Selling to the Public Sector – helping
Leicestershire SMEs unlock their potential
Public Sector Contracts:
Collaboration, Subcontracting &
Policy Compliance
Bob Moodie & Vicky Byers
NJM European, Economic & Management Consultants Ltd
Public Sector Contract Opportunities:
Collaboration & Subcontracting
The Key Themes in Today’s Workshop
 The Procurement Context
 Identifying opportunities
 Collaborating and Subcontracting
 Articulating policies
A New Procurement Environment
Policy/Legal
Economic/Financial
EU Competition Policy (Procurement)
Price & Value for Money (VFM) & M.E.A.T.
Coalition Govt. / Local Govt.
(Transparency – Invoices £500+)
Comprehensive Spending Review
Rationalisation & Framework Agreements
Coalition Govt’s aspiration to award 25% of
central Govt. contracts to SMEs
Contract Bundling (Economy of Supply)
Leicestershire County Council’s
Ability to deliver economies and efficiency
Sustainable Commissioning & Procurement savings
Strategy (2009-13)
Social
Technological
Corporate Social Responsibility
E-Portals
Sustainability, Equality & Diversity
E-tendering & E-auctions
Innovation & non contractual outcomes
Real time reporting
EU Procurement Thresholds
Supplies
Central Government
plus some ‘Quangos’
(see Schedule 1 List)
Other Public Sector e.g.
Local Authorities,
Universities, FE, etc
Services
Works
€125,000
€125,000
€4,845,000
(£101,323)
(£101,323)
(£3,927,260)
€193,000
€193,000
€4,845,000
(£156,442)
(£156,442)
(£3,927,260)
Thresholds relate to Total Contract Values (including any extension options),
are applicable from 1st of January 2010 and are NET of VAT
Principles: Open competition, non-discrimination, equal treatment and
transparency.
Note: Exchange Rates
Procurement Procedure
Procedure
Characteristics
When the procedure is adopted
Open
All qualified applicants must be
given the opportunity to bid
For lower risk procurement where supplier
capability is less important or where the
focus is on price
Restricted
Two stage process with facility to
shortlist (PQQ + Tender)
Most common
Where capability of supplier is key
determining factor in the delivery of the
contract, market response likely to be
huge to allow short-listing
Negotiated
Two stage process with facility to
negotiate at second stage
Specification is not clear or some creative,
artistic or expert input is required.
Competitive
Dialogue
Two stage process with facility to
enter into a dialogue with potential
suppliers to consider potential
solutions and refine specification
before invitation to tender
Complex procurement where suppliers
expertise has significant impact on the
development of the specification
Framework
Agreement
Call-Off or Mini competition amongst
preferred suppliers
(selected from open/restricted
procedure)
Capability and Capacity is important and
is generally a recurring/constant
requirement (max 4 years; including
extension options)
Opportunity Identification
Who?
Context & Opportunity
 Public procurement, estimated at over £175 billion per annum
(13% of UK GDP).
 Leicestershire County Council spends over £300 million each
year on goods, works and services. From 2011-12 to 2014-15,
the Council will need to make savings of around £82m, including
£22m from commissioning and procurement.
 Leicester City Council estimated procurement budget for the
Authority is £260 million p.a. (2007-2008).
 NHS Leicestershire & Rutland Procurement Partnership
influences spend of approximately £250 million on goods and
services each year.
Opportunities: Public Sector
9 Local Authorities:
 Leicestershire County Council
 Leicester City Council
 North West Leicestershire District Council
 Charnwood Borough Council
 Melton Borough Council
 Blaby District Council
 Harborough District Council
 Oadby & Wigston Borough Council
 Hinckley & Bosworth District Council


3 Universities: Leicester, Loughborough, De Montfort
7 FE colleges: Stephenson, Loughborough, Brooksby Melton, North
Warwickshire & Hinckley, South Leicestershire, Leicester, Loughborough
University School of Art & Design
 Schools
Other:
 NHS (subject to major review)
 Housing Associations / RSLs
 The Emergency Services
Local Procedures
Public Sector
Organisation
Threshold (goods &
supplies)
Procurement Process & Source
Leicestershire County
Council
<£1k
£1k – £20k
>£20k - £100k
1 Oral / Written Quote
3 Written Quotes or www.sourceleicestershire.co.uk
Request for Quotation www.sourceleicestershire.co.uk
>£100k - EU
threshold (£156,442)
Formal Tender Process www.sourceleicestershire.co.uk
Or www.espo.org
< £10k
£10k - £49k
Oral / Written Quotes (officer discretion)
3 Written Quotes or Formal Tender Process (officer
discretion)
£50K - EU threshold
(£156,442)
www.sourceleicestershire.co.uk or www.espo.org
Up to £250k (works
only)
www.exorgroup.co.uk/supplier
£5k - £25k
>£25k – EU threshold
(£156,442)
3 Oral / Written Quotes
Formal Tender via departments or www.in-tend.co.uk
Leicester City Council
University of Leicester
Opportunities for consortia
Private Sector Opportunities
Third Sector Opportunities

