1 Bob Moodie NJM European, Economic & Management Consultants Limited Selling to the Public Sector – helping Leicestershire SMEs unlock their potentialBob Moodie NJM European, Economic & Management Consultants Limited
2 Composition of business stock The ChallengeComposition of business stockNo. of Employees1-910-4950-249250+% of business stock126.96.36.199.399.7%SMELSEAccording to the latest figures only 16% of the total value of public contracts go to SMEs.75% of SMEs rarely or never bid for public sector work
3 Where to find information/opportunities Preferred suppliers We’re too young (we lack trading history /track record)Lack of previous public sector experiencePriceLack of bid skillsWe’re too small (contract is too big as a proportion of our turnover)The timescale is too tightDifficult to access purchasersProcess is time-consuming, costly and complexPQQ qualifiers – policies & proceduresLocation and point of serviceDifficult to find consortia to bid with
4 Responding to the Challenge: Be Strategic The Key Themes in Today’s WorkshopThe Procurement ContextIdentifying opportunities and raising business profileWhen to bid and when not to bidPreparing PQQs and tendersIn the present competitive environment it is vital to understand that only a very professional approach at all levels of the process will suffice if you want to be successful
5 The Procurement Context: Regulatory Framework EU Procurement DirectivesEuropeanLocalNationalGovernment StrategyStatutory RequirementsCouncil ProceduresLocal Agreements
6 EU Procurement Thresholds SuppliesServicesWorksCentral Government plus some ‘Quangos’ (see Schedule 1 List)€125,000(£101,323)€4,845,000(£3,927,260)Other Public Sector e.g. Local Authorities, Universities, FE, etc€193,000(£156,442)Thresholds applicable from 1st of January 2010 and are NET of VATPrinciples: Open competition, non-discrimination, equal treatment and transparency.Note: Exchange RatesThe thresholds would be more meaningful as £. Also need to state that relate to total contract values, including any extension options
7 A New Environment Political Economic Social Technological The Comprehensive Spending Review (2010)NHS reorganisationGlover Report - SMEs and Public Procurement (2008): Transparency Simplicity, Strategic & MeasurementEquality of Access (SME & Third Sector)Coalition Government’s aspiration to award 25% of central contracts to SMEsPrice & Value for MoneyFinancial EnvironmentContract Bundling (Economy of Supply)Rationalisation & Framework AgreementsAbility to deliver economies and efficiency savingsSocialTechnologicalCorporate Social ResponsibilitySustainabilityInnovation & non contractual outcomesPortalsE-tenderingE-auctionsReal time reportingSee comments on Melton Workshop slides
8 Context & OpportunityPublic 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. Over the next three to four years, to , the Council will need to make savings of around £70m - that’s 25% of its budget.Leicester City Council estimated procurement budget for the Authority is £260 million p.a. ( ).NHS Leicestershire & Rutland Procurement Partnership influences spend of approximately £250 million on goods and services each year.LCC’s latest savings figure is £82m between and , incl. £22m from commissioning and procurement
9 Local Procedures Public Sector Organisation Threshold (goods & supplies)Procurement Process & SourceLeicestershire County Council<£1k£1k – £20k>£20k - £100k>£100k - EU threshold (£156,442)1 Oral / Written Quote3 Written Quotes orRequest for QuotationFormal Tender ProcessOrLeicester City Council< £10k£10k - £49k£50K - EU threshold (£156,442)Up to £250k (works only)Oral / Written Quotes (officer discretion)3 Written Quotes or Formal Tender Process (officer discretion)orUniversity of Leicester£5k - £25k>£25k – EU threshold(£156,442)3 Oral / Written QuotesFormal Tender via departments orSee comments on Melton Workshop slides
10 Procurement Procedure CharacteristicsWhen the procedure is adoptedOpenAll qualified applicants must be given the opportunity to bidFor lower risk procurement where supplier capability is less important or where the focus is on priceRestrictedTwo stage process with facility to shortlist (PQQ + Tender)Where capability of supplier is key determining factor in the delivery of the contract, market response likely to be huge to allow short-listingNegotiatedTwo stage process with facility to negotiate at second stageSpecification is not clear or some creative, artistic or expert input is required.Competitive DialogueTwo stage process with facility to enter into a dialogue with potential suppliers to consider potential solutions and refine specification before invitation to tenderComplex procurement where suppliers expertise has significant impact on the development of the specificationFramework AgreementCall-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)Open is the most common ----IT’S MY UNDERSTANDING THAT RESTRICTED IS MOST COMMON
11 Procurement Process Overview Contract NoticeEOIPQQCommissionTenderReviewManageAwardEvaluate
