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ESPO sees rise in supplier engagement with SMEs over the last three years
Small and medium sized enterprises (SMEs) are crucial to the success of our local economies and, as an organisation looking to work with a variety of suppliers, ESPO values the contribution smaller companies make to the success of our organisation.
Three years ago, ESPO decided to make a conscious effort to make it easier for all suppliers to seek a place on our frameworks, whether they are a larger business or an SME and has worked closely with Leicester and Leicestershire Enterprise Partnership (LLEP) to achieve this.
In 2013, ESPO measured our engagement with SMEs and found that 55% of our suppliers at that time classified themselves as an SME. While a respectable figure, we found it wasn’t unusual for SMEs to be put off by the tender process; considering it to be onerous, time-consuming and overly complicated, or to be under the misapprehension that ‘only large firms win tenders’ – concluding that as ESPO’s frameworks tend to provide ‘national’ coverage, there was little point in small and medium companies bidding.
Around the same time, we signed up to the FSB’s Small Business Friendly Procurement Charter, which aims to create positive procurement opportunities between small enterprises and public sector buying organisations. The Charter sets out fourteen commitments - many of which ESPO had already adopted.
Since adopting the Charter, a number of initiatives have been implemented to make framework bidding opportunities more accessible and to overcome the perception of small and medium companies that ‘only large firms win tenders’. So far our engagement has slowly risen to a positive 76% of our suppliers classing themselves as an SME.
The initiatives put in place to make it easier for any supplier, but particularly SMEs, to bid for and win a place on a framework, include;
Meet the Buyer: ESPO regularly attends ‘Meet the Buyer’ events to meet directly with small and medium sized companies, as well as engaging with their industry representatives such as the FSB.
- Standardised documentation: ESPO has standardised all of our documents for the tendering process; paperwork and terms and conditions are now more concise and easier to understand, and standardisation makes them recognisable, and therefore easier to complete.
- Less is more: Wherever possible we break down requirements into smaller Lots, this means supply of framework services and products can be based on geographic area. By doing this smaller enterprises, who do not have the capability for national provision, can break into the market and offer their services to a smaller area rather than have the pressure of reaching customers nationally, whilst our frameworks can still provide ‘national’ coverage for customers.
- Revised financial vetting policy: We have introduced a new, risk based approach for the assessment of suppliers’ financial standing so that the level of assessment is appropriate to the procurement risk. Low value frameworks with multiple suppliers require less financial assessment than a framