Government awards nearly a quarter of all public contracts to mid-market businesses. These tenders represent an exceptional opportunity for companies of all sizes to build new revenue streams. The sentiment towards small and medium business and increasing participation in public sector tendering hasn’t been this high in years, but for companies who want to get involved, where do you start?
Here are our top five tips for mid-market companies looking to compete:
1: Find and select the right opportunities
Most countries have a free source of tender alerts. In Ireland, etenders.gov.ie is the best source of ‘national’ tenders (anything up to €200,000), while ted.europa.eu is the go-to resource for higher value tenders across Europe. In the US, fbo.gov is where most opportunities end up.
Some companies gather opportunities from a variety of sources, so rather than signing up to lots of different ones, you can choose one and cut down on the time spent searching for opportunities. Most require an annual subscription, but might also have a free version so that you can try it out.
There are literally thousands of ways for buyers to categorise goods and services, so you need to make sure you are filtering search results in the right way - covering all the goods and services you are able to deliver. The best tender alert tools incorporate specific tools that help you to filter opportunities by categories, keywords and geographies. Be as specific as you can to avoid wasting time sifting through inappropriate tenders.
2: Assess the landscape objectively
Before deciding whether or not to compete, you need to make an objective assessment of the buyer, your competitors, the tender and your own ability to deliver. Winners will typically invest a minimum of 3% of the contract value on their proposal. If you’re not investing that much yourself, then you’re going to struggle to succeed.
Look at the buyer’s procurement history and who they have previously bought from. Incumbent suppliers do have an advantage, but the data shows that they lose contracts far more often than they retain them.
Read the request for tender carefully and asses how well you meet the criteria, whether you have the relevant experience required and how well suited your team are to delivering the services requested. Only compete where you believe that you will score highly (>80%) against the evaluation criteria.
3: Partner with other suppliers to be successful
Your chances of success are vastly improved if you can partner with other suppliers, and in some cases where there are minimum requirements (e.g. turnover) will be the only way you can compete. The Irish Competition Authority has published a guide for SMEs looking to form partnerships for competitive bidding, entitled How to comply with competition law when tendering as part of a consortium. In the US, the FBO provides information about Vendor Collaboration on their website.
Collaborating with other suppliers can increase your credibility, your overall team expertise, and gives you increased chances to be successful. It can help you to achieve the economies of scale that larger organisations are often able to deliver. If you have had limited success in the past, partner with companies who have demonstrated their ability through previous tender successes.
4: Build your network and strengthen your relationships
For the best chances of success, find out about opportunities before they are even published! Many tender opportunities arise from expiring contracts and so can be predicted. Oftentimes, simply asking buyers what their plans are is the best course of action. Your challenge is to be known to the buyer before the tender is published – people buy from people!
Establish a strategy to pipeline future opportunities before they arise. Keep a calendar and source information about procurement opportunities from as many sources you can: previous tenders, newspaper articles, trade magazines, networking events, the grapevine… Start nurturing relationships with the right people and plan ahead so that you are in a strong position to compete when the time comes.
5: Win Government business by not tendering!
For public contracts below a certain value (€25,000 in Europe) there is no requirement on the buyer to ‘tender’ for the business. At least half of all government spending is below this threshold and represents an ideal opportunity for smaller businesses to get a foot on the ladder without the effort associated with responding to a formal tender.
Typically, three quotes will be sought in these cases so the most important thing is to be known to the buyer. Buyers will rely on their network of contacts to solicit quotes so it’s essential that establish your credentials with buyers and put yourself in a position to be offered the opportunity to quote.