Bob Moodie & Vicky Byers NJM European, Economic & Management Consultants Ltd

Selling to the Public Sector – helping Leicestershire SMEs unlock their potential

Public Sector Contracts: Collaboration, Subcontracting &

Policy Compliance

Public Sector Contract Opportunities: Collaboration & Subcontracting

The Key Themes in Today’s Workshop The Procurement Context Identifying opportunities Collaborating and Subcontracting Articulating policies

A New Procurement EnvironmentPolicy/Legal Economic/Financial

EU Competition Policy (Procurement)

Coalition Govt. / Local Govt.(Transparency – Invoices £500+)

Coalition Govt’s aspiration to award 25% of central Govt. contracts to SMEs

Leicestershire County Council’s Sustainable Commissioning & Procurement Strategy (2009-13)

Price & Value for Money (VFM) & M.E.A.T.

Comprehensive Spending Review

Rationalisation & Framework Agreements

Contract Bundling (Economy of Supply) Ability to deliver economies and efficiency savings

Social Technological

Corporate Social Responsibility

Sustainability, Equality & Diversity

Innovation & non contractual outcomes

E-Portals

E-tendering & E-auctions

Real time reporting

EU Procurement Thresholds Supplies Services Works

Central Government plus some ‘Quangos’ (see Schedule 1 List)

€125,000

(£101,323)

€125,000

(£101,323)

€4,845,000

(£3,927,260)

Other Public Sector e.g. Local Authorities, Universities, FE, etc

€193,000

(£156,442)

€193,000

(£156,442)

€4,845,000

(£3,927,260)

Thresholds relate to Total Contract Values (including any extension options), are applicable from 1st of January 2010 and are NET of VAT

Principles: Open competition, non-discrimination, equal treatment and transparency.

Note: Exchange Rates

Procurement ProcedureProcedure Characteristics When the procedure is adopted

Open All qualified applicants must be given the opportunity to bid

For lower risk procurement where supplier capability is less important or where the focus is on price

Restricted Two stage process with facility to shortlist (PQQ + Tender)Most common

Where capability of supplier is key determining factor in the delivery of the contract, market response likely to be huge to allow short-listing

Negotiated Two stage process with facility to negotiate at second stage

Specification is not clear or some creative, artistic or expert input is required.

Competitive Dialogue

Two stage process with facility to enter into a dialogue with potential suppliers to consider potential solutions and refine specification before invitation to tender

Complex procurement where suppliers expertise has significant impact on the development of the specification

Framework Agreement

Call-Off or Mini competition amongst preferred suppliers(selected from open/restricted procedure)

Capability and Capacity is important and is generally a recurring/constant requirement (max 4 years; including extension options)

Who?Opportunity Identification

Context & Opportunity Public procurement, estimated at over £175 billion per annum

(13% of UK GDP).

Leicestershire County Council spends over £300 million each year on goods, works and services. From 2011-12 to 2014-15, the Council will need to make savings of around £82m, including £22m from commissioning and procurement.

Leicester City Council estimated procurement budget for the Authority is £260 million p.a. (2007-2008).

NHS Leicestershire & Rutland Procurement Partnership influences spend of approximately £250 million on goods and services each year.

Opportunities: Public Sector 9 Local Authorities:

Leicestershire County Council Leicester City Council North West Leicestershire District Council Charnwood Borough Council Melton Borough Council Blaby District Council Harborough District Council Oadby & Wigston Borough Council Hinckley & Bosworth District Council

3 Universities: Leicester, Loughborough, De Montfort 7 FE colleges: Stephenson, Loughborough, Brooksby Melton, North

Warwickshire & Hinckley, South Leicestershire, Leicester, Loughborough University School of Art & Design

SchoolsOther: NHS (subject to major review) Housing Associations / RSLs The Emergency Services

Public Sector Organisation

Threshold (goods & supplies)

Procurement Process & Source

Leicestershire County Council

<£1k£1k – £20k>£20k - £100k

>£100k - EU threshold (£156,442)

1 Oral / Written Quote3 Written Quotes or www.sourceleicestershire.co.ukRequest for Quotation www.sourceleicestershire.co.uk

Formal Tender Process www.sourceleicestershire.co.ukOr www.espo.org

Leicester City Council < £10k£10k - £49k

£50K - EU threshold (£156,442)

