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How Small and Medium Businesses Can Win Government Contracts

UK government has for some 11 years undertaken a succession of procurement reforms to ensure that it is very definitely ‘Open for Business’ with SMBs, investing considerable resources to effect the necessary culture change and procurement practices that enable SMB-Fair buying behaviours. As an Australian entrepreneur, with offices in both countries, I am heartened that Australian government is undertaking a similar journey.....

by Elizabeth Vega, Group CEO Informed Solutions; UK Cabinet Office Small & Medium Business Panel Member & Chair of the Meet the Buyer Working Group; 2018 Digital Leader Founder Award Winner; 2018 Queens Award for Enterprise: Innovation Winner; Dept for International Trade Export Champion; Dept for Business, Energy & Industrial Strategy Queens Award for Enterprise Champion; ScaleUp Institute ‘Access to Markets & Finance’ Committee Member

As a member of UK Cabinet Office’s Small and Medium Business Panel and Chair of the Meet the Buyer Working Group, I and the other Panel members work with Cabinet Office and Crown Commercial Services (CCS) to lower unfair barriers to entry for small and medium businesses (SMBs) who wish to access government and public sector contracts. 

UK government has for some 11 years undertaken a succession of procurement reforms to ensure that it is very definitely ‘Open for Business’ with SMBs, investing considerable resources to effect the necessary culture change and procurement practices that enable SMB-Fair buying behaviours.

As an Australian entrepreneur, I am heartened that Australian government is undertaking a similar journey; trying to better understand the SMB marketplace and become more inclusive of SMBs that wish to compete for government contracts.  In reforming and modernising its procurement functions, government is looking to remove or at least lower the current barriers to smaller companies doing business with the public sector.  These changes will help create a more diverse, energised, innovative and competitive supplier ecosystem.

The Government Procurement Act 2018, which came into effect on 18th April, is already prompting changes to procurement policies and the channels to bidding for public contracts.  These reforms have the power to increase the transparency, supplier diversity and competitiveness of the marketplace in Australia.  For Australia’s more ambitious small and medium sized businesses, including those in rural communities, fairer and more equitable access to public sector contracts represents an excellent opportunity to leverage innovative products and services; be more agile and responsive to changing customer needs; create new, skilled jobs; and become successful scale-up businesses and exporters over time.

As a business that operates successfully in numerous markets, from offices in Australia and the UK, I constantly look at advances in digital, innovation policy and procurement practices across leading countries.  In the UK, government has made a very significant effort to engage with and understand the SMB supplier marketplace, and consequently more small and medium companies are successfully winning valuable government contracts.  This has resulted in new marketplace dynamics and opportunities, including delivering better value for money for government and creating greater social, economic and commercial value through improved public sector procurement.

However, for all the progress the UK has made, there are learnings and insights, as well as unforeseen and unintended consequences that Australian SMBs and government procurers can use to their advantage.

It’s All About Relationships

Winning government contracts (or contracts in any sector) relies on successful three-way relationships between the procurer, buyer and supplier.  The key to business success lies in making this three-way relationship work for everyone.

For SMBs, building a real understanding of the customer, and their needs and challenges, is as important as having an enlightened public sector buyer and procurement team.  It’s about all parties knowing how to communicate well with the other, particularly as regards how to work effectively together.

For any business, including SMBs, to become a high performing supplier to government it starts with the procurer explaining the buyer’s needs, preferences and pain points in a clear and transparent way that does not unfairly favour incumbents, which will already have much of this knowledge.  Supplier side - it’s important that the SMB demonstrates that it has understood the customer’s needs and will fulfil their commitments to the buyer in efficient, cost effective and convenient ways.

Building In-House Capability

In the UK, industry association techUK undertook a Civil Servants Survey that highlighted that many SMBs had not sufficiently developed their approach to writing bids and managing customer relationships.

