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

1. Selling to the Public Sector – helping Leicestershire SMEs unlock their potential Bob Moodie & Vicky Byers NJM European, Economic & Management Consultants Ltd Public Sector Contracts: Collaboration, Subcontracting & Policy Compliance

2. Public Sector Contract Opportunities: Collaboration & Subcontracting The Key Themes in Today’s Workshop • The Procurement Context • Identifying opportunities • Collaborating and Subcontracting • Articulating policies

3. A New Procurement Environment

4. EU Procurement Thresholds

5. Procurement Procedure

6. Opportunity Identification Who?

7. 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.

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. Local Procedures

10. 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

11. Opportunity Identification Where?

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

13. Contract Notices

14. 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)

15. 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

16. A Strategic Approach Identifying Opportunities & Raising Your Profile

17. 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

18. Collaborating or Subcontracting: Be Systematic & Get Organised • 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

19. A Strategic Approach To bid or not to bid?

20. 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?

21. 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?

22. Strategic Decision Making 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

23. Collaborative Bidding

24. 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

25. 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

26. Collaborative Bidding: Benefits • 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...

27. 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)

28. Collaborative Bidding: Challenges • 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)

29. Choosing the Right Partner

30. 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?

31. Choosing the right partner • 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)?

32. Preparing a Collaborative Proposal

33. 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

34. Preparing a collaborative proposal • 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?

35. Working as a Sub-contractor

36. 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

37. 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

38. 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

39. Subcontracting: Disadvantages • 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)?

40. 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

41. Policies

42. 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?

43. 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

44. ♪♫♪ Accentuate the Positive ♪♫♪ 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)”

45. ♪♫♪ 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)”

46. 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?

47. Risk: What is your Approach

48. 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

49. Tender Sources www.espo.org www.sourceleicestershire.co.uk www.sourcenottinghamshire.co.uk www.sourcenorthamptonshire.co.uk www.sourcelincolnshire.co.uk www.sourcederbyshire.co.uk www.CompeteFor.com www.supply2.gov.uk www.tenders.ac.uk www.in-tend.co.uk www.supply2health.nhs.uk www.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.uk www.bluelight.gov.uk www.cbconline.org.uk www.contraxonline.com www.publictenders.net/tenders/region/east-midlands www.dh.gov.uk/ProcurementAndProposals/fs/en www.publicprocurement.co.uk www.buyingsolutions.gov.uk www.skillsfundingagency.bravosolution.co.uk

50. For one to one support contact: • Email: bob@njm.co.uk or vicky@njm.co.uk • Tel: 0191 284 4949