Up to £250k (works only)

Oral / Written Quotes (officer discretion)3 Written Quotes or Formal Tender Process (officer discretion)

www.sourceleicestershire.co.uk or www.espo.org

www.exorgroup.co.uk/supplier

University of Leicester £5k - £25k>£25k – EU threshold(£156,442)

3 Oral / Written QuotesFormal Tender via departments or www.in-tend.co.uk

Local Procedures

Opportunities for consortia

Private Sector Opportunities Third Sector Opportunities Increasingly public sector contracts

are being won by large Prime contractors in the areas of Construction ICT Recruitment

Sometimes a prime contractor may commit to using local SMEs to ‘sweeten’ their offer

A consortium of SMEs may be able to create a critical mass and compete with larger companies

Large companies and charities are winning public sector contracts in the areas of Healthcare Social Care Education

SMEs and smaller charities/social enterprises may be contracted to deliver parts thereof

Local Authorities are encouraging smaller charities to collaborate and form consortia to deliver services

Where?Opportunity Identification

Finding Opportunities Where should you look / who should you know?

PUBLISHED UNPUBLISHED SOURCESTender websites & Supplier portals

Networking / relationship building

Organisational / Sector websites Procurement Teams / Category Managers

Tenders Electronic Daily (TED) Operational departments and units

Local / National press / Press releases

Market analysis / competitor intelligence

Trade Press Partners / sub contractors

Meet the buyer events / briefings

Second / Third Tier Contractors / Supply chains

Contract NoticesKEY TENDER WEBSITES

Name: Source: Used by:

Source Leicestershire www.sourceleicestershire.co.uk LAs, NHS in Leicestershire

Eastern Shires Purchasing Organisation

www.espo.org LAs, NHS in Leicestershire, OJEU tenders

Leicestershire County & Rutland NHS

http://www.lcr.nhs.uk NHS

In-Tend www.in-tend.co.uk Universities, Colleges, Schools, LAs (some in Leicestershire and nationally)

Blue Light www.blpd.gov.uk Police, Fire & Rescue Services (including Leicestershire Constabulary & across UK)

Supply to Government www.supply2.gov.ukwww.supply2health.nhs.uk

Lower value government tenders (*website will be replaced by ‘Contracts Finder’ March 2011)

OJEU www.ted.europa.eu Any public sector contract above EU Threshold

Identifying Collaborative/Subcontract

Opportunities Who presently holds the contracts in your target area? Who’s won contract/expanding (Contract Awards) and business

press Who is contracting/Who is buying? What contracts are likely to come forward? Anticipating new requirements? e.g. NHS reorganisation Who are the key contacts? LA Outsourcing Flagship projects (e.g. Olympics, Crossrail)

A new and critical source of intelligence

As part of Coalition Government commitment to transparency in public expenditure (as of February 2011) every Local Authority must publish details of invoices of £500+

Information can be used to identify competitors and/or potential collaborators/subcontract opportunities

Identifying Opportunities & Raising Your Profile

A Strategic Approach

Collaborating or Subcontracting: Be Systematic & Get Organised What is your target market? Who are your competitors and potential business

partners? In your target market who are the key buyers (personnel

at Department level and Procurement Officers) - engage procurement personnel and seed ideas

Find out about approved (accredited) supplier lists/framework agreements

Register and publish on tender e-portals Set up internal processes and individual(s) to monitor

tender portals, alerts, sources and review feedback Networking - meet the buyer events, business/sector

networking e.g. Chamber of Commerce

Collaborating or Subcontracting: Be Systematic & Get Organised

To bid or not to bid?A Strategic Approach

Strategic Decision Making

Is the tender a good fit in relation to your company’s activities?

Can you meet the eligibility criteria (technical qualifications, policy compliance e.g. Quality Assurance, Insurance) ?

Do you have a good track record in relation to the opportunity?

Do you have the trading history (e.g. 2 years Accounts)? Do you have the capability and capacity to deliver the

contract if successful? Can you make sense of the budget and can you deliver the

contract on time?

Strategic Decision Making

What are the risks? Who are your competitors? What percentage of your turnover does the contract

represent? Do you need a partner(s) or will you use subcontractors? Does tender permit consortia/subcontractor response?

Are there special requirements e.g. limitations on subcontracting, legal framework, etc?

