Bob Moodie NJM European, Economic & Management Consultants Limited

1. Selling to the Public Sector – helping Leicestershire SMEs unlock their potential Bob Moodie NJM European, Economic & Management Consultants Limited

2. What we will look at: • The Context & Opportunities • Understanding Procurement Processes • Finding tender opportunities • Developing a strategic approach • Becoming ‘Bid Ready’

3. Context: Policies • Coalition Government’s aspiration to award 25% of central contracts to SMEs • Leicestershire County Council’s Sustainable Commissioning & Procurement Strategy (2009-13) • % expenditure with SMEs • No. of local SMEs submitting Pre-Qualification Questionnaires to ESPO when expressing an interest in Council requirements • The Comprehensive Spending Review (2010) • SME Concordat • Equality of Access (SME & Third Sector) • EU Procurement Directives (OJEU) • UK Government strategy and statutory requirements • Local authority procedures, statutory requirements

4. Context: Economics • Extensive public sector budget cuts and spending pressures • Price & Value for Money (VfM) • Most Economically Advantageous Tender (MEAT) rather than Lowest Price • Collaborative buying by authorities – purchasing consortia • Rationalisation & Framework Agreements, Contract Bundling; • Reduction of public sector in house management overhead and increase in outsourcing NB Suppliers’ ability to deliver efficiency savings and effectiveness

5. Context: Economics • VfM is the optimum combination of cost, quality and fitness for purpose to meet the buyer’s requirements (it is not about the lowest price) • Local authorities are subject to the Best Value guidelines • Embraces the concept of the ‘price-quality’ relationship • Selection usually will be made on the most economically advantageous tender (MEAT)

6. Context: Society & Environment • Corporate Social Responsibility • Sustainability & Equality • Innovation & non contractual outcomes (Added Value) • Local Government Act 2000 – Wellbeing Powers • Leicestershire County Council’s Sustainable Commissioning & Procurement Strategy (2009-13) performance measures: • No. of contracts with a Total Value exceeding £1m that include a Social Clause • No. of high risk contracts where environmental considerations are included in the contract award (weighting 15% or more)

7. Context: Technology E-Procurement: Transition from paper based to electronic based systems and processes: • E-Portals • E-tendering • E-auctions • Iprocurement • Purchasing Cards (pCards) • Real time reporting • Payment and Servicing

8. 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 • Schools Other: • NHS (subject to major review • Housing Associations / RSLs • The Emergency Services

9. Opportunities • UK Public procurement is 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. Over the next three to four years, to 2012-13, the Council will need to make savings of around £70m - that’s 25% of its budget. • 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.

10. Leicestershire County Council Procurement Expenditure (2008-09)

11. Opportunities • Policies to encourage SME involvement and a more level playing field • Better transparency and simplified procurement processes • Equal treatment and fair competition • Open markets & better access to information NB: • Procedures can be complex, time consuming and open access creates more competition • Adopt a strategic approach • Willingness to be involve

12. Opportunities: SMEs • Brings greater competition • Lower cost base • Innovation • Responsiveness • Flexibility • Quality of service • Specialists • Customer focus • Local Knowledge Bear this in mind when you are developing your USP for a particular contract!

13. Public Procurement: Demystifying the Process

14. Procurement Procedures: The formality of the procedures and process increases in line with the contract value and risk. Lower value contracts • Advertising not essential • Officer discretion • Approved supplier lists • Verbal and Written Quotes common or tender process • Easiest to compete and win – harder to find Higher value contracts • Advertised • Formal Tender process only • Essential above EU Thresholds • Framework agreements • Easiest to find – harder to win

15. Procedures – Example Each organisation has its own published procurement policy, procedures, processes and contract value thresholds in place. For example.........

