How Do Government Contracts Work?
Government contracts are big business – if you can get them.
Unfortunately, if you’ve never tried before, the process of finding and applying for tenders can be understandably frustrating.
But don’t worry – we’re here to explain exactly how government contracts work so you can feel confident next time you find the perfect project.
What is a Tender?
Heard about other businesses getting tenders but not sure what they are? Let’s start with the basics.
A tender is a notice that a government department is starting a new project and needs private sector help.
Depending on the type of notice it is, the tender will offer an opportunity for you to express your interest in joining the project or be an invitation to submit a bid for your company to be a supplier on the project.
Almost all government departments undertake regular public sector tendering, though project sizes and contract lengths vary. Regardless, this means there’s a huge variety of work available for both SMEs and larger companies.
What Tender Opportunities Are Available?
Between 2021 and 2022, the UK government spent £379 billion on public sector procurement, which includes private sector spending through tenders and purchases from other public sector bodies.
The biggest sector for procurement spending was healthcare, followed by economic affairs and social protection.
However, every government department, as well as local government and other governmental bodies, submits individual tender notices for public sector projects.
From technology to agriculture and construction, there are public sector tendering opportunities for every type of industry and company.
Where Do You Find UK Public Sector Contracts?
The official UK government portal for finding government contracts is Contracts Finder. Here, you’ll find tender notices for most government projects worth more than £12,000.
Higher value contracts are usually placed on Find a Tender. These could range in value from £150,000 to billions of pounds.
The devolved nations each have their own tender portals: Public Contracts Scotland, Sell2Wales, and eSourcing NI/eTenders NI. UK businesses can also apply for public sector contracts in the EU, the main portal for which is TED.
However, there are issues with these portals. For example, just 40% of available government tenders can be found on Contracts Finder, the ‘official’ portal for UK government work. The remaining 60% may not pass the threshold for publication on Contracts Finder, leaving companies to sift through departmental websites and local government portals. As a result, many businesses are missing out on public sector tendering opportunities that are perfect for them.
On Contract Finder Pro, you’ll find all available public sector tenders in one place, saving you valuable time and effort.
What’s the Difference Between a PIN and a Contract Notice?
As you browse tender opportunities, you’ll find that some tender notices are described as PINs – Prior Information Notices. But what does this mean?
A Prior Information Notice lets private sector companies know that the buyer will be launching a tender soon. At this point, any companies interested in the project can officially express their interest.
There’s no specific timeframe for when a PIN is released relative to the official tender notice. However, the bidding process will usually begin within a year of a PIN being released, if the buyer decides to go through with the tender after examining the market during the PIN stage.
PINs can be especially handy for seeing what the market looks like for tenders in your industry, as in many cases projects that require PINs may be too large for SMEs to bid on. But, you can use PINs to explore opportunities as a subcontractor – where you’ll pick up parts of a project from the successful tender winner.
Is a Framework the Same as a Tender?
Some government departments run framework agreements rather than single-project tenders, a good example being the Crown Commercial Service. A framework is a contractual agreement, usually between one buyer and multiple suppliers, that sets out the terms for future projects within the framework’s duration.
Once all the suppliers for the framework have been agreed upon, individual ‘call offs’ are published for public sector projects. Only companies that are on the framework will have the opportunity to secure these.
Consequently, winning a spot on a framework is a really lucrative way of picking up long-term work for your business.
How To Apply for Government Contracts
So, you’ve found a tender that looks ideal for your company. You’ve read the requirements, noted the deadline, and now you want to bid on it. But how do government contracts work?
To be in with a chance of landing a public sector contract, your company needs to submit a bid on the tender, which is essentially a technical sales pitch that answers strict questions set out in the tender document.
Your bid will demonstrate that your company is best placed to complete the project. You can use evidence like case studies, testimonials, and statistics as proof that you can deliver what is required.
Your tender response will also outline a potential budget and a summary of the products or services you’re proposing.
Government tenders are often evaluated by looking for the Most Economically Advantageous Tender; as in, the tender with the best value for money. Changes are coming, though: you might see future tenders evaluated according to Most Advantageous Tender rules, which gives a broader definition to ‘value for money’.
Your company will be notified in due course if your bid has been successful. If you win the tender, an award notice will be published notifying the wider industry that your company has received the tender. Unsuccessful suppliers may receive feedback on their bid to help with future tenders.
So there you have it – a basic rundown of exactly how government contracts work. Remember, you can find all the public sector tender opportunities available right now on Contracts Finder Pro – you might be surprised by what’s out there.