Solo or Collaborative Bidding? Form a consortium if:

You don’t have the capability or capacity You can’t meet the 20% rule

Options: Consortium

Joint Bidding Lead Contractor & Subcontractor

Legal basics – will you be jointly and severally liable? Memorandum of understanding (MoU) / Partnership agreement /

(Non Disclosure agreement (NDA); Agreement not to compete in other tender)

Service level agreement (SLA)/contract NB consortium should be properly constructed, led and managed

Strategic Decision Making

Collaborative Bidding

What is Collaboration?

Informal Formal Recognition of mutual

interest Trust (founded on

relationships between key individuals)

Informal Agreement Networking & Referrals Mutual subcontracting

Legally defined Consortium (increasingly required by LAs)

Joint venture Partnership / Merger Vertical Integration

Collaborative Bidding: Benefits

Increase capacity and scope to bid without stretching resources

Overcoming PQQ impediments i.e. a shared trade history may overcome some problems (accounting history and 20% rule)

Combined strengths: capability (skills) , increased capacity and experience

Business Development: Access new clients and markets

Share development and delivery cost and dilute risk Getting input into your tender Mutual learning and innovative approaches Take out a competitor Improve chance of success Needs Must... A new landscape for the Third Sector...

Collaborative Bidding: Benefits

Collaborative Bidding: Challenges

Identifying a partner (Time + Effort) Engaging a partner (Risks) – floating the idea (informal

meeting) and formal meeting to negotiate and establish Agreement

Getting Agreement on roles, responsibilities Getting Agreement on liabilities (jointly and severally

liable) Trust relationship (how well do you know your partner –

can you be confident they can and will deliver)

Complex decision-making, loss of autonomy, compromises and concessions

Sharing sensitive information & ‘know how’ (protecting your IP?)

Logistics (preparing proposal, contract negotiation and contract delivery)

Buyer preferences (prefer 1 contractor) – risk averse Legal framework/document (Leicestershire County

Council)

Collaborative Bidding: Challenges

Choosing the Right Partner

Choosing the right partner

Do you already have an existing relationship e.g. Trust & Shared Values (important in Third Sector)?

Can they and are they likely to deliver? What is their reputation in the market? Who do they already work for/with? (comparable

client/service, etc) Are they financially secure? What Accreditations do they have?

Who would you be working with (individual expertise, experience, attitude and commitment)?

Could one opportunity form the basis for collaboration around other opportunities?

Would the PQQ present problems for them e.g. Director’s conduct, Trading History (Administration or Liquidation), Credit worthiness, Contract(s) terminated for default, Employment Tribunal (you may need to check)?

Choosing the right partner

Preparing a Collaborative Proposal

Preparing a collaborative proposal

Agree Objectives Client Requirement is mutually understood Designing a solution Roles and responsibilities in preparing the proposal

(potential headache) Milestones for preparation of proposal Who will lead proposal (legal implications/framework)? Project management, governance and communications Risk management

How will contract be managed and operated? (e.g. Partnership Agreement)

Who will contribute what and when to deliver contract requirements?

Is it clear who gets what? Balance of inputs? Are you the Senior or Junior Partner? Contract negotiation, client liaison and decision making?

Getting a seat at the table Dispute resolution? What if one partner defaults or the contract is terminated?

Preparing a collaborative proposal

Working as a Sub-contractor

Subcontracting: What is the Prime Contractor looking for? Specialist capability or capacity that can’t be found or is not available

‘in-house’ e.g. Niche expertise/experience Cost effective (Value for Money) – makes total price more competitive Quality & Reliability Local Knowledge (relationships) / Local Delivery (coverage) Improved capability and capacity Speed and flexibility Added Value Dilute risk

The right attitude and commitment

Subcontracting: Advantages

Minimal input into tender (no resource pressure during preparation of tender)

Extend your scope of contract opportunities which would otherwise be unavailable to you (particularly important for new and small companies going for larger contracts)

Diversify your customer base – new customers, new territories

Expand your portfolio of work and experience

Subcontracting: Disadvantages

No or minimum control of shape of tender offer No input into contract negotiations Potential cash flow difficulties Subverting/diluting your brand Lack of direct client liaison Loss of control in decision making

Are you named in bid or do you have formal (side) agreement detailing your role?

What are your rights if main contractor defaults or client determines to terminate the contract (liabilities and indemnities)?

