The UK Public Sector Market and SMEs

The UK public sector is a massive market, spending nearly £300 billion on goods and services from suppliers, including everything from medical equipment, roads and street signs, blackboards and schoolbooks, aircraft and tanks, services and consulting, and all types of social care.

It is commonly assumed that only large suppliers can bid on this work. For the last decade, there has been a push for procuring Public Sector organisations to award contracts to Small and Medium Enterprises (SMEs), with the government aiming to spend at least £1 for every £3 in this manner. Procurement professionals are working on new ways to open their market to smaller businesses in order to achieve better value.

Small and medium-sized enterprises (SMEs) are needed to diversify and innovate the government's supply base, as they are often able to move at a faster pace and be more flexible in delivering requirements than their larger counterparts.

What and Who are the Public Sector?

The Public Sector consists of a variety of organisations that buy using the “public purse”

• Central Government – Departments and their Agencies such as:

o   Department of Environment, Food & Rural Affairs

o   Department of Works and Pensions

o   Treasury Department

o   HMRC

o   And many more

• NHS – Integrated Care Systems (ICS), Hospitals Trusts, Clinical Commissioning Groups (CCGs), Primary Care GP Surgeries, and all other state-funded health organisations.
  
  
• Higher and Further Education – Universities and Colleges. University Purchasing Consortia such as the SUPC and others.
  
  
• Schools – Local Authority, Nurseries, Primary and Secondary Schools.
  
  
• Local Government – Local Authorities and Councils, Police, Fire, and other Local Authority Services.
  
  
• Community Interest Companies (CICs), Care Homes, Housing Associations, Health and Social Care organisations, and services.
  
  
• Ministry of Defence. Army, Navy, and Royal Air Force.
  
  
• Purchasing consortia (Eastern Shires Purchasing Organisation, Yorkshire Purchasing Organisation, etc.) 

Why Sell to the Public Sector?

What makes the Public Sector attractive to sell to?

•       Stability. Organisations will usually produce a business case to justify going to market and the expected expenditure. This offers stability as the spend has been approved and authorised. 

•       Contracts. To make a tender worthwhile and give Value for Money (VFM) an organisation will often let a contract for several years, sometimes as high as five years but increasingly for much bigger tenders as much as ten years.

·       Cashflow. Public Sector organisations are required by law and must pay their invoices with 30 days of receipt.

·       Fair Competition. Organizations must follow a clear and competitive Public Contracts Regulations process that makes bidding fair for all. All bidding suppliers must have the same opportunity to win a tender. Bidding Suppliers have the legal right to their score as well as feedback and an understanding of how close they are to the competition.

·      Transparency – Public organisations have strict guidelines surrounding fairness and transparency. All bids must be evaluated to the same published criteria irrespective of who the supplier is.

·      Reputation – Public Sector contracts are sometimes used as case studies and open suppliers up to other buying organisations within that market.

EB0001