23 November 2022 7 min read

How to bid on government construction contracts in the UK

 

Read about government construction contracts to improve your chances of winning future bids.

The UK government has published an extensive knowledge base on how to bid on government construction contracts (UK). By adopting a tender framework, they have built a level playing field for a small business to compete with a larger corporation on high-value contracts in the public sector.

But bid writing and getting familiar with the tender process is tricky for SMEs. With contract opportunities worth over £10,000 available, get acquainted with the contract process to improve your chances of winning.

In this article, we help you understand how to find contracts for bidding and the procedure for any supplier business to apply for tender opportunities.

TL;DR

  • Favourable payment cycles and set processes for agreements make government contracts a lucrative opportunity for SMEs

  • It's necessary as an SME to have attention to detail for bid writing for tenders. This includes eligibility criteria, the scope of work and query/submission deadlines.

  • Use best practices to bid writing by focusing on readability, social proof, formatting and having a structured approach to presenting the information.

Why should you bid on government contracts?

The UK government undertakes many projects and initiatives to improve its citizens' living standards. For this, it needs to procure products and services across various sectors, ranging from simple fax machines to construction materials for roads. According to Public Spending statistics, across the UK in 2021/22, gross spending on public sector procurement was £379 billion.

Apart from the benefits of growing your business, SMEs should bid on government contracts due to following reasons:

  • Support for SMEs - The public sector aims to support small businesses across healthcare, construction, education, etc. 33% of public contracts are reserved for small businesses and the service sector.

  • 30-day payment period - Businesses enjoy a compulsory invoice clearance within 30 days by a public sector organisation.

  • Streamlined processes - The public sector has set an effective stage for suppliers across the industry to bid on the scheme listed.

Public sector organisations work continuously to make the tendering and procurement process easy for businesses to align with. With the policies and framework set, it's easier for today's small businesses to enter the market and compete.

Where to find government tender opportunities?

Contracts Finder is a central place to find various sector contracts across construction, education, transport, etc. You can find relevant contract work published without creating a user account. To save the search and stay updated on the key contracting updates via email, organisations can create an account.

Benefits of Contracts Finder include:

  • Explore sector-wise tender and bidding scope

  • View past tenders to gain insight into how to write your bid response accordingly

  • Search for the best value invitation to tender available with the UK government worth over £10,000

Homepage screenshot of the Contracts Finder showcasing the filters available to find government contracts

For Northern Ireland, Wales and Scotland, you need to use their dedicated public procurement website - Find more

Organisations can also explore Industry Publications, Twitter, Newspapers and public sector websites for tender opportunities. Business support networks like trade associations and chambers of commerce are also viable options for finding relevant public procurement work.

What are the 5 stages for bidding for construction tenders?

Seven construction workers standing on white field overlooking the construction site

Photo by Scott Blake

Today, a company can participate in the construction tendering and bidding process by following the below-mentioned stages:

1. Prior Information Stage (PIN)

In the Prior Information Stage (PIN), the public sector intimates suppliers about an upcoming contract. This gives them time to align their business with the potential bid requirements and prepare their tender responses.

2. Selection Stage

Construction tenders usually come with pre-qualification criteria comprising of past work experience, social value, quality assurance, and safety. Here, holding accreditations like ISO 14001, ISO 9001, OHSAS 18001 and PAS 1192 helps with qualifying certain selection questions.

You can explore PAS 91 - a standard pre-qualification questionnaire developed by the British Standards Institute (BSI) to understand the minimum quality criteria for a construction company.

3. Invitation to Tender (ITT) Stage

Once shortlisted, the public sector sends suppliers an invitation to tender (ITT) and submit their bids. The procurement process across the services expected, technical response document, winning criteria, pricing response document, etc is elaborated on in detail.

In case the bid does not have any selection stage, the tender notice serves as the ITT.

4. Evaluation Stage

Based on the selection criteria and your tender response, the public sector management evaluates your bid submission. You must ensure you meet their submission guidelines in terms of -

  • Document submittals for meeting eligibility criteria set

  • Your ability to deliver the assignment

  • Completed responses as per the quality expected

The participating suppliers are scored based on the quality of their bid writing for the final selection.

5. Award Stage

The bid winner is selected based on the highest scores obtained and how well the company is aligned with the tender process. A Contract Award Notice is published to clarify the number of tender responses submitted, winning organisation, tender requirements, etc.

Building your bidding processes before starting

Proposal creation and submission can get easily chaotic as suppliers try to align with the bid requirements. To avoid this, it is advised to have a bidding process in place before you start preparing your responses.

Conduct due diligence

Do you think your company is the right supplier for projects by public sector organisations?

Have clarity on your current workload of projects undertaken, resources available and financial numbers. This helps you know where you stand when it comes to taking up a new public sector procurement work.