12 Contract Notices KEY TENDER WEBSITES Name: Source: Used by: Eastern Shires Purchasing OrganisationLAs, NHS in Leicestershire, OJEU tendersSource LeicestershireLAs, NHS in LeicestershireLeicestershire County & Rutland NHSNHSIn-TendUniversities, Colleges, Schools, LAs (some in Leicestershire and nationally)Blue LightPolice, Fire & Rescue Services (including Leicestershire Constabulary & across UK)Supply to GovernmentLower value government tenders (*website will be replaced by ‘Contracts Finder’ March 2011)OJEUAny public sector contract above EU Thresholdsourceleicestershire should be top – It’s more likely to advertise the lower value contracts that SMEs are interested in, than the ESPO websiteVoluntary Action LeicesterShire also advertises contract opportunities for voluntary sector organisations
13 Identifying Opportunities & Raising Your Profile A Strategic ApproachIdentifying Opportunities & Raising Your Profile
14 Be Systematic & Get Organised What is your target market?In your target market who are the key buyers - Personnel at Department level and Procurement Officers (important for low value contracts that are not formally advertised)?Engage procurement personnel - make sure they know you exist, seed ideasFind out about approved (accredited) supplier listsRegister and publish on tender e-portalsNetwork (buyers/commissioners, meet the buyer events)LCC is trying to move away from standing/approved lists, towards framework agreements. Frameworks reflect better value for money, established following an assessment of price vs. quality
15 Be Systematic & Get Organised Set up internal processes and individual(s) to monitor tender portals, alerts, sources and review feedbackSearch for potential business partners / collaborators / subcontractorsDevelop / improve your key policies e.g. Make them relevant and articulating business benefitAccreditation (e.g. CHAS, ISO, IiP etc)Bid writing is a skill – invest the time in developing the capability
17 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?Two years accounts aren’t critical. As mentioned in my notes on the Melton Workshop slides, “OGC guidance states that financial vetting should be based on appropriate information and the use of sound business judgement, rather than just the mechanistic application of financial formulae”The Council may use the following information to satisfy itself that the firm is financially stable:Parent company accounts (if applicable)Bankers statements and referencesAccountants’ referencesManagement accountsFinancial projections, including cash flow forecastsDetails of previous contracts, including contract valuesCapital availability
18 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?What is the percentage chance of success?Do you have the time and resources to devote to preparing a good bid?
19 Strategic Decision Making Solo or Collaborative Bidding?Form a consortium if:You don’t have the capability or capacityYou can’t meet the 20% ruleOptions:ConsortiumJoint BiddingLead Contractor & SubcontractorLegal basicsMemorandum of understanding (MoU) / Partnership agreement / (Non Disclosure agreement (NDA); Agreement not to compete in other tender)Service level agreement (SLA)/contractConsortium must be properly led, constructed, managedConsortium jointly and severally liable
20 Consortia Benefits: Risks: Increase capacity and scope to bid e.g. Overcome PQQ impedimentsPartner selection and getting AgreementShared trade history (combined capability and capacity)Trust relationship (how well do you know your partner – can you be confident they can and will deliver)Business Development: Access new clients and marketsComplex decision-making, loss of autonomy, compromises and concessionsSpread riskSharing sensitive informationMutual learning and innovative approachesLogistics (Co-ordinating bid)Delivered additional added value (the whole is greater than the sum of the parts)Logistics (Contract delivery)Improve chance of successVoluntary Action LeicesterShire provide training to voluntary sector organisations on establishing consortia
22 Preparing the PQQ/Tender Make sure you download/print off ALL tender documents and read them carefully (multiple times)Note the tender instructions, e.g. word limits, submission format, deadlines and evaluation criteria
23 PQQ: Example Scoring Framework SectionScore Weighting1Organisation DetailsN/A2Financial InformationN/A or Risk Based AssessmentPass/Fail3Insurance4Business Activities15%5Business Practices30% (Total)Health & Safety5-10%Quality AssuranceEnvironmental ManagementEquality6Requirement - specific40%7Experience & References8Professional & Business StandingDepends on nature of contract, e.g. an IT contract may require more on Business Continuity arrangements, whereas a Social Care contract may require more on Equalities
24 Tenders: Example ‘Scored’ Criteria Response TypeReason indicated for ScoreNon compliant responseNo relevant information / solution provided in response to contract requirements.1Unacceptable responsePartially compliant response but with serious deficiencies in solution offered, indicating serious difficulties / inability to deliver contract requirements.2Unsatisfactory responsePartially compliant response with shortfalls in solution offered, indicating not all contract requirements could be met and thus difficulty in delivery of the contract.3Acceptable responseCompliant response, indicating basic contract requirements are met but not exceeded. Contract could be delivered.4Good responseCompliant response, clearly indicating entire delivery can be met and solution offers some limited benefits beyond stated requirements.5Excellent responseCompliant response, bidder illustrated comprehensive understanding of contract reqs. Proposed solution provides significant additional benefits beyond stated reqs.