For SMBs to succeed in winning government contracts, they need to learn how to write clear, insightful and articulate bids.  SMBs need to appreciate that their bid must answer the procurer’s questions succinctly and fully, presenting their commercial proposal in a way that is easy for the buyer to understand and that explains how the product or solution will deliver the desired benefits and outcomes, as well as best price, for the customer.

Getting to know a government buyer and their needs, ahead of the formal procurement and bid invitation process, gives a supplier valuable insight and a significant advantage when preparing their bid.  The procurers and buyers who make an effort to engage with suppliers and explain their needs prior to inviting bids are more likely to be committed to a fair and level playing field for SMBs.

SMBs also need to look for ways to reach out to and understand the buyer, for example through open-market engagement webinars and ‘meet the buyer’ sessions run by procurers, and through industry association events.  When an SMB builds any insights gained into their bid proposal, it communicates to procurers and buyers that they have made the effort to understand the buyer’s specific needs and that they are far more likely to be an engaged, effective and dependable supplier - irrespective of company size.

How SMBs Can Use Advisors and Bid Management Agents

It is understandable that from a capacity and capability perspective, SMBs might seek help from outside advisors or third party bid management agents.  There will be many advisors and bid management agents in the marketplaces, across the full spectrum of good, bad and indifferent.  SMBs should use a thoughtful vetting process, which includes testimonial and reference checks when selecting which agent they work with.

Once the third party bid management agent is selected, the SMB needs to ‘direct’ their bid management agent, in the same way as they would expect to direct an external accountant or lawyer.  It’s important for SMBs to get comfortable directing third party professionals who support the business and decision-making, particularly with expertise that the SMB does not have in-house.  As one half of a customer-supplier equation, it’s imperative that SMBs ‘own’ their role in the relationship.  Bid management agents and advisors should work alongside the SMB to understand the buyer’s needs, preferences and challenges; make sense of and comply with the requirements of the procurement and evaluation process; and collaborate in shaping and articulating the most favourable commercial proposition.

In my experience, and this is sector agnostic rather than exclusive to the public sector, all suppliers simply have to get to know the potential customer in order to shape the most competitive and mutually advantageous bid that provides directly relevant context, specificity and business benefits.  By all means, if an SMB needs help in developing and crafting the words for their bid then they should seek guidance from a third party bid management agent.  If an agent is engaged in the right way, it offers the SMB practical support in the short-term with bid development, and in the mid-to-long term it can help the SMB upskill their own people.

My guidance to SMBs wanting to do business with government, as well as large corporates, is to work hard to build up their bid writing and customer relationship management skills.  Reciprocally, I know that governments in the UK and increasingly in Australia are investing considerable resources to ensure that they better understand the SMB marketplace and have SMB-Fair procurement practices, so all companies with the required products and capabilities can compete for contracts on a level playing field, irrespective of size.  These dynamics create new business opportunities and better buying outcomes for government buyers and for SMBs.

Learning and Improving

Armed with bid management guidance and foundation skills in bid writing, SMBs can improve their success rate by understanding why they win and why they have lost the competition to win government contracts.

If government is committed to procurement reforms that create a more diverse, fair and inclusive supplier marketplace; help deliver more innovation and better value for money; and facilitate suppliers producing the highest quality bids, then procurers genuinely do need to be willing to provide candid, helpful feedback to SMBs.  That feedback may simply be the consolation prize for a very significant investment of many person weeks of effort that did not even win the SMB a much wanted contract.  Feedback allows SMBs to learn and improve their bid management approach and future likelihood of success.  If the procurer does not offer feedback then I encourage SMBs to politely request it.

Where SMBs uses a third party bid management agent, I believe they should still directly ‘own’ how they collect buyer decision intelligence, rather than delegate it to their agent.  Customer feedback on why the company did or didn’t win the contract helps an SMB learn and develop their competitive bidding capabilities, improves their chances of success on future bids, and gives them insights which enable them to better serve government customers.

As a final step in how SMBs in Australia can win government contracts and how public sector buyers can be better served, helpful feedback helps everyone win!

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