16. Local Procedures

17. Procedures Common Procurement Procedures: • OPEN - One Stage Process • Each applicant submits a full priced tender • RESTRICTED – Two Stage Process • i) Pre Qualification Questionnaire (PQQ) to select shortlist of potential suppliers • ii) Invitation to Tender (ITT) to shortlisted potential suppliers –full priced tender required

18. Procedures • FRAMEWORK – Two Stages or More • Suppliers selected through an open / restricted procedure to a ‘panel’ of suppliers for given period • Call offs or mini competitions may be held when services / goods required Less common: • NEGOTIATED - Two Stages • Very complex, high value • Tender specification not clear – supplier input required • COMPETITIVE – Two Stages • Tender specification requires development – dialogue with supplier

19. Procedures Pre Qualification Questionnaire (PQQ): • Evaluation of organisation • Are you safe and appropriate choice? • Compliance • Past performance / track record • Selection criteria Invitation to Tender Stage (ITT): • Evaluation of bids • Your service / product / works offer • Future performance • Award criteria

20. Procurement Process Overview Procure Contract Notice EOI PQQ Tender Commission Manage Evaluate Review Award

21. PQQ Information General Business Information • Business Details • Status (Sole contractor / consortium) • Ownership • Business Probity • Professional Conduct Documentation required may include: • Company History • HR Information • Administrative Information (Company Registration/VAT Number) • Quality Standards Accreditation / Certificates

22. PQQ Information Financial & Insurance Information: • Turnover • Accounts • Insurance Documentation Required may include: • Audited accounts, Management accounts, Parent company accounts • Bankers statements & references • Financial projections, including cashflow forecasts • Details of previous contracts and values • Capital availability • Certification of Incorporation, Certificate of Name Change • Insurance Certificates

23. PQQ Information Business Activities, Track Record, References • Business Activities • HR Information (FTEs / Training Records / CVs) • Referee Contact Details for recent contracts • Relevant Contract Performance • Subcontractors • Capability Statements • Case Studies • References (norm = 3 recent referees)

24. PQQ Information Essential Policies: • Quality Management • Equality & Diversity • Health & Safety • Environment Management & Sustainability Others Policies: • Business Ethics • Corporate Social Responsibility • Business Continuity • Sub Contracting PQQ may require you to supply : specific responses, outline of strategy, copy of statements, copy of certifications etc

25. PQQ Evaluation PQQ will be evaluated to select potential suppliers to invite to tender. Based on: • Business Probity • Technical Capability and Capacity • Financial Information • Contract Compliance • Policy Conformity NB: Evaluation includes: • Pass / Fail criteria • Financial risk based assessment • Criteria have different scores with weightings

26. Example Scoring Framework

27. ITT Information • If you are shortlisted from the PQQ or for the Open Tender procedure • Invitation to Tender documents will normally identify the information required and how to structure your response. • The areas covered are usually as follows: • What are you going to do • How are you going to do it • How much will it cost • Who is going to do it • What is your track record / prior experience • Compliance • References

28. ITT Information Invitation to Tender (ITT) pack will include: • Instructions to Tenderers • The Specification • Form of Tender • Draft Contract Terms and Conditions • Declarations / Bona Fide • Pricing Schedule

29. Costing the Proposal • Personnel & Tasks • Charging Rate(s) (Daily/Hourly) & Time • Fixed Cost / Variable Cost • Expenses & Disbursements • Contingency • VAT • Innovative Cost Proposals • Discounted Cost e.g. 5% early payment, economies of scale and efficiency savings linked to contract term and/or number of contracts (Lots) awarded • Buyer comfort: Offer 10% Contract Price Withheld until completion

30. Adopt a Strategic Approach: Tactics • Before you start: is the tender opportunity right for your organisation? (To Bid or Not To Bid?) • Download / print off ALL PQQ / tender documents and read them carefully: • Is the specification relevant to your business activities? • Do you have a track record in the area? • What % of turnover does the contract represent – 20% rule? • What are the risks, who are your competitors and what is the % chance of success? • Is there an incumbent? • Can you answer each question with the information required? • Do you have the supporting documentation in place for compliance? • Can you make commercial sense of the contract price? • Do you have the in-house resources to deliver – do you need partners / subcontractors? • Do you have the time / resources to prepare the bid by the deadline?

