Although there have been sweeping cuts across the board within the public sector, their operational model is still largely based on outsourcing project work to experts in their field and contracts can still provide a lucrative revenue stream for businesses who are equipped and able to do the work.
Before you start searching for available opportunities and launching headlong into the tendering process, however, you do need to weigh up the pros and cons of whether this will be worth it for you.
Public sector contracts can sound like the golden egg you’ve been waiting for, holding many advantages over work within the private sector. They invariably offer longer term contracts, usually of three years and often with the potential to extend that to five, and once that contract is in place, it is pretty secure. Together with the reliability of pre-determined payment terms, this can provide a business with much sought-after financial stability.
But this security does come at a cost. Here are some of the main issues you need to consider before starting the process.
The Pre-Qualification process
The biggest difference between the public and private sector is the tender process. Unlike commercial organisations who have more freedom to choose their suppliers based on a company’s USPs, ethos and whether they establish a rapport, if you’re looking to win public sector contracts worth over £100,000, you first have to go through a pre-qualification process.
The Pre-Qualification Questionnaire (PQQ) is a lengthy document in which you have to prove you have the capabilities to meet the contract’s specifications. You will need to demonstrate everything from your financial stability, to environmental and CSR accreditations and standards.
This can be restrictive, particularly for smaller companies.
Ensuring you comply with the PQQ can be a costly affair. Having all the correct policies and standards developed and in situ can mean a large initial outlay. Attaining ISO 9000 standards alone can cost upwards of £5,000, for example, which is a considerable investment for a smaller firm. But there’s no denying either that this kind of investment will benefit your company, and stand you in good stead not just to win these contracts but to deliver work for both the public and private sector.
Time and man-power
Believe it or not, there is often little difference in the time it takes to pursue a private sector sale and complete a public sector tender, but the way in which you allocate time and man-power to each is quite different.
The sales process in the private sector can be spread across weeks or months with the prospecting, the meetings, the sales pitch, the proposals, the negotiations etc. A sales team can spend considerable time attempting to convert leads, without any guarantees of success.
Whilst the public sector tendering process may appear complex at first, the time-frame is condensed and the process is actually quite transparent. There is a routine which you will become used to, the more tenders you do and providing you meet the pre-qualification criteria and submit a quality proposal, you have as much chance of winning a tender as you do a private sector client.
It’s important to note, however, that much of the tendering process is actually an administrative rather than sales-led task. It is imperative that you follow detailed guidelines on how your proposal is presented, ensuring all i’s are dotted and t’s are crossed. Collation of information to provide evidence of your suitability is as important as ‘pitching’ why you are the best company for the job.
Some thought does, therefore, need to go into how you allocate the tasks amongst your team.
I stated that one of the biggest advantages of winning public sector tenders is the stability this affords, but it is important to note that big government contracts can change with political power. You may win a four-year contract but often these are subject to political changes which means they can still end, or alter, without a great deal of notice.
Whether you deal with public or private sector contracts, every business needs to be prepared for change. This means doing everything you can to expect it before it comes, and reacting in a strategic and intelligent way when you’re faced with it.
So, in conclusion, is it worth it? As long as you are fully prepared for the process, understand that you won’t win them all and don’t hinge your business on one big contract, public sector tendering can bring real rewards and benefit your business.
If you want to discuss how you can develop your business to enable you to pursue public sector contracts, get in touch.