Increasingly public sector
contracts are being won by large
Prime contractors in the areas of
 Construction
 ICT
 Recruitment

Large companies and charities are
winning public sector contracts in the
areas of
 Healthcare
 Social Care
 Education

Sometimes a prime contractor
may commit to using local SMEs
to ‘sweeten’ their offer

SMEs and smaller charities/social
enterprises may be contracted to
deliver parts thereof

A consortium of SMEs may be
able to create a critical mass and
compete with larger companies

Local Authorities are encouraging
smaller charities to collaborate and
form consortia to deliver services
Opportunity Identification
Where?
Finding Opportunities
 Where should you look / who should you know?
PUBLISHED
UNPUBLISHED SOURCES
Tender websites & Supplier
portals
Networking / relationship building
Organisational / Sector websites Procurement Teams / Category
Managers
Tenders Electronic Daily (TED)
Operational departments and units
Local / National press / Press
releases
Market analysis / competitor intelligence
Trade Press
Partners / sub contractors
Meet the buyer events /
briefings
Second / Third Tier Contractors /
Supply chains
Contract Notices
KEY TENDER WEBSITES
Name:
Source:
Used by:
Source Leicestershire
www.sourceleicestershire.co.uk
LAs, NHS in Leicestershire
Eastern Shires
Purchasing Organisation
www.espo.org
LAs, NHS in Leicestershire, OJEU
tenders
Leicestershire County &
Rutland NHS
http://www.lcr.nhs.uk
NHS
In-Tend
www.in-tend.co.uk
Universities, Colleges, Schools,
LAs (some in Leicestershire and
nationally)
Blue Light
www.blpd.gov.uk
Police, Fire & Rescue Services
(including Leicestershire
Constabulary & across UK)
Supply to Government
www.supply2.gov.uk
www.supply2health.nhs.uk
Lower value government tenders
(*website will be replaced by
‘Contracts Finder’ March 2011)
OJEU
www.ted.europa.eu
Any public sector contract above
EU Threshold
Identifying Collaborative/Subcontract
Opportunities
 Who presently holds the contracts in your target area?
 Who’s won contract/expanding (Contract Awards) and business
press
 Who is contracting/Who is buying?
 What contracts are likely to come forward?
 Anticipating new requirements? e.g. NHS reorganisation
 Who are the key contacts?
 LA Outsourcing
 Flagship projects (e.g. Olympics, Crossrail)
A new and critical source of
intelligence
 As part of Coalition Government
commitment to transparency in public
expenditure (as of February 2011) every
Local Authority must publish details of
invoices of £500+
 Information can be used to identify
competitors and/or potential
collaborators/subcontract opportunities
A Strategic Approach
Identifying Opportunities & Raising Your Profile
Collaborating or Subcontracting: Be Systematic
& Get Organised
 What is your target market?
 Who are your competitors and potential business
partners?
 In your target market who are the key buyers (personnel
at Department level and Procurement Officers) - engage
procurement personnel and seed ideas
 Find out about approved (accredited) supplier
lists/framework agreements
Collaborating or Subcontracting: Be Systematic
& Get Organised
 Register and publish on tender e-portals
 Set up internal processes and individual(s) to monitor
tender portals, alerts, sources and review feedback
 Networking - meet the buyer events, business/sector
networking e.g. Chamber of Commerce
A Strategic Approach
To bid or not to bid?
Strategic Decision Making
 Is the tender a good fit in relation to your company’s





activities?
Can you meet the eligibility criteria (technical
qualifications, policy compliance e.g. Quality Assurance,
Insurance) ?
Do you have a good track record in relation to the
opportunity?
Do you have the trading history (e.g. 2 years Accounts)?
Do you have the capability and capacity to deliver the
contract if successful?
Can you make sense of the budget and can you deliver
the contract on time?
Strategic Decision Making
 What are the risks?
 Who are your competitors?
 What percentage of your turnover does the contract
represent?
 Do you need a partner(s) or will you use subcontractors?
 Does tender permit consortia/subcontractor response?
 Are there special requirements e.g. limitations on
subcontracting, legal framework, etc?
Strategic Decision Making
Solo or Collaborative Bidding?
 Form a consortium if:
 You don’t have the capability or capacity
 You can’t meet the 20% rule
 Options:
 Consortium
 Joint Bidding
 Lead Contractor & Subcontractor
 Legal basics – will you be jointly and severally liable?
 Memorandum of understanding (MoU) / Partnership agreement /
(Non Disclosure agreement (NDA); Agreement not to compete in
other tender)
 Service level agreement (SLA)/contract
 NB consortium should be properly constructed, led and managed
Collaborative Bidding
What is Collaboration?
Informal
Formal
 Recognition of mutual
 Legally defined