25 Preparing the PQQ/Tender Get your team together, appoint a bid manager and conduct detailed review and interpretation of tender requirements.Determine whether you require clarification of any aspect of the tender and ask the question(s) allowing enough time for a response.Check regularly to see if any questions/answers have been submitted by competitors. Be aware that any question you ask will be notified to other suppliers)Prepare work plan & allocation of roles/tasks/milestones with reference to tender & submission deadline.NB: Build in time to review, refine and style bid
26 Preparing the PQQ/Tender What is the Buyer looking for?Demonstrate a clear understanding of the brief (i.e. the challenges are understood and addressed)Design a clearly structured tender response aligned against each tender requirement and criteria (e.g. core, gateway and specific). Ensure compliance!Methodology: clearly show who does what, why, when, how and benefits from buyer’s perspective).Identify and demonstrate clearly your capability and the innovation of your offer (USP) - can your offer exceed the contract requirements and provide additional benefits, outcomes?
27 Preparing the PQQ/Tender Properly define appropriate resources / organisation (CVs of identified team members / subcontractors / partners & management structure).Project Plan (Schedule of Deliverables, Milestones and Resource and illustrate with diagram where possible i.e. Gantt Chart)Explain Contract management and communication (i.e. how you interface with the client to monitor project)Risk Assessment (illustrate how you provide buyer with a low risk solution)Articulate pricing and value for moneyCompliance (Policies – NB You may be asked to explain your policy commitments)
28 Preparing the PQQ/Tender Standing Out from the CrowdHave you articulated ‘Why choose us?’Have you fully defined the key features, quality and benefits of your approach?Have you used and made the most of recent and relevant case studies to illustrate your track record?Have you presented advantages over your competitors?Have you gone the extra mile in manifesting your understanding of the brief and the design of your solution?
29 Costing the Proposal Personnel & Tasks Charging Rate(s) (Daily/Hourly) & TimeFixed Cost / Variable CostExpenses & DisbursementsContingencyVATInnovative Cost ProposalsDiscounted Cost e.g. 5% early payment, economies of scale and efficiency savings linked to contract term and/or number of contracts (Lots) awardedBuyer comfort: Offer 10% Contract Price Withheld until completion
30 Preparing the PQQ/Tender Do not attempt to find an “inside track” (canvassing)Respond by the correct date + time (electronic, electronic + post, post?) avoid last minute submissionsEnsure the submission is complete AND signed including copies of requested documentation, e.g. insurance certificates, policies, audited accounts etcUse tender envelope/label if provided and check if there is a tender referenceLook carefully at the evaluation criteria, scores and “weighting”. This should influence time and effort in preparation of answers
31 Preparing the Tender: Bid Writing Language & Style:Write in plain EnglishAvoid jargon and unexplained abbreviationsUse ‘active’ and not ‘passive‘ verbs, refer to ‘we’ and ‘you’Short sentences and paragraphs; use introductory headersPunctuation and spelling really matterAim for clarity, brevity, readability and persuasion!
32 ♪♫♪ Accentuate the Positive ♪♫♪ What QA does your company operate? If no accreditation is held please explain why not and what alternative steps you take to ensure quality at work?Bad 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)”
33 Avoiding a Poor Score Common reasons for a poor score: Failure to follow the instructions.Writing by committee, no narrative flow and lack of control/ownershipIncomplete or missing answers/sections.Supporting documentation incompleteRepeating answers or referring to ‘see above’ (questions are rarely repeated)Over emphasising what you sell, rather than what they are looking to buyRecycling old tenders ‘Cutting & pasting’!Generic PQQ/Tender responseProviding response on general capability instead as opposed to specific contract requirements.
34 Buyer Preferences LIKE Don’t like Concise and precise language Wordy tenders, Inconsistencies and errors, poor use of grammarClear structure (esp. Methodology)Poor methodology (failure to define who does what, where, when, why and how)Challenges have been understood and properly addressedDeviation from defined requirements, lack of understanding of client requirements and failure to answer questionsRelevant background informationLack of detail/explanation or ‘data dump’Properly defined & appropriate resourcesUnclear who will be involved in deliverySystems & proceduresExaggerated and unsubstantiated claimsInnovation – or the opposite (tradition)Poor evidence of reliabilityRisk assessment (mitigations)No risk assessmentCase studies & referencesIrrelevant case studiesAnswers that directly answer the question – using the same language
35 Be... Compliant Tender Format & Requirements Policies, Insurances, etc PersuasiveUSPAdded Value and/or InnovationCompetitiveQualityPrice