How Will Coronavirus Affect Public Procurement for SMEs?

May 12, 2020General, Bid Management, Bid Writing, Tender Writing

In these unprecedented times, there are often more questions than answers when it comes to public procurement and SMEs. If you’re uncertain about what the current situation is, or what might happen next, we’ve put together this post to answer those questions; and also to give you hope for new opportunities that might present themselves.

My business bids for work…. How does Covid-19 affect my opportunities for successfully bidding for new work?

Following the Covid-19 Outbreak, the European Commission published updated guidance on the 1st April 2020 on the application of the legal requirements for public procurement which affect us via the UK Public Contract Regulations (PCR) 2015.  The PCR 2015 set out how contracting authorities can purchase and procure services, works, and goods, but clarifies the processes for doing so in an unprecedented emergency such as the current pandemic.  This has been further reinforced by Procurement Policy Note 01/20 from Crown Commercial Services which explains how the guidance translates into actual procurements carried out in the UK.

In short, both sets of guidance fundamentally change how an Authority is able to procure and support businesses during this period, particularly those that have a specific impact on supporting the Government and other public sector bodies through this period.  This represents both challenges and opportunities in the coming weeks and months which may aid all businesses in the UK, but in particular opens doors for small and medium enterprises (SMEs) who are often more agile, innovative, and flexible than their larger competitors. Appreciating this and being alive to how it can benefit your business and knowing what you need to do to potentially bid for work could be the key factor in landing a contract that keeps a business stable during this tumultuous period.

What will public procurement and bidding look like?

The nature of the pandemic means that Contracting Authorities (‘the buyer’) have a range of opportunities to appoint service providers (‘the supplier’) which can mean greater opportunity, including the potential to not need to submit a bid at all. The options available presently to Authorities include, but are not limited to;

Award due to extreme urgency (regulation 32(2)(c)).

This means that timescales for public procurement can be significantly reduced in the most extreme circumstances where an Authority has a need for a service, i.e. the supply of PPE due to extreme shortages or provision of social care workers if you’re in recruitment. To clarify, ‘Regulation 32(2)(c) of the PCRs allows an authority to directly award a public contract “insofar as is strictly necessary, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority”.
If you have a life-changing service or goods that you provide, it is worth being aware of this as it may help you get through the door should an Authority be concerned with a direct appointment. This provision is more likely to be used in the early months of the pandemic and less so as it progresses and changes shape in the coming months, as Authorities are expected to learn and plan for their future needs. All such instances will always be done without advertising and under the ‘negotiated’ procedure.

Direct award due to the absence of competition or protection of exclusive rights.

This is similar to the above, in that The Cabinet Office has acknowledged that in some industries or sectors there may only be one provider that can meet the requirements; this could be either for something such as production capacity, availability of staff to suit their needs, etc. This is less likely to be applicable to SMEs who typically would not have the level of resource or capability to achieve such outputs.

Call off from an existing framework agreement or dynamic purchasing system (DPS)

Where suppliers are already on an existing Framework or a DPS, then an Authority can simply choose to award the work directly. Whilst Framework Agreements are only procured on a rolling basis, DPS’ are easier and often a ‘rolling’ public procurement that you can join at any time or at set intervals throughout a year. It is worth looking in your industry for applicable ones (appreciating Frameworks are procured less often) as they act as a ‘pre-vetting’ for your business for a buyer. Being aware of this and sharing it with the Authority can act as a streamlined route to getting a direct appointment and by-passing the bidding process under a Framework agreement or going through a ‘mini-competition’ of no more than 10 days for a DPS.

Call for competition using a standard public procurement procedure with accelerated timescales

Contracting Authorities can reduce timescales in the traditional public procurement methods most of us as bidders will be familiar with, including for the open procedure, restricted procedure and competitive procedure with negotiation. What this means is that where a standard bid takes on average 4-5 weeks, Contracting Authorities can now streamline timescales under the ‘accelerated’ route which allows for a bid to be delivered in 15 days from receipt of tenders, plus the ten-day standstill period. Where these requirements arise bids will be quick and fast, which means as an SME business has to be prepared to respond. This can be difficult in a time where SMEs may have a large volume of staff furloughed or where there is a high likelihood of competing demands. Having a ‘game plan’ of standard bid content or the ability to ‘outsource’ if needed to a bid consultancy can be of assistance.

Extending or modifying a contract during its term

If you already hold a contract for a service, a Contracting Authority can simply choose to extend your existing arrangement, meaning you don’t need to spend costly time having to re-bid for work in the first place. For this to happen the Contracting Authority must justify that the need for the extension is due to exceptional, unforeseen circumstances; the contract is of the same nature as the existing one, and the final value of the extension will not exceed 50% of the overall contract or Framework value in aggregate (i.e. the total contract value of the contract term). Again, being aware of this and knowing that you can point this out to your contact at the Authority can be the difference between retaining work and potentially losing out.  Procurement teams aren’t always up to date on what they are permitted to do, you knowing and being able to guide them to the PPN from the Cabinet Office could help you keep a safety net on your business for the next 3 – 6 months whilst the economy settles.

