Procurement Act removes that obstacle by publishing lower-value tenders to attract smaller businesses. The threshold for these low-value tenders is £12,000. 

However, there are avenues that help SMEs find these simple, low-value contracts in different sectors of the public procurement market. This enables small businesses and organisations to start making a name for themselves and earn the attention of public sector buyers.

2) Focus on value rather than the cheapest bid

The government has switched focus from MAT (most advantageous tender) to MEAT (most economically advantageous tender). MEAT includes elements like transparency, community support, environmentally friendly business practices, nondiscrimination in recruitment, a diverse workforce, integrity, and an ethical supply chain.

Some larger enterprises overlook these qualities in government contracts or don’t assign them much importance, whereas some small and medium organisations already embrace a pay-it-forward approach, and give back to their communities. 

SMEs with this mindset, and that have the capacity to meet all the tender requirements, are preferred over enterprises that focus solely on growing their business.

3) Simplified tender processes

By taking the complexity out of tendering opportunities, the UK government hopes to give small and medium businesses the confidence to submit bids on suitable contracts. Some of the ways in which the government has attracted suppliers to different sectors include:

  • Merging the current procurement regulations and dropping the number of sets from four to one. 
  • Reducing the current number of award procedures from seven to three. 
  • Introducing one central platform where suppliers can submit the company data necessary to successfully compete for public sector tenders and contracts.

4) Prompt payment on UK government contracts

Prompt payment for goods, services or works is particularly important for SMEs because they need consistent monthly cash flow. Buyers previously in the public sector don’t always adopt this approach, waiting until the last minute to pay invoices.

The government, however, has set a 30-day payment target for suppliers, so SMEs can count on at least one regular monthly payment.

5) Feedback summary on public sector tenders

According to the Procurement Act, businesses that miss out on government contract opportunities are entitled to an assessment summary.

The aim is to provide constructive feedback by comparing their bid to the winning contract, with a short explanation as to why their business wasn’t awarded that particular tender opportunity.

In this way, SMEs can see where their tenders need improvement and can plan better for the next tender published on a contract finder site.

6) Future-proof government tenders and contracts

One of the more practical benefits for SMEs in the public sector has to do with more accessibility to public sector and government contracts. Public sector buyers must publish upcoming contract opportunities for the next 18 months.

This allows small businesses to go over the list to find tender opportunities that are appropriate for their capacity, features, skills, and USP. It also gives them plenty of time to prepare for their chosen government contracts, bearing in mind their feedback from previous tenders that were unsuccessful.

7) Collaboration with other public sector suppliers

It’s possible for several SMEs to collaborate or form a consortium so they can take advantage of larger public sector contract opportunities. The combined resources and services enable the group to access more lucrative government contracts by being able to meet all the requirements as one cohesive unit.

In addition to bidding on big contracts, the businesses in the consortium are exposed to a wider range of buyers who may notice their skillset and include them in their supplier pool for when they have below-threshold tenders and contracts.

8) Early engagement to showcase suppliers’ features and unique services

The UK Procurement Act encourages suppliers to engage in early communication with government buyers. Essentially, it’s a dialogue between buyers and suppliers so that each party better understands the required services in future contract opportunities.

There’s an emphasis on transparency and fairness in communication, so both sides have equal opportunities to engage and discuss resources and systems.  

Access An Extensive Database Of Public Procurement Contracts

All the benefits in the world don’t count for a thing if you can’t find public sector contracts relevant to your business. You need a database of published contracts and business opportunities for organisations and business enterprises of all sizes.

Supply2Gov (S2G) has a comprehensive database of published contracts that is so extensive it lists more tender opportunities than the UK government’s contracts finder platform. 

While S2G publishes all types of public sector contracts, it’s particularly concerned with lower-value tenders and contracts that give SMEs a chance to enter the public sector marketplace without too much pressure.

You can search for contracts based on keywords relating to your business or location. You can also set up your personalised alert profile to ensure you never miss relevant opportunities. 

Register now and start receiving free contract alerts in your local area immediately.