By: David Smith

For small and medium-sized enterprises (SMEs) looking to expand their company, the public sector can offer plenty of opportunities for growth through securing government contracts. Understanding the role that competition plays in this landscape is an important factor that may contribute to success.

At its core, competitive tendering in the public sector helps to achieve two crucial objectives: delivering value for money for the taxpayer and ensuring transparency and integrity in the procurement process. The Procurement Act 2023 (the Act) aims to reinforce these principles by establishing clear procedures that seek to create a fair and open field for businesses of all sizes to compete.

The Two Pillars of Competitive Tendering

The Act primarily outlines two competitive tendering procedures:

The Open Procedure

Similar to its predecessor in the Public Contracts Regulations 2015 and Utilities Contracts Regulations 2016, this procedure is generally accessible and straightforward. Any interested supplier is usually able to submit a tender in response to a published tender notice.

The Competitive Flexible Procedure

This is a major introduction by the Act, replacing many of the more prescriptive procedures that were previously in place. Contracting authorities now have greater flexibility to design their own competitive tendering process. This may encourage more innovative and tailored approaches. However, authorities must still adhere to the wider procurement objectives and specific procedural requirements for time limits and transparency.

Both procedures are initiated by the publication of a tender notice on a central digital platform, signalling the commencement of a procurement opportunity. For SMEs, knowing where to find these notices is often the first step. Our Contracts Finder Platform is an essential tool for discovering upcoming tenders.

Understanding Special Regimes and Exceptions

The Act mandates that all public contracts, including “special regime contracts” such as concession contracts, defence and security contracts, light touch contracts, and utility contracts, are generally expected to be procured through one of these competitive tendering procedures. While separate guidance exists for these specific types of contracts, the underlying principle of competition remains a key aspect.

However, there are limited circumstances where a contracting authority may not be required to follow a standard competitive tendering procedure. This includes:

• Direct Award: In specific, justified cases outlined in sections 41 or 43 of the Act, a contract can be awarded directly without competition. These circumstances are typically exceptional and relate to urgent or highly specialised needs that would be difficult to find through standard procedures.
• Call-off Contracts under Frameworks: A complete competitive procedure might not be required when a public contract is awarded under an existing framework agreement (often called a ‘call-off’ contract). However, section 45(3) of the Act generally requires competition even for call-off contracts, albeit within the parameters of the established framework.

The Legal Framework – Your Guide to Compliance

Understanding the legal backbone of competitive tendering is important for any SME preparing to bid on a tender. Key provisions in the Procurement Act 2023 that govern these procedures include:

• Section 19 (Award of public contracts following a competitive tendering procedure) provides guidance on how contracts will be awarded after a competitive process. 
• Section 20 (Competitive tendering procedures) outlines the general principles and requirements for competitive tendering. 
• Section 21 (Tender notices and associated tender documents) details the information that must be included in tender notices and supporting documents. 
• Regulations 18-22 (Specific Tender Notices): These regulations provide detailed requirements for different types of tender notices, including open procedures, competitive, flexible procedures, frameworks, and dynamic markets. 
• Regulation 23 (Associated tender documents) elaborates on the supplementary information provided alongside the tender notice. 

Familiarity with these provisions can help SMEs ensure that their tenders are compliant and address all stipulated requirements effectively.

What Has Changed and What It Means for You

The most significant change the Act brings is introducing a competitive, flexible procedure. While it grants contracting authorities more freedom in designing their procurement processes, SMEs might encounter a greater variety of tendering approaches.

Rather than relying on a “one-size-fits-all” approach, SMEs should be prepared to understand and respond to the specific design of each competitive, flexible procedure. SMEs should not assume that each tender will require the same bidding approach, documentation, or evidence.

The Act has also simplified the application process, which is an advantage for SMEs that have never bid on contracts before. A single tender notice now replaces the previously separate contract notice and concession notice. This tender notice is now the single gateway to the procurement, providing direct access to the associated tender documents or instructions on obtaining them.

These documents are essential for reading and understanding, as they contain vital details such as specifications, award criteria, assessment methods, and contract terms. It is important to understand that while associated tender documents are usually provided, the contracting authority is not obligated to do so if all necessary information for preparing a tender is already included in the tender notice.

Key Considerations for SMEs in the Tendering Process

As an SME bidding on a tender, it is advisable to pay careful attention to detail and take a strategic approach with their bidding. Here are some critical aspects to consider:

• Time Limits and Information Sufficiency: Section 54(1) of the Act dictates that contracting authorities must set fair time limits for businesses to submit their bids, considering the nature and complexity of the contract.

Section 21(5) specifies that authorities cannot invite tenders or set a deadline unless the tender notice and/or associated tender documents contain sufficient information for suppliers to prepare their bids, particularly regarding the required goods, services, or works. This means that bidding SMEs should expect to receive enough information upfront, helping them to draw up accurate and competitive proposals.

• Exclusion Grounds and Conditions of Participation: Under sections 26 and 28, contracting authorities are required to consider whether any supplier (including their connected or associated persons or subcontractors) is excluded or excludable from the procurement process before assessing tenders.

This is generally assessed at the earliest possible stage. Suppliers may sometimes be notified before exclusion, allowing them to replace an associated person or subcontractor. National security grounds also have specific notification and agreement requirements with a Minister (section 29).

Beyond exclusion, tender notices and associated documents will outline “conditions of participation.” These differ from the award criteria and are used to assess a bidder’s capacity and ability to perform the contract. They must be proportionate to the nature, complexity, and cost of the contract and typically relate to:

• Legal and Financial Capacity: Ensuring the supplier has the legal standing and financial stability to undertake the contract. 
• Technical Ability: Verifying that the supplier possesses the required technical expertise and resources.

It is important that SMEs carefully review these conditions to assess whether they meet the eligibility requirements before entering the bidding process.

Summary

Understanding the competitive nature of public sector procurement is important, and SMEs should position their unique value propositions to increase their chances of securing government contracts, which can contribute to their growth and the wider public good.

Participating in bidding for public sector tenders may initially seem overwhelming, but with the proper knowledge and a proactive approach, it can be a worthwhile endeavour. Public Sector Tenders aims to support you in finding your next contract and provide valuable knowledge and information about preparing competitive bids.