However, even with all of these options, should a Contracting Authority not be able to reasonably justify one of the above, you’re likely to see business continue as normal on the bidding front. The only differential will be that procurements may take longer to be released to market due to staffing shortages internally with Authorities or have extended procurement times (i.e. 8 weeks instead of 5) to allow bidders a fair window and sufficient opportunity to submit a high-quality bid.  Again this offers greater opportunity for SMEs because as where you might not have had the time or ability to fit a bid in, it could be the door that opens for your business, enabling you to secure your first public sector contract.

Shot of two colleagues shaking hands during a meeting at work

How likely am I to actually win new work?

This is a hard question to answer because it really will depend on a case by case basis. At Bid for Success, we are huge advocates of our customers making informed bid decisions when they choose to go after an opportunity as it makes a huge difference in whether they are likely to win or not.  Here are some of the factors that are worth weighing up:

Is it a contract where the Authority is happy with its service provider or has the incumbent been there for a long time?

The Authority may not be willing to change service providers. Whilst they will still have to go through with the procurement process, the reality is that they are likely (not always) to be risk-averse and won’t want to change.

If you’re not sure or don’t have a read on the Authority and their existing relationship, ask some careful clarification questions like who the incumbent is and for the Authority to share any recent KPI or performance data on the contract to help you make an informed decision. Also carefully read the contract notice and bid documents and see if there is a ‘lean’ towards a specific style of delivery or other factors that suggest its geared towards a competitor.   If in doubt and money matters, go with your gut instinct on whether to bid or not bid after having done your due diligence.

Is there a risk of the incumbent or your competition going bust (assuming there is one)?

The risk profile of any goods or service provider is going to be critical in the upcoming months as several businesses will struggle to survive. A Contracting Authority will look at this carefully and if it’s a medium to long-term contract may not appoint a business that has a bad financial rating or a lack of financial resources in place to be stable (i.e. cash reserves on the balance sheet). Being aware of this and knowing that a competitor rates poorly and is likely to go under could be a golden chance to get in and swoop up contracts (including those they hold if they do go under, which is why it’s worth being in touch with potential buyers sooner if you know this is likely to happen).

Is it a Framework or a DPS where there will be multiple opportunities to win work?

This is a simple one; a Framework and DPS have multiple suppliers. Whilst there is never a guarantee of work, you can reduce this risk by asking at the start of a procurement how much ‘spend (£)’ went through the previous Framework or on what basis the ‘anticipated’ contract value has been determined.  If they can’t justify it and they continually reference the massive buyer list (i.e. all the Authorities who want to use it but haven’t committed to putting any spend through) then it’s worth being skeptical about the opportunity.

What’s the MEAT of it (i.e. the split of price vs. quality on the tender)?

Almost all public sector bids are done on the basis of appointing the ‘Most Economically Advantageous Tender’ (MEAT), which is about an Authority securing the best value between the quality of the service they need and the price they pay for it. This can be found at the tender stage looking at the evaluation and the price vs. quality split on how the contract will be awarded.
If they are more focused on quality over price, this sends a strong signal that the Authority wants a good service and is willing to pay for it. We are always a huge advocate of quality led tenders as some bidders will undercut others to win the work. This may hold true even more in the coming months as companies struggle to survive.
Contracting Authorities should be responsible and either query or kick out ‘abnormally low’ prices on bids; but with their own financial resources being depleted via the pandemic may be unlikely to do so.  It’s always worth bearing this in mind when you look at bids and doing so on a case by case basis to ensure it represents a strong opportunity that could actually be secured.

Are there any other immediate opportunities to try to get in with the Public Sector?

It’s worth keeping abreast of what is coming out from the Government at .gov.uk.  Currently, they are cataloguing a list of suppliers that may be able to help different departments and Authorities with their immediate needs in light of the pandemic. There is no ‘hoop’ to jump through bar completing the straight forward form on their website.
Medical supplies, building materials, and recruitment are the priority areas.  Moreover, the Cabinet Office has also paused and/or are extending some other procurements and framework arrangements. This can be both good and bad as it might mean you have an opportunity to bid something you weren’t aware of or that it might take longer for a procurement to be finalised / come to market.  For all the latest data check out the CCS website direct.

Do You Have More Questions?

If there is anything that you need help with, please do get in touch with us.  We try to write about things in plain English but public procurement is a high-jargon world, so if you have questions then drop us a line. You might also be interested in our FREE Membership Club on Facebook for bid and tender hints and tips, or you can book a meeting with one of our senior team. We pride ourselves on championing SME businesses and want to do all we can to support you in this difficult period.

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