interest
Trust (founded on
relationships between
key individuals)
Informal Agreement
Networking & Referrals
Mutual subcontracting
Consortium (increasingly
required by LAs)
 Joint venture
 Partnership / Merger
 Vertical Integration
Collaborative Bidding: Benefits
 Increase capacity and scope to bid without stretching
resources
 Overcoming PQQ impediments i.e. a shared trade
history may overcome some problems (accounting
history and 20% rule)
 Combined strengths: capability (skills) , increased
capacity and experience
 Business Development: Access new clients and
markets
Collaborative Bidding: Benefits
 Share development and delivery cost and dilute risk
 Getting input into your tender
 Mutual learning and innovative approaches
 Take out a competitor
 Improve chance of success
 Needs Must... A new landscape for the Third Sector...
Collaborative Bidding: Challenges
 Identifying a partner (Time + Effort)
 Engaging a partner (Risks) – floating the idea (informal
meeting) and formal meeting to negotiate and establish
Agreement
 Getting Agreement on roles, responsibilities
 Getting Agreement on liabilities (jointly and severally
liable)
 Trust relationship (how well do you know your partner –
can you be confident they can and will deliver)
Collaborative Bidding: Challenges
 Complex decision-making, loss of autonomy,




compromises and concessions
Sharing sensitive information & ‘know how’ (protecting
your IP?)
Logistics (preparing proposal, contract negotiation and
contract delivery)
Buyer preferences (prefer 1 contractor) – risk averse
Legal framework/document (Leicestershire County
Council)
Choosing the Right Partner
Choosing the right partner
 Do you already have an existing relationship e.g. Trust





& Shared Values (important in Third Sector)?
Can they and are they likely to deliver?
What is their reputation in the market?
Who do they already work for/with? (comparable
client/service, etc)
Are they financially secure?
What Accreditations do they have?
Choosing the right partner
 Who would you be working with (individual expertise,
experience, attitude and commitment)?
 Could one opportunity form the basis for collaboration
around other opportunities?
 Would the PQQ present problems for them e.g.
Director’s conduct, Trading History (Administration or
Liquidation), Credit worthiness, Contract(s) terminated
for default, Employment Tribunal (you may need to
check)?
Preparing a Collaborative Proposal
Preparing a collaborative proposal
 Agree Objectives
 Client Requirement is mutually understood
 Designing a solution
 Roles and responsibilities in preparing the proposal




(potential headache)
Milestones for preparation of proposal
Who will lead proposal (legal implications/framework)?
Project management, governance and communications
Risk management
Preparing a collaborative proposal
 How will contract be managed and operated?






