Since 2017, the UK Government has been breaking up its larger IT contracts. Known as ‘contract disaggregation’, these smaller contracts are more manageable and more attractive to SMEs. It allows the Government to diversify their vendors, protect supply lines and give smaller businesses a chance at lucrative contracts.
Today, G-Cloud, the Government’s online store of approved technology providers, has over 2,000 IT suppliers - the vast majority of which are SMEs. This means an increasing number of opportunities for IT and tech companies who can benefit from securing government IT contracts.
With the ‘Transforming Public Procurement’ green paper advising big reforms to public procurement, now is the time for innovative IT companies to make the most of government contracts.
The Opportunities for SMEs
There had been several concerns about big contracts, mainly issues about their value for money if stretched out over five to ten years, the relative risk of single-vendor contracts and the lack of freedom given to public sector buyers in contracts like these. Disaggregation was, therefore, seen as a solution to those problems.
Before 2017, big IT firms made huge deals, such as the £844 million worth of contracts awarded to the Canadian IT services provider CGI. Nowadays, due to disaggregation and expiry dates, there are potentially big opportunities for a wider range of suppliers. For example, at the end of 2020, around £3 billion worth of public sector IT contracts were set to expire, according to a report by Tussell.
The report stated IT suppliers should engage with buyers as soon as possible to be in the best position to win renewals. But more on winning contracts later. Here’s how to find them.
Finding IT Contracts
Finding IT contracts involves knowledge of where and how to look. There are a number of online services IT and tech organisations can utilise when looking for government IT contracts, such as:
However, The Digital Marketplace is the best online service for IT companies when looking for IT or tech-based government contracts.
The Digital Marketplace
This online service allows you to provide technology, people or user research services to the public sector. This is done by applying for a ‘framework agreement’, which covers various service offerings. For example:
- G-Cloud Framework: For supplying cloud hosting services, software and support.
- Digital Outcomes and Specialists Framework: For providing people to work on digital projects or user research services.
These framework agreements usually last for four years. If your application to one of these frameworks is successful, you can begin to sell goods and services on the Digital Marketplace.
If you’re a localised SME, you can also search for IT-specific contracts advertised by your local council. You can read more about how to find government contracts in our blog here.
Winning IT Contracts
Some SMEs are still under the impression that there are significant barriers regarding pursuing public sector IT contracts. While winning IT contracts is no walk in the park, it isn't impossible and is much easier than it used to be.
No longer do big firms have the same kind of monopolies in these markets. IT service providers willing to go the extra mile and network well will position themselves where winning IT contracts is possible.
Additionally, there are a few things IT service providers have to remember. Disaggregation allows government buyers to pursue a multi-vendor approach, which potentially increases competition. Similarly, with larger freedom to choose, SMEs must be more agile and more innovative to really set themselves apart from the competition.
However, many IT companies will be open to partnership in order to secure contracts that require different services that two or more organisations would be able to provide. Sometimes, partnerships like this can be incredibly advantageous.
SMEs can deliver significant value and unique skillsets, which they should leverage as they approach contracts. If the UK Government is looking for multi-vendor contracts, it may be worth focusing on the single service offering and top-quality service improvements that no one else offers.
So how can IT service providers and SMEs win IT contracts? There are many general rules any business can follow when it comes to winning public sector contracts. However, some specifically apply to the IT industry.
IT service providers should consider the following:
Register on the Digital Marketplace
Registering on the Digital Marketplace shows you’re pre-approved to deliver IT contracts to public sector organisations. It helps speed up the procurement process, avoiding that early red tape.
Demonstrate Your Social Value
When Carillion collapsed, the UK Government decided to introduce looking for social value within tender responses. To win contracts, businesses will have to demonstrate their positive impact on society. This move actually represents a 10% weighting in tender response evaluations, meaning it can be the difference between winning and losing a contract.
In a press release, it was written:
The new approach will apply tests that all bidders, irrespective of their size and type, will be capable of meeting and therefore further levels the playing field for the UK’s small businesses, start-ups and voluntary and community sector organisations and social enterprises.
For IT companies, this might mean implementing new systems for healthcare or social housing programmes that increase the ability of those programmes to do good in a local community.
Be Helpful and Supportive - Even Before You’ve Won a Contract
Those IT companies that engage public sector organisations before bidding and offer help and advice will be held in higher regard than those who don’t. Public sector buyers are looking for organisations that can provide the right help and support for levelling up their communities but also keeping them up-to-date with technology.
While procurement teams are looking at tapping into the latest trends and technologies, they’re not always IT-savvy. The public sector is notorious for relying on siloed and outdated technology, so to find a supplier who can give them insight into building a better digital infrastructure is a big win for them.
This kind of support should always be offered before you’ve been invited to tender to show you’re serious about providing help and truly know your stuff. Markets are more volatile than ever and the public sector faces a more demanding environment than ever. These organisations want suppliers who can provide more than just what’s written on the contract.
Public sector procurement is an increasingly lucrative opportunity for businesses - the key is knowing how to discover contracts and make connections. To do so, attend our virtual summit, the Public Sector Show 2021.
The Public Procurement Playbook
Want to learn more about the public sector procurement process and win more public sector business? Download the Public Procurement Playbook.
Topics Covered Include:
- Public Procurement Trends & Stats
- How to Target and Find Contracts
- Improving Sales Potential & Outreach Tips
- Tips for Winning Contracts
- Managing the Bid Process
- Links to Other Useful Resources