John Fernau was previously commercial director at the Home Office and has now joined Sixfold International to help its clients win public sector contracts.
He draws on his experience to provide an insight into the way Whitehall engages with small business suppliers and shares advice on how to win work from national and local government. We quizzed him about his experiences and this is what we learned.
What did you learn about small businesses and public procurement during your time at the Home Office?
I learnt a lot about it! As well as being the commercial director I was also the Home Office’s SME champion so I was very heavily involved in setting out the direction for the department’s strategy for small business engagement. My strong view was that the only way to really increase SME spend was to make changes on the buy-side, rather than just having lots of SME market engagement which looks good but doesn’t deliver much. This meant that the Home Office’s SME strategy focussed on breaking down large ICT packages into smaller chunks which SMEs could contract for, mainly using the SME friendly GCloud framework where the Home Office is still the biggest user.
SME success is seen as excellent news by civil servants and ministers (including the prime minister) and they like to see new and innovative SME suppliers breaking through. Sometimes unfortunately the machinery of government can impede small businesses. My sense was that complex public tenders favour the big established firms as they already understand how government decisions are made and who makes them; and also they have dedicated bid teams who have developed strong techniques and know how to ‘play the game’.
I wanted to personally work to change this beyond what I could do as a civil servant, so I left the Home Office to set up Fernau Solutions and help to ‘level the playing field’ for SMEs and give them some of the understanding and bidding acumen that the established suppliers have.
What are the key things business owners need to bear in mind when pitching for public sector contracts?
There are a lot of things to consider: in strategic terms about which bodies within the public sector to aim for and in what order, through to tactical bid skills such as understanding what is important to the buyer (as shown in the evaluation weighting) and making sure your bid effort reflects this.
I think it is really important that businesses think hard about which areas of the public sector their offerings are most relevant and to target those public bodies. There is a balance here though, as although government is increasingly encouraged to buy ‘off the shelf’ solutions rather than bespoke ones, public sector bodies are parochial and smaller businesses must tailor their marketing and language to be specifically relevant to the those they are targeting.
Although small businesses want to grow and may want to present themselves as bigger and perhaps more credible operators, it is important that they play to their strengths. If you are a UK based SME, then say so very clearly. Small businesses are perceived as being flexible, disruptive, and innovative; and these are rare and required qualities in government, especially given the unprecedented efficiency challenges which will emerge over the next five years. Although public buyers can’t formally favour small suppliers why not take advantage of this positive perception?
What are the common mistakes small business owners make when pitching for public sector contracts?
Firstly, I think small businesses often decide not to bid for opportunities as their turnover doesn’t meet the minimum required. meaning they are too small. However especially in competitions for framework agreements, the turnover requirement is often excessive compared to the resulting contracts, meaning that smaller businesses could have delivered them. To meet the requirement on turnover, small businesses often forget that they can partner with, or sub-contract, other small businesses and count all of their attributes, including turnover, in their bid and the government likes to see this collaboration.
Successful bid technique is like good exam technique; you have to answer the question. Too often, bidders provide answers that are easy for them to put together, as perhaps they can recycle a response or policy, rather than submitting the right answer. Given their limited bid resources, it is vital that small businesses are disciplined and honest with themselves in making their bid/no bid decisions and preparing their bids. There is nothing to be gained in submitting a weak bid.
I think small businesses can also get a lot more out of debriefing sessions with government buyers. If a small business is unsuccessful in a tender I would recommend insisting on a debriefing meeting and clearly stating that this is about improving your next bid and certainly isn’t about disgruntlement or challenging the decision. This will help the buyer to open up and give a candid steer on how to bid better, and small businesses will find this feedback ‘from the horse’s mouth’ invaluable.
How can business owners who win government contracts ensure that they deliver on them and maintain a good relationship with their client so that they get more work?
This is really important as having gone through all the hurdles of winning a contract, small businesses need to deliver really strongly to build their reputation in government and capitalise on the effort they have made. However, I have seen even major multinationals come unstuck once they get into contract with government for the first time!
I think the most important thing to understand is the need to build confidence with your new client by setting out very realistic plans on how and when you will deliver. It is more important to government that you reliably keep your promises, than to aim for very quick delivery and fail. This requires self-discipline, as naturally small businesses will be keen to please their demanding new client.
The media loves a bad news story about the government and this drives the government to be very risk averse with its programmes. Ministers and officials need to believe that you will deliver and this trust is built by steady and on-time delivery. Proposing to ‘throw everything at it’ and ‘it will be alright in the end’ simply aren’t acceptable. Especially in a new relationship it is important to start building trust and credibility by delivering as promised from the outset.