(e.g. Partnership Agreement)
Who will contribute what and when to deliver contract
requirements?
Is it clear who gets what?
Balance of inputs? Are you the Senior or Junior Partner?
Contract negotiation, client liaison and decision making?
Getting a seat at the table
Dispute resolution?
What if one partner defaults or the contract is terminated?
Working as a Sub-contractor
Subcontracting: What is the Prime
Contractor looking for?
 Specialist capability or capacity that can’t be found or is not
available ‘in-house’ e.g. Niche expertise/experience
 Cost effective (Value for Money) – makes total price more
competitive
 Quality & Reliability
 Local Knowledge (relationships) / Local Delivery (coverage)
 Improved capability and capacity
 Speed and flexibility
 Added Value
 Dilute risk
The right attitude and commitment
Subcontracting: Advantages
 Minimal input into tender (no resource pressure during
preparation of tender)
 Extend your scope of contract opportunities which
would otherwise be unavailable to you (particularly
important for new and small companies going for larger
contracts)
 Diversify your customer base – new customers, new
territories
 Expand your portfolio of work and experience
Subcontracting: Disadvantages
 No or minimum control of shape of tender offer
 No input into contract negotiations
 Potential cash flow difficulties
 Subverting/diluting your brand
 Lack of direct client liaison
 Loss of control in decision making
Subcontracting: Disadvantages
 Are you named in bid or do you have
formal (side) agreement detailing your
role?
 What are your rights if main contractor
defaults or client determines to terminate
the contract (liabilities and indemnities)?
Collaborating & Subcontracting: are
you bid ready?
 Skills , Experience & Track Record (business & key individuals) –
case studies and CVs
 Quality Assurance & Accreditation (Professional Standards)
 Business continuity (IT security)
 Health & Safety
 Equal Opportunities
 Environment & Sustainability
 Insurances
 Financial stability & probity
 Supply chain arrangements
 Project management systems and reporting
Policies
Health & Safety, Equality & Diversity
& Environment Policies
Can you articulate the business benefits of these policies
as they may relate to the conduct of the contract?
Articulating your values & principles
 Health & Safety
 No accidents, injuries or claims
 Minimises risk of disruption to delivery
 Good working environment (reduced levels of absenteeism and
increased productivity e.g. Minimising stress)
 Equality & Diversity
 Staff retention, reduced levels of absenteeism,
 Enthusiastic and committed workforce
 Corporate Social Responsibility
 Values underpin contract delivery
 Environment
 Reduced cost, overhead and contribution to Public Authority
Commitment to reducing carbon footprint
♪♫ Accentuate
♪
the Positive ♪♫♪
Do you have a Health & Safety Policy?
Weak Answer:
 “Yes, see Appendix 1”
Good Answer:
 “The Health & Safety of our staff and customers is a vital part of
the company’s quality process. We operate a comprehensive
Health & Safety Policy (see Appendix 1) covering all aspects of
our products (services) and operations and it is reviewed
biannually.”
 For an SME employing less than 5 people: “Although we are not
required legally to have a Health & Safety Policy, we take this
matter very seriously and have adopted a Health & Safety Policy
in the interests of our staff and clients (see Appendix 1)”
♪♫ Accentuate
♪
the Positive ♪♫♪
What Quality Assurance arrangements does your company
operate? If no accreditation is held please explain why not and
what alternative steps you take to ensure quality at work?
Weak Answer:
 “We operate our own quality system. We have determined that
formal accreditation is inappropriate to our company’s needs.
Complaints are the responsibility of the Managing Director.”
Good Answer:
 “We regard quality as a vitally important part of our business
activity and we operate a comprehensive and strict internal quality
assurance process covering all aspects of our business activity
(details can be found in Appendix 2). We are committed to a
process of continuous improvement and we are in the process of
applying for ISO 9001 (we expect to be assessed in May of this
year)”
Business Continuity



What is your Approach to Risk Management in terms of
Business Continuity?
Do you have a formal Business Continuity Management
Programme? If YES, enclose a copy of your
plan/programme document
Within the last 3 years have there been any occasions
when you business operation has been disrupted?
 If YES what were the circumstances and what was the effect
upon your customers?

Do you have a strategy for ensuring continuity of supply
from your critical suppliers?
Risk: What is your Approach
Risk identified
for:
Client
Delivery
Supplier
Partner /
Subcontractor
Mitigation (i.e.
what will you
do)
Impact
Classification
(High, Medium, of risk:
Low)
Reputation (R),
Operation (O),
Finance (F)
Some final thoughts







Be clear about when to bid and not to bid
Make early decisions about whether to go solo /
consortium / subcontractor
Find out who will buy your products and services and
start building relationships early
Find out who your competitors are with a view to
developing collaborative / subcontracting relationships
Understand what the buyer is looking for and bespoke
bid accordingly (always answer the question asked!)
In preparing bids recognise that nothing less than a
professional approach will suffice
Remember you do not have to go it alone
Tender Sources
www.espo.org
www.sid4health.nhs.uk
www.sourceleicestershire.co.uk
www.construction-on-line.co.uk/
www.sourcenottinghamshire.co.uk
www.delta-ets.com
www.sourcenorthamptonshire.co.uk
www.ted.europa.eu/
www.sourcelincolnshire.co.uk
www.exor.co.uk
www.sourcederbyshire.co.uk
www.bluelight.gov.uk
www.CompeteFor.com
www.cbconline.org.uk
www.supply2.gov.uk
www.contraxonline.com
www.tenders.ac.uk
www.publictenders.net/tenders/region/east-midlands
www.in-tend.co.uk
www.dh.gov.uk/ProcurementAndProposals/fs/en
www.supply2health.nhs.uk
www.publicprocurement.co.uk
www.procurement.supplychain.nhs.uk
www.buyingsolutions.gov.uk
www.skillsfundingagency.bravosolution.co.uk
For one to one support contact:
 Email: bob@njm.co.uk or vicky@njm.co.uk
 Tel: 0191 284 4949