Thresholds in Public Procurement
Why should Small businesses go after government contracts?
The English government has a public service procurement budget of £45 billion. Any contract with a value above £10,000 must be put out to tender with anything over OJEU thresholds requiring a Pre-Qualification stage with a questionnaire (PQQ).
You can find the latest public tenders here:
https://www.contractsfinder.service.gov.uk/Search.
If your business can meet all the criteria set out in the contract. Then you should pitch. We have outlined some of the reasons why you should in this and previous posts.
Financials: Decide what’s worth it
If the value of a contract is acceptable to your business then you might want to bid for it. Money earnt from the contract is often the sole reason SMEs go after them. If a contract is worth £200,000 and you work out that your profit margin is 20% for this contract then you will have a pre-tax profit of £40,000.
The value in contracts varies from tender-to-tender. So it is often wise idea to only bid for those that meet a pre-defined threshold and pass your Bid/No-bid analysis.
Longer-Term Relationships
Another advantage is that once you land the contract with some clients and delivered well, you may be put on the preferred suppliers list. This means that your business is far more likely to get repeat contracts valued under competitive tendering thresholds from them in the future, thereby reducing the cost of bidding for more contracts from the same client.
Lastly, the more government work you do the more trusted a supplier you will become because of the experience and valuable references you will have gained in public sector work.
Check out some of our other blogs on public sector tendering. Find them at https://medium.com/tech-sojourna.
This blog is part of a series of blogs on public sector tendering during Startup Europe Week 2016. Follow #SEWeek16 on twitter to see what Europe has been up to.
