The Advantages of Tendering – should your business be bidding for work (right now)?

10th July 2020

The Advantages of Tendering

Last updated: Dec 17, 2021 @ 10:56 am

The advantages of tendering are obvious to those who have been there before. If you haven’t, and you’re just starting now, we know that the tendering process can seem daunting. This is especially the case for SMEs, as it can sometimes feel as though buyers want ‘big business’ suppliers. However, it is important to remember the advantages you have over larger businesses with bigger overheads.

At the time of writing this blog, it would seem that the UK is beginning to find its feet again as we emerge from the Covid-19 pandemic. Businesses are re-opening and companies are inviting their employees back into the office. This is great news for most small businesses who have struggled through the weeks of lockdown. It is now, arguably, more vital than ever to secure a pipeline of work.

Securing a pipeline  

It might surprise you to hear that over the course of lockdown, we have continued to support a steady stream of businesses with their tendering efforts. In many sectors, buyers continued to publish calls for work and invite potential suppliers to tender. However, this wasn’t the case for all industries. As we’re all aware, the events industry and the hospitality and tourism sectors struggled through this difficult time.

There is good news, however. As part of the Hudson Group, we support businesses in both of the aforementioned industries (as well as 11 other sectors). Throughout this challenging time, our team has continued to rigorously search for new contract opportunities to help these industries thrive when they return to work. On both our Creative Tenders and Hospitality Tenders portals, we have continued to source work for:

  • Catering;
  • Events management;
  • Videography;
  • Venue hire;
  • Catering equipment;
  • School meals, and many more.

“The procurement industry hasn’t come to a standstill” – Head of Bid Management, Daniel Hall.

On a daily basis, buyers are still looking for suppliers to support their businesses and vice versa. With this in mind, we can’t stress enough the importance of assessing your pipeline of work.

If your business operates in a sector which has struggled to find immediate work over the past few months, build your pipeline. As the UK gets back on track, it is vital that you have work lined up that keeps your business growing and your employees in a secure job.

If you’re fortunate enough to work in an industry with in-demand services due to the current climate, there are plenty of reactive contracts for you. For example, we have seen businesses thrive in industries such as;

  • Healthcare;
  • Medical supplies;
  • PPE;
  • Software;
  • Internet services, and many more.

We source new opportunities for these services daily via our Healthcare Tenders and Technology Tenders portals.

So, what are the advantages of tendering for work?  

Now that we have established where to find contract opportunities, let’s look at a few advantages of tendering for contracts.

Understandably, many SMEs don’t know how to tender for work. If we’re honest, the process can seem complex on the surface. We know that tendering for contracts is a full-time job because it’s what we do.

With that being said, thousands of businesses tender for work. It’s part of their business development strategy. There must be a reason for this – let’s explore it.

1. Guaranteed pay (public sector)

One of the biggest advantages of tendering for work is the guaranteed payment. In the public sector, suppliers benefit from guaranteed pay upon winning a contract. This is obviously a sizeable advantage to tendering for work. Unlike private buyers, public organisations are bound by their contractual agreements to pay the awarded supplier.

Going one step further, the Crown Commercial Service (CCS) must pay contractors within 60-days of invoicing to comply with the Prompt Payment Code (2008). This gives suppliers peace of mind, especially for first-time winners.

The Crown Commercial Service (CCS) has released information on new measures to improve the enforcement of the Prompt Payment Code (2008) in 2019.

What changed?

In essence, the aim of the Prompt Payment Code remained the same as always. Companies must pay their suppliers and contractors fairly, within 60-days of invoicing. Or they must pay within the bounds of the stated terms of the contract between them. However, as of September 2019, companies tendering to be part of a CCS Framework are required to answer questions pertaining to such things as:

  • Payment practices;
  • Payment processes;
  • Supply chain management;
  • Payment tracking systems;
  • Existing payment performance.

Companies now need to be able to provide evidence that they have effective systems in place. This is to ensure a fair and responsible approach to the remuneration of their supply chain. Companies that are unable to provide evidence that they meet these requirements will most likely be excluded.

What prompted this change?

This announcement was prompted by a growing awareness of persistently poor supply chain management. In April 2019, five major contractors were removed from the Code for failing to pay suppliers on time. A further 12 companies were suspended for the same issue, but have consequently submitted satisfactory proposed changes to meet the Code. If the contractors can evidence that they are meeting this commitment, they will be reinstated as a supplier to CCS.

Who did this affect?

The official CCS announcement clarified that this was aimed at business who were, or intended to be, Suppliers to CCS. This meant they would have been bidding for central government opportunities greater than £5m per annum from 1st September onwards. However, any business (including SMEs) should still take note that responsible supply chain management is a key concern for central government procurement. Being able to evidence that you are compliant with this will stand you in good stead when tendering for CCS tenders of any size.

What actions should you take?

If your company is affected by the tightening of the Prompt Payment Code regulations, there are several things you need to consider:

  • Consider your current position.

Do you meet the criteria set out in the Procurement Policy Note (PPN), published in November 2018?

In most cases, you should simply be able to submit a copy of this report alongside your tender submission. All of the information contained therein will fulfil the requirements of the tender.

  • Do you meet the criteria set out in the PPN but haven’t already submitted a report of your payment data?

