Help SMEs win work

The existing public sector procurement system is not fit for purpose and must be changed to open up more tenders to SMEs, argues Jamie Barrett.

While the government’s intentions to improve localism and support SMEs have been noble, public sector procurement practices still wildly favour the largest multi-national project management consultancies over smaller practices. The same goes for the UK’s largest contractors winning over regional building firms.

A flawed route to procurement
At best, the current procurement methods for public sector construction schemes could be called severely flawed.

Long before any pre-qualification questionnaires (PQQs) or invitations to tender (ITTs) are issued, public sector projects have to go through protracted internal governance procedures. Then there are the budget-setting cycles and complex sign-off processes. Time-sensitive projects often run behind schedule before they have even been approved. And going through the Official Journal of the European Union – the public gazette – can then add up to six more months to the procurement process.

The system is broken. Public sector organisations are locking SMEs out by setting up complicated and unfriendly frameworks that favour their larger counterparts.

The biggest issue for SMEs is that no two public sector clients – whether it is an NHS trust, a local authority, a school or a university – use the same procurement approach. Each body will use its own format and framework, which means SMEs must reinvent the wheel for every single tender opportunity.

Under-utilised solutions
To give credit where it is due, the government has gone some way towards trying to simplify the process. It has launched Constructionline (CL), a procurement and supply chain management service, and developed PAS91, a publicly available, standardised pre-qualification questionnaire for the construction industry.

CL registration is a pre-qualification in itself: it is thorough and offers a common-sense approach. However, PQQs then continue to ask for the same information, which is not efficient for suppliers to provide in different formats over and over again. Instead, PQQs should ask whether you are CL pre-qualified; and if so, then only project-specific questions can be answered.

The introduction of PAS91 was another sensible development and an attempt to simplify procurement; and the time that could be saved for SMEs if PAS91 was actually used would be significant.

Yet despite the availability of such a good document, the vast majority of public sector organisations still use their own 1980s – making each PQQ submission a bespoke, time-intensive document to produce every time.

The challenge for SMEs
The huge challenge SMEs face is that large multinational consultancies and the major contractors have entire departments that are dedicated to working on PQQs and tender submissions. Simply, the average SME does not have these resources. Public sector procurement takes senior staff away from fee-earning work, which then puts significant pressure on these businesses.

Plus, while submissions from SMEs may be technically excellent, when every document has to be bespoke it is near-impossible to compete against major companies with many more resources.

Worryingly, despite the government’s laudable determination to increase public sector work for SMEs, there is no appetite in the public sector to truly implement change and deliver on these ambitions. Public sector organisations have a strong tendency to ‘do what they’ve always done’, rather than look at alternative solutions and suppliers that could potentially offer better value.

Even if the first stage of the tendering is successful, there is a further lengthy and resource-intensive process to go through – another major challenge for SMEs. While frameworks for building services are largely populated by the biggest companies, these frameworks do not necessarily offer a best-value route to procurement.

Overall, public sector procurement lacks a strategic approach and is simply driven by the need to get suppliers on to a framework, to make the process quick and easy, avoiding the need for a protracted OJEU tender.

A shocking statistic
Our own experience can offer some insight. Despite working on more than 100 PQQs, taking expert advice on the quality of our proposals, requesting feedback for every one and ploughing that knowledge back into the next opportunity, we have been successful on zero tenders to date. Not a single one.

Yet our business is successful. Customer satisfaction scores across the board are outstanding – 100 per cent in the past year, and 99.4 per cent since Evolution5 was established in 2007. And 100 per cent of our customers – which include a high proportion of public sector organisations – say they would use our services again.

Surely this suggests that something is radically wrong with the public sector procurement system?

Jamie Barrett is managing director of building consultancy Evolution5