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SMEs must take a strategic approach to winning their share of government contracts

Posted on 10/04/2014 by Jon Milton in Category Local authorities
There has been a lot of debate around the recent news that the UK tendering system takes 53 days longer than the EU average, making the UK the third slowest country in awarding contracts to SMEs. In fact I was invited to write a number of articles on the subject including for Talk Business Magazine and the International Business Times.

Despite the government initiative to award 25 per cent of central government business to SMEs by 2015, it is well known that many SMEs remain dubious about their prospects of securing their share of government contracts. With many alluding to the fact they still cannot compete against major suppliers.

However I believe SMEs can actually have the edge over their larger counterparts. In particular SMEs can provide specialist skills that larger organisations might lack, as well as providing larger corporates with numerous economic and environmental benefits which can only be gained from using smaller, local business. In my opinion SMEs can still win their fair share of public sector contracts, but in order to do this they must take a more strategic approach to their relationships with major contractors. SMEs should look for opportunities to act as tier one or two sub-contractors to a prime supplier, or vendor neutral managed service provider.

Acting as a tier two or three provider has numerous benefits to the SME. Government contracts are often large in size and can be difficult to implement. A major contractor would take care of this so the SME can focus primarily on delivering results. In turn, this will allow the SME to become more efficient as well as save time and money. Performing well as a supplier will also put the SME at an advantage should other opportunities arise.

However, to make the most of the opportunity, SMEs must also look internally and better equip their own business.

For starters, SMEs should talk to major contractors and understand how they operate. This will help the SME restructure their business and cost base to adapt to working with a major contractor.

SMEs also need to be ready to demonstrate their capability to offer a unique, localised service with great flexibility. An ability to demonstrate these skills will be recognised and appreciated by large contractors.

Therefore, I believe there are already lots of opportunities for SMEs to work with major contractors and gain a greater share of government business. But, while the government’s commitment to awarding more business to SMEs is positive, to maximise the opportunity, SMEs must fully understand the marketplace in which they operate.​