You will be required to fill out this new section when completing central government tenders. Take the time to review the questions outlined in this section carefully to ensure that you will be able to answer all of them fully (they are pass/fail questions) and that you can meet the evidence requirements outlined in Table 2, which include:

    • A copy of your standard payment terms for all of your supply chain contracts.
    • Details of the systems which are in place to ensure that suppliers are paid promptly.
    • A copy of your procedures for resolving disputed invoices promptly and effectively.
    • Details of any payments of interest for late payments you have paid in the past 12 months or which became due during the past 12 months and remain payable (contractually or under late payment legislation) and, if any such payment has been made (or arose), an explanation as to why this occurred and an outline of what remedial steps have been taken to ensure this does not occur again.
    • Details of any code or standard on payment practices to which you are a signatory.
    • If you are a signatory to a code or standard on prompt payment, details of what steps you have taken to ensure that you meet the requirements of the code or standard.
    • A copy of your standard payment terms used with sub-contractors on public sector contracts subject to PCR 2015
  • You will also need to provide the percentages of invoices paid by your company to those in your supply chain on all contracts within 60-days of receipt of the invoice in each of the two most recent 6-month periods. You will need to provide the percentage of invoices paid within each of the following categories (including the total volume of invoices paid in each category):
    • within 30 days;
    • in 31 to 60 days;
    • in 61 days or more.

How is this information assessed? 

As stated above, the questions are pass/fail and the evidence to be provided is compulsory. You must demonstrate that 95% of invoices payable to your supply chain have been paid within 60 days of receipt of invoice. If not, you will be required to provide an explanation. You will also be required to demonstrate that you have either taken or are planning to take, suitable remedial steps to rectify this. This whole section on prompt payment is entirely pass or fail. You will need to be confident that you have the evidence to back up your answers. Without it, you will most likely be excluded from the tendering process.

2. The government wants to award SMEs

If you’re an SME under the assumption that only ‘big businesses’ stand a chance of winning a contract, consider the government’s target.

The UK government has a target to see at least £1 in £3 being spent with SMEs. This means that public sector businesses have a goal to actively award contracts to smaller businesses.

3. Gain experience

In order to progress and win larger contracts, you must present relevant case studies and demonstrable experience. Tendering for contracts as part of framework agreements or dynamic purchasing systems (DPS) is an effective way of building this experience. We often advise first-time tenderers to begin with these types of contracts.

For example, in the care sector, spot provider frameworks can be a great stepping stone for new businesses.

You can find spot provider frameworks on our dedicated Healthcare Tenders portal.

4. Make contacts

Continuing from the previous point, in order to gain experience and provide case studies, you need to make contacts. Building relationships will help you to work with more buyers and, in turn, gain valuable experience.

When tendering in the future, you will be able to demonstrate works that you have previously completed and impress buyers with your previous contract examples.

As every business owner knows, without contacts you are in danger of your business plateauing. To grow and expand your horizons, you will more than likely need to build a base of contacts who can provide opportunities for inter-trading and collaborations.

5. Sustainability

One of the many advantages of tendering is that you can secure long-term contracts. Winning a place on a long-term contract or framework agreement can have a significant impact on the sustainability of your business. This is one of the other main advantages of tendering. We have helped clients to secure upwards of four years of income, from one win. To any business owner, this is an attractive prospect.

Find more information and results shared by our previous clients on our testimonials page.

6. Take control of your delivery  

Winning the contracts you want to deliver is one of the biggest advantages of tendering for work. We’re not suggesting that you will simply have your pick and win all the contracts you tender for. However, by choosing the contracts you wish to bid for, you are effectively filtering your opportunities from the beginning.

With this in mind, it is important to note that there are a few things you should consider before choosing the contracts to bid for. We advise that you complete the following checklist before commencing any work on your tender responses.

  1. Can you deliver the contract if you win?

This might sound obvious, but you’d be surprised at the number of businesses who don’t consider their own resources prior to bidding. Of course, in most cases, the buyer will be able to assess your capabilities based on the company information you provide. Therefore, it is unlikely that you would be awarded a contract that you can’t deliver. However, you don’t want to waste time, resources and money crafting an intricate tender response only to be eliminated from the process based on capability.

  1. Have you checked the financial thresholds?

In order to ensure that the awarded supplier can deliver the work, buyers will often set a minimum financial threshold. This is often reported in the earlier stages of the tendering process to ensure that the potential suppliers meet the requirements before they proceed any further.

If the financial threshold isn’t outlined, there is another way of determining whether you will meet the requirements.

As a general rule of thumb, you should not bid for projects with a budget that is greater than half of your annual turnover. For example, if the buyer states that the contract budget is £150k, your business should turn over more than £300k.

  1. Do you have experience and evidence you can provide?

In the majority of cases, buyers will ask to see at least three relevant case studies as part of your tender response. It is crucial that you have these case studies developed, branded and ready to go. This will not only save time during the process, but it will also allow you to assess whether or not the contract is right for you.

It is also worth noting, that in the public sector, it is common for buyers to ask to see three years of accounts. The accounts will likely need to display the company name that you are currently trading under.

  1. Is the contract profitable?

It can be easy to get enthusiastic when you see a contract that you are eligible for. However, before laying the groundwork of your bid, it is crucial that you consider your profit. While the contract budget might sound appealing, assess the cost of your delivery and the resources the contract will require before moving forward.

Further support

In this blog, we have addressed a few of the main advantages of tendering for work. However, if you require further support with bidding for contracts or responding to a specific tender, please feel free to get in touch. Our team of expert Bid Writers will be happy to provide a free consultation. During the consultation, our team will assess the needs of your business and connect you with the best service to help your business.

Learn more about the services we provide.

Find more helpful tips and advice in our blogs. We cover topics including:

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