31. Adopt a Strategic Approach: Key Points • Address each element of the tender specification and structure your response accordingly • Do not cut and paste from previous bids • Be specific in your response – do not provide generic information • Understand what the buyer requires – show how your solution goes the ‘extra mile’ • Respond to the questions with relevant evidence and / or provide appropriate examples e.g. Case studies • Use diagrams, illustrations, graphics • Realistically price your offer and use any financial model provided • Review the drafts against the criteria, scores , weightings and revise • Proof read and check any figures / costings • Aim for clarity, brevity, readability and persuasion

32. Adopt a Strategic Approach: Key Points • Review the evaluation criteria, scores and weighting (this should influence time / effort spent on each criterion response) • Beware of yes / no, pass / fail criteria • References – recent and relevant • Use tender envelope / label if provided • Ensure the submission is complete AND signed • Include copies of requested documentation e.g. Insurance certificates, accounts, policies etc • Respond by the correct format, date + time (electronic, electronic + post, post?)

33. Tender Preparation: Key Steps • Appoint a bid manager / individual and team of key people • Meeting(s) with tender team for detailed review and interpretation of tender requirements & criteria (including scores & weightings). • Prepare work plan & allocation of roles/tasks/milestones with reference to tender & submission deadline. • NB: Build in time to review, refine and style bid • Determine whether you require clarification of any aspect of the tender and ask the question(s) allowing enough time for a response. Check regularly to see if any questions/answers have been submitted by competitors. • Conduct regular reviews of the draft tender • Conduct a mock assessment against the scoring matrix • Ensure you have enough time for signing and submission • Post submission ask for feedback

34. Finding Opportunities • Where should you look / who should you know?

35. Contract Notices

36. Finding Opportunities: e-portals • Identify a number of key tender websites • Familiarise yourself with the website format and content • Register and or publish company details • Set up for Alerts service, newsletters etc • Appoint key individual(s) to monitor regularly for new contract opportunities • Apply filters to your search words (decide which opportunities to focus on)

37. Buyer Requirements • Main evaluation criterion: ‘Most Economically Advantageous Tender • Understanding buyer’s needs • Combining price with quality and other relevant factors • Value for money • Acceptable level of risk • Efficiency • Improvement in performance or cost savings • Meeting department and organisation’s objectives • Reliability, consistency • Contract management • Inspection and audit

38. Buyer Preferences

39. Buyer Preferences

40. Get Bid Ready: Preparing the Documents • Make note of instructions, word limits and submission format • Try to understand what each question is asking and why they are being asked. Be compliant! • Note the scoring / weighting of criteria and spend time / effort on your response accordingly • Make careful note of the deadline and make sure you submit well in advance of the deadline (avoid last minute submissions) • Anything you are not sure of, contact the buyer (but be aware that any question you ask will be notified to other suppliers) • Answer all questions honestly and be keen and positive in your responses (emphasise your USP). • Double check your response / second pair of eyes • Ensure you complete and submit all the documents required • If unsuccessful (or successful) ask for a debrief

41. Get Bid Ready: Action Plan • Register AND publish on e-portals • Set up internal processes and identify individual(s) to monitor tender portals, sources, alerts • Identify and network with your local public sector buyer targets (at departmental / procurement level) • Attend meet the buyer events / tender briefings • Develop a Tender Resource Pack (e.g. Company & financial information, case studies, references etc) • Establish a working group for tender preparation • Search for potential partners / subcontractors • Strengthen your technical capacity, infrastructure, bid skills • Develop, improve your policies • Consider accreditation (e.g. CHAS, ISO, IiP etc) • Review unsuccessful bids • Act strategically – know when to bid and when not to bid!

42. Be...

43. Further one to one support: • bob@njm.co.uk • vicky@njm.co.uk • 0191 284 4949