Assign responsibilities and roles

To ensure you make a timely bid response submission, you can divide responsibilities that the team ensures are adhered with:

  • Someone to make the decision if the company will bid for the tenders or not

  • Assign the role of a manager for bid writing

  • Form a proposal team that designs the solution to the problem statement of tenders

  • Someone to sign on the bid before submitting

What will be your method of delivery?

Based on the tender requirements, budget, and schedule, a supplier can deliver the bid submission using any of the below methods:

  • Design-Build (DB) - a single supplier via the same contract covers both the design and construction aspects of the project.

  • Design-Bid-Build (DBB) - the design is managed by the buyer. The designer finalises the project specifications, post which the undertaking is set for bids for the build phase.

  • Construction Management at Risk (CMAR) - Here, separate suppliers manage the build and design. A construction manager is hired by the buyer who may help with the design phase too.

  • Integrated Project Delivery (IPD) - The owner, construction manager and architect/engineer sign a contract sharing the project risk, roles and reward together.

As a business, it's necessary you make these decisions prior to bidding to avoid wasting your resources on unsuitable tenders.

Back up your bids with social proof

Adding social proof helps you present your business as a suitable supplier for public sector tenders. It makes the tender owner feel secure about assigning the work to you, increasing your winning chances. You can use below mentioned social proof example for making your bid stand out among the competition:

Case Studies

Did you work prior in a similar tender or industry and delivered substantial results?

A published case study helps you effectively showcase this past work as an example. It especially helps with sector contracts, where it allows you to highlight specific use case that supports your bid.

Testimonials

A testimonial from your past customers is a great way to highlight your professional and technical expertise.

But sometimes, testimonials can get unspecific. Hence ask the right set of questions while taking a quote to put a spotlight on your work ethic, value delivered, and process followed.

Logos

If you have worked with recognisable brands in past, get their permission to showcase their logos. This increases your chances of winning the contract opportunities as you ride on the trust built by those brands.

CV

Market your stellar team and management in the bid with their skill set, education and professional expertise. Buyer trusts your execution capabilities when they witness you are promoting your A-list professionals for public sector tenders.

What are the criteria? How are construction contracts scored?

person using black laptop computer overlooking construction drawings

Photo by Evgeniy Surzhan

The submitted bids for the tenders are evaluated based on the weighted average of these two main criteria:

  • Pricing: scored based on the final price you shared in the bid for the tender.

  • Quality: scored based on your answers to the pre-qualification criteria set, social value, safety records, supply chain work experience, services offered, etc.

For example, consider 2 bids applied to a tender opportunity that has 60% weight for pricing:

Bid Example (A) = £ 200,000

Bid Example (B) = £ 400,000

To calculate the score, one commonly compares the price of bids versus the lowest-priced offer as follows:

(lowest price/bid price) * Price Weight = Price score

Thus, for our example bids, the price score will be:

Bid Example (A) = (£ 200,000/200,000) * 60% = 60%

Bid Example (B) = (£ 200,000/400,000) * 60% = 30%

Similarly, all bids receive qualitative scores based on the weights assigned for the Quality Evaluation. A total of Price and Quality scores determine your overall bid score.

Generally, a public sector organisation clearly specify their requirements and the more you adhere, the better the chances to win. It's useful to learn from your past tendering response, especially those where you lost the contracts.

Get acquainted with the Construction Playbook published by UK Government to help SMEs align their bids as per tendering best practices.

Whether the delivery of a school, hospital or major infrastructure project, the principles and policies in this Playbook will transform how we assess, procure and manage public works projects and programmes.

Adopting the playbook helps public sectors and companies across the supply chain set clear expectations to achieve the desired outcome from construction projects.

Guide your evaluator on a journey

person holding pencil near laptop computer

Photo by Scott Graham

An evaluator is a representative of the public sector organisation who will score your bid response. It's based on the framework of evaluation decided by the buyer and best practices by government playbooks. These evaluators have the necessary technical expertise in the procurement and construction industry for a fair evaluation.

To ensure you win the bid, it's important evaluator understands your bid response writing. Here are some tips on how you can guide your evaluators:

  • Bring clarity to your bid writing - don't make the mistake of assuming prior knowledge and write sentences that include industry jargon or acronyms.

  • Work on the bid's readability - Write short sentences in simple language that is easy to read and comprehend. Use spaces generously between paragraphs and headings to make it look clean. Before submission, proofread your bid for the logical flow of the content and grammar.

  • Add structure to your answers - Present relevant information only in short paragraphs to provide to-the-point answers. It's advisable to use bullets while elaborating on each answer for multi-part questions.

  • Highlight important points - Use quotes and feature sentences to grab your evaluator's attention to influential information in your answers. This could include social proof, evidence, statistics, etc.

  • Remove unnecessary information - Don't include data about your service that are not relevant to the tenders. Remove extra words that don't effectively contribute to the 'what' and 'how' of your answers. Use sentences that remove objections about your bid than creating them.

