Getting your teeth into the UK local authority market
When targeting the UK public sector, it can pay to think local. For one thing, the numbers are very seductive. In 2005-06, English and Welsh local authorities spent some £83bn on local services, accounting for 26 per cent of public expenditure. Major cities like Birmingham, Manchester and London currently spend in the region of £3bn a year on council services, while a fairly typical county council like Suffolk estimates that it will spend around £350m this year. Once you look at it in that way, it’s easy to understand why businesses are eager to pitch to the public sector.
And then there’s the fact that in a time of economic uncertainty and instability, you can usually bet on government, and that includes local government, to be a reliable customer. The public demand for services is a bit more recession-proof than other markets and local authorities tend to have a good record when it comes to paying on time. Yet the myths persist. In some quarters, there is the feeling that the Irish, and Irish SMEs in particular, might be unwelcome.
Not so, says Andy Haigh, a consultant and founder of Sixfold, a UK-based business consultancy company, which has worked closely with Enterprise Ireland. "There are a lot of Irish companies with really innovative leading products and services, and they are not exploiting the UK public sector as well as they might because they are frightened of getting involved," says Haigh.
Haigh thinks that if these companies can work through the processes and interpret them sensitively - speak the language if you like - they can compete pretty much on an equal footing. In fact, they can even get advantage from the fact that they are not from the UK; an Irish SME will have no baggage and can cut a dash as a fresh and innovative face, in contrast to the staid and familiar 'usual suspects'.
Winning Business
But how do you set about getting the business? Talk to any UK local government procurement specialist and they will tell you that you must do some basic homework. It’s easily overlooked, but you must understand the different roles played by county councils and unitary, borough and district councils. Make sure you know which tier is responsible for which services, if you want to avoid wasting time and appearing ill-informed.
That done, you can get to grips with the nitty-gritty of the tendering and procurement process. UK local authorities all have their own tendering procedures, but there is a lot of overlap and similarity, and the great thing about the internet is that they all post up selling guides on their websites. One of the first tasks for any small business on a mission to find new local authority customers must be to surf around on the relevant local authority websites and dig for information.
A key part of the information that businesses need is the various financial thresholds and the different criteria required to apply for them. An understanding of the various thresholds can enable a small business to carefully tailor its strategy. In general terms, the thresholds vary between each local authority. However, under EU regulations, all contracts for goods and services valued at over £139,893 and all contracts for works valued at more than £3,497,313, must be advertised and tendered for according to a specified procedure. The main way of finding out about these large contracts is through the Official Journal of the EU (OJEU). All businesses aiming to get business from local government should bookmark the OJEU website, www.ojec.com as well as www.tendermatch.com.
Embarking on tendering for business at this level is entirely possible, given the right advice and the right product or service, but successful bids will require a lot of legwork. A more gradual approach. which may be appropriate for some companies is to explore the lower threshold levels (see www.supply2.gov), where work of much lower values can be tendered, in some cases without the need for local authorities to gather many quotes or to advertise. This can give any SME keen to test the waters the chance to compete on a lower level and build up experience and trust.
An alternative is to enlist the services of Enterprise Ireland, which can put Irish businesses in touch with UK companies that offer lead generation services. Gavin McWhirter, a Senior Market Advisor for Enterprise Ireland’s London office, says that using what is in effect an outsourced sales company can be a good way of dipping a toe into the UK market place for a much lower cost: “It means a far lower risk for the company than trying to initiate a recruitment process and they’ll probably be getting better results more quickly.”
Tips for success
Whichever route you take, it’s important to make sure that you apply for contracts which are a good fit for your business’s resources and capabilities; be absolutely confident that you can deliver what you are bidding for. As a rough rule of thumb, Andy Haigh says that no matter how good you are, if the value of the contract is more than 25 per cent of your annual turnover, you are just going to be too much of risk.
As for the practicalities, Haigh advises businesses to challenge if they think a procurement document is inaccurate or biased – it’s the only way to avoid problems further down the line. Another common problem, says Haigh, is that a local authority will use its own specialists to scrutinise products and services and businesses can find this extremely stressful. So-called soft skills are therefore vital to build a good relationship with the local authority specialists and get them on your side.
Documentation is vital in all of this. Ian Stewart, Strategic Procurement Officer at Cambridgeshire County Council, points out that a business must not assume that a local authority knows all about them and their capabilities: “We can only evaluate objectively on the information in front of us,” says Stewart. And, as tendering criteria are weighted, make sure that your pitch is similarly weighted; frustrating as it may be, give them what they want and no more.
Next, no matter how small your business, make sure that you have policies that meet a local authority’s requirements in terms of equal opportunities legislation, health and safety and environmental policy. Local authorities will want to be assured that you are running a well-organised and professional business. Ken May, Director of ESPO, says that he has at times been staggered by the incompetence of businesses which have included emails from MDs telling staff to download a policy from the internet as part of their bid documentation. Incredible, but true, says May.
Ken May adds it’s also a good idea to see what a local authority will find out about your company if it does a credit check through Experian or Dun and Bradstreet. You don’t want any nasty surprises and if you check first, any anomalies or inaccuracies can be dealt with before they become a costly problem.
Beyond the practicalities though, one particular tough question needs to be addressed. Are Irish businesses really welcome in the UK, or have the local players got it all stitched up? Andy Haigh thinks some Irish companies misjudge the dynamics and think that they can simply apply the same approaches that would work in Ireland. But the scale of things in the UK is different and so are the networks. To penetrate them, says Haigh, you need to get to the relevant conferences, network with local authorities and the local Chamber of Commerce (soon to have their own website with tendering opportunities) and perhaps employ a consultant who knows how things work in this market.
And for those who harbour a suspicion that it’s all about undercutting the competition, Ken May offers this insight; "When I first joined local government, I thought they put the quotations in front of them and picked the lowest price. It’s not true, value for money is far more important than price. That’s a private sector misconception, but it’s not true and never has been."
The truth is that in a much more interconnected and open world, UK local authorities give every impression of bending over backwards to encourage business from wherever it may come in the quest to get value for money.”
