BLOG: The keys to a successful tender
Public sector contracts can represent an excellent opportunity to grow your business. With the government spending approximately £15 billion - roughly £1 in every £3 - each year on buying goods from small businesses. Wirral Chamber of Commerce caught up with tendering and procurement specialist, Mike Hobbs, to discuss how its members can tender for public sector contracts more effectively.
Public bodies including central and local government, housing associations and the NHS, as well as many large private sector organisations are increasingly procuring goods and services through the use competitive tendering. This guide has been designed as a simple introduction for businesses wishing to know more about the process of tendering, how to find opportunities, understand the key considerations when evaluating a proposal, and how to best to produce a winning tender.
It is a legal requirement that any tenders issued by public-sector organisations are freely available and are the listed on the website of the north west's local authority procurement portal The Chest.
Once you access the site, you can register as a user. You will be asked to set your own search criteria (geographic, sector and keyword specific) and, when tender opportunities that correspond to your requirements appear on the site, you will receive an email notification that an opportunity has been published. When you next login to the site, you will be able to download the tender response information.
The most critical aspect of the process is to evaluate the merits of the specific tender before deciding whether to proceed with an application. Below are some critical questions that need to be considered before such a decision is taken:
- Is the opportunity aligned with our strategic aims ad fits within our core business?
- Do we have the skills and capacity to deliver the work or would we need to invest in additional resources to deliver the contract, and will we be able to source them?
- Is the project feasible, realistic, clearly defined and deliverable within the timescales?
- What is the ratio of contract value to business turnover? (Increasingly buyers have indicated they will only contract with suppliers if the level of turnover is at least twice the value of the tender).
The tender process is designed to produce price transparency within the supplier base, and buyers are looking for the most economically advantageous response, which is not necessarily the cheapest. However, the tender must make commercial sense to your organisation, not just in terms of the overall value of the contract. Other considerations will include the payment schedule (some buyers will pay within 120 days of an agreed invoice) and penalties for not delivering on time or against budget. Most tenders are legally binding and if you supply a quotation for a specific piece of work, you may be held liable for delivering against the price you have quoted.
Wirral Chamber of Commerce can provide fully funded support to help you improve your tendering and procurement processes. The European Union funded Liverpool City Region Integrated Business Support Programme (LCRIBS) can offer a procurement expert to help your business win tenders.