Your bid document acts as a sales pitch for government contracts. So don't just supply information, but also sell why you're the perfect supplier for the buyer. Your bid response should also reflect social values using secure words and consistency in the tone.

How to avoid losing bids to silly mistakes (according to the government)

Working on your writing your bid for the win is challenging and requires attention to detail. But unfortunately, many organisations lose contract opportunities due to simple mistakes. Here's how you can avoid common tendering mistakes while competing for government contracts:

  • Poor team building - the evaluator doesn't believe the professionals put forth by you is capable to execute the public sector contracts. Hence, secure relevant and local talent who have the necessary skills to deliver.

  • Pricing is not competitive - Price has a key weightage in evaluation. Make sure you have provided your best-optimised budget for the tender.

  • Non-adherence to the eligibility criteria - thoroughly prepare for the bid by conducting necessary due diligence in terms of your business resources, service scope and value

  • Insufficient information - You have not provided enough social proof, key data or benefits that support your organisation's competency. If you have any disadvantages, word them to market them as strengths.

  • Skipping questions - In a hurry to submit the bid response, SMEs could miss out on any question or mandated procedure. Do not copy-paste answers and proofread before making the submission.

How does the tender process for government contracts work?

The procurement process can get complex depending on the public work undertaken and the services required. For execution management of the tenders, the public sector and supply chain adopt various arrangements as follows:

Open Tendering

Open Tendering provides an equal opportunity for everyone to apply for the released contract notice. It's great to give exposure to newly opened businesses or suppliers expanding their service. The public sector needs to evaluate every bid submission for fair selection under this arrangement.

Since one can get many bid submissions, sometimes larger or more complex projects may involve pre-qualification criteria to get more relevant supplier bids.

Selective procedure

If the public sector organisations have a list of pre-approved suppliers in the market, adopting a restricted procedure for tendering is a time saver. Here, an invitation is sent to a set of businesses that fit the requirements of the government contracts in terms of quality and competency.

This reduces the efforts required to present the tender opportunities compared to the open tendering procedure.

Restrictive procedure

Under this method, suppliers can submit their interest to compete for the contract. The buyer must select a minimum of 5 businesses to ensure a fairly competitive environment. Applying such restrictions help with bid management and contracting in a highly competitive market.

Negotiated tendering

Also known as competitive tendering, here, the tender opportunities are advertised, and selected suppliers among the ad respondents are further allowed to submit a bid. Then, the buyer opens the scope of work negotiations with the relevant tenders submitted.

Such arrangement is useful for specialised government contracts where early involvement of the contractor may prove to be useful. Negotiations play a key role, where the scope of work is accommodative in nature. This arrangement also further reduces the cost of the management of tenders.

What are the payment model types?

Construction projects usually could involve a large number of transactions with huge sums. Thus, the public sector and local suppliers must align for a secure and mutually acceptable method of payment.

A business can explore the below-mentioned payment models for the tender opportunities one bids for:

Fixed Price

An agreement on a fixed monetary value for the complete contract is decided between the public sector organisations and the business. This could include fixed output and paid post-scope of work completion.

Service Fee

In this arrangement, the scope of work is divided into milestones over the complete assignment duration. The payment is made based on the completion of these milestones as per the delivery grade expected.

Staged Payment

Under the staged payment model, government contracts are divided into milestones that are timed with a deadline. Non-adherence to the timeline leads to penalties decided prior to starting the tender.

Result-based payment

The value of government contracts is based on the outcome delivered by the business. These results achieved may have a tangible or social impact.

License

A license model allows the business to collect payment from those who use their service.

Stand by for clarification questions

man wearing black t-shirt asking a question during a presentation

Photo by Felicia Buitenwerf

Assuming data or having wrong interpretations of the invitation to tender contract leads to a clear no-win for your bid. Here are some tips to ensure you do not miss out on the details before the submission of the tenders:

  • Keep a tab on the deadlines for submitting questions for better bid management.

  • Highlight inconsistent, ambiguous or misspellings that may lead to wrong assumptions for your solution.

  • You should ask for any clarifications regarding the terms, conditions and payment model of the contract to avoid future disagreements.

  • Know that your questions might get published for others to view and act upon.

Frequently asked questions

What are the easiest government contracts to win?

Any requirement of the tenders that overlap with your past work experience and relevant team skills has a better chance of winning. Though it's not possible to predict easy-to-win government tenders, some industries have more contract opportunities than others. These include construction, information technology, healthcare, roads, logistics and pharmacy (for example, increasing vaccine production during the COVID-19 pandemic).

What is the lowest bidder rule?

The lowest bidder rule means whichever supplier provides the least bidding amount is awarded the contract.

What do the basic bidding documents include?

Your bid document must consist of the PS&E or Plan, Specifications and Estimates of your proposed solution for the tenders.

 

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2022-12-05 14:36:25