Subcontracting: Disadvantages

Collaborating & Subcontracting: are you bid ready?

Skills , Experience & Track Record (business & key individuals) – case studies and CVs

Quality Assurance & Accreditation (Professional Standards) Business continuity (IT security) Health & Safety Equal Opportunities Environment & Sustainability Insurances Financial stability & probity Supply chain arrangements Project management systems and reporting

Policies

Health & Safety, Equality & Diversity & Environment Policies

Can you articulate the business benefits of these policies

as they may relate to the conduct of the contract?

Articulating your values & principles Health & Safety

No accidents, injuries or claims Minimises risk of disruption to delivery Good working environment (reduced levels of absenteeism and increased

productivity e.g. Minimising stress)

Equality & Diversity Staff retention, reduced levels of absenteeism, Enthusiastic and committed workforce Corporate Social Responsibility Values underpin contract delivery

Environment Reduced cost, overhead and contribution to Public Authority Commitment

to reducing carbon footprint

Do you have a Health & Safety Policy? Weak Answer: “Yes, see Appendix 1”Good Answer: “The Health & Safety of our staff and customers is a vital part of

the company’s quality process. We operate a comprehensive Health & Safety Policy (see Appendix 1) covering all aspects of our products (services) and operations and it is reviewed biannually.”

For an SME employing less than 5 people: “Although we are not required legally to have a Health & Safety Policy, we take this matter very seriously and have adopted a Health & Safety Policy in the interests of our staff and clients (see Appendix 1)”

♪♫♪ Accentuate the Positive ♪♫♪

What Quality Assurance arrangements does your company operate? If no accreditation is held please explain why not and what alternative steps you take to ensure quality at work?Weak Answer:

“We operate our own quality system. We have determined that formal accreditation is inappropriate to our company’s needs. Complaints are the responsibility of the Managing Director.”

Good Answer: “We regard quality as a vitally important part of our business activity

and we operate a comprehensive and strict internal quality assurance process covering all aspects of our business activity (details can be found in Appendix 2). We are committed to a process of continuous improvement and we are in the process of applying for ISO 9001 (we expect to be assessed in May of this year)”

♪♫♪ Accentuate the Positive ♪♫♪

Business Continuity

What is your Approach to Risk Management in terms of Business Continuity?

Do you have a formal Business Continuity Management Programme? If YES, enclose a copy of your plan/programme document

Within the last 3 years have there been any occasions when you business operation has been disrupted? If YES what were the circumstances and what was the effect upon your

customers? Do you have a strategy for ensuring continuity of supply from your

critical suppliers?

Risk: What is your ApproachRisk identified for:

Mitigation (i.e. what will you do)

Impact (High, Medium, Low)

Classification of risk:Reputation (R), Operation (O), Finance (F)

Client

Delivery

Supplier

Partner / Subcontractor

Some final thoughts Be clear about when to bid and not to bid Make early decisions about whether to go solo / consortium /

subcontractor Find out who will buy your products and services and start

building relationships early Find out who your competitors are with a view to developing

collaborative / subcontracting relationships Understand what the buyer is looking for and bespoke bid

accordingly (always answer the question asked!) In preparing bids recognise that nothing less than a professional

approach will suffice Remember you do not have to go it alone

Tender Sources

www.espo.orgwww.sourceleicestershire.co.ukwww.sourcenottinghamshire.co.ukwww.sourcenorthamptonshire.co.uk www.sourcelincolnshire.co.ukwww.sourcederbyshire.co.ukwww.CompeteFor.comwww.supply2.gov.ukwww.tenders.ac.ukwww.in-tend.co.ukwww.supply2health.nhs.ukwww.procurement.supplychain.nhs.uk

www.sid4health.nhs.uk www.construction-on-line.co.uk/www.delta-ets.com www.ted.europa.eu/www.exor.co.ukwww.bluelight.gov.ukwww.cbconline.org.ukwww.contraxonline.comwww.publictenders.net/tenders/region/east-

midlandswww.dh.gov.uk/ProcurementAndProposals/fs/enwww.publicprocurement.co.ukwww.buyingsolutions.gov.ukwww.skillsfundingagency.bravosolution.co.uk

For one to one support contact:

Email: bob@njm.co.uk or vicky@njm.co.uk

Tel: 0191 284 4949