6 reasons to do business with the public sector

On average the UK Government spends £306 billion a year, more than a third of all public spending, on procuring goods, works, and services from external suppliers. In this post we explore the 6 reasons why you should include public sector contracts within your business strategy.

What is the Public Sector?

The Public Sector is typically made up of not-for-profit organisations owned by central, national and local governments, for the benefit of their citizens. They cover areas such as defence, education, fire services, healthcare, police and refuse collection.

As the public sector relies on public funding to make decisions, they are required to ensure their financial decisions are made respectfully, encourage free and open competition, achieve best value for money, and ultimately benefit the public.

The 6 Reasons to bid for public sector tenders

1. Contracts are open and accessible

All government contracts over £12,000 and wider public sector contracts over £30,000 must be publicly accessible online for any supplier to view and bid for. No matter what size your business is, if you meet the criteria and can deliver the tender requirements, you have a fair chance of winning the work. This is different to private procurement where the buyer can choose who to inform of their procurement needs, and who to do business with.

2. The public sector wants to award work to SMEs

The UK government aims to award 33% of all public contracts to SMEs, which make up 99% of all UK businesses. Some contracts can also have restrictions which favour SMEs – such as limiting applications to businesses based within a specific region, or explicitly making tenders open exclusively to SMEs.

3. 30-day payment periods

All invoices for contracted work must be processed by public bodies within 30 days of receiving them, ensuring businesses like yours get paid promptly. Lengthy payment periods can be an issue within the private sector, where larger businesses can dictate when they issue payment.

4. Transparent tendering processes

Nothing is hidden in public procurement. All supplies receive the same information, award criteria are shared upfront, and suppliers will receive feedback if they do not win a contract. Private buyers do not have to make their processes public, and have no obligations to provide feedback to suppliers.

5. Most Economically Advantageous Tenders (MEAT)

MEAT is the chosen method of proposal assessment, meaning contract awards are not just based on price, and consider the wider aspects of tender submissions. Social Value is a major consideration in contract awards, meaning your chances of success can be boosted if you evidence how your business enhances the communities it operates in. Any work you do that helps tackle economic inequality, fight climate change, create equal opportunities, or benefit communities in other ways, should be highlighted.

6. Availability of work

Over 50,000 contracts are published each year by the UK public sector, many of these contracts require multiple suppliers and generate revenue over several years. Of these opportunities, over 70% are Low-value tenders, meaning the market is very accessible for SME’s.