Sunday, 7 March 2010

SME business, public sector procurement and recession

Last week I ran a couple of sessions for SME businesses on PQQs and Tender writing for public sector contracts. We had over 100 businesses over the 2 sessions (which are running again in Leeds at the end of the month), and they were a lively group with lots of interesting questions and points of views.

Two points stood out for me. The first is the one that I have raised many times before of the need for a standardised PQQ form for all public sector contracts. The OGC template is fine as long as all public sector bodies use it in the same form. Ideally the information would be centrally held, but let's not be too idealistic. But the use of a standard form would be simple and easy.

The second issue is the impact of the recession on company turnovers. It has been a hard year or two for many companies, and turnovers are often down on previous years. There is a concern that this may be a negative for some public sector buyers, who will be worried that the companies are not financially secure. If it is a universal downturn (and it will not be) then everyone will be in the same place, but realistically good companies may also have had a deterioration in their trading position and it may make them look weaker than they really are. The second part of this is that for many contacts there is a requirement that the bidders turnover must be a multiple of the contract value i.e. the contract can make up no more than say 25% of turnover in any one year. If turnover is down, then the value of contracts that a company can bid for will be lower, which will in turn reduce the potential turnover in future. A tricky cycle could be established. It may not be an issue for most companies, but it will surely effect some. A little leighway may be necessary when drafting requirements - when the PQQ and ITT are written it is too late.

2 comments:

SCMDave said...

Good points and I hadnt really thought about the second one before.
As for "standard" PQQ's, in upstream oil & gas we have this sorted with one main organisation handling the Prequals/Performance feedbacks on suppliers and this appears to work well. Just how difficult would it be to even make a start with public sector supply chains??

Cheers
Dave

PAWA said...

There have been a couple of trials of using a standard online PQQ system - notably the One Form project in St.Helens and a similar one in Lewisham (I think). I believe that they were pretty successful but not taken forward.

I think the easiest thing would be for everyone just to use the OGC template - at least as a start. It would need some central co-ordination, and I think the OGC would be the place to lead it.
There will always be a need for exceptions, but the principle should be having to make a case to do something different rather than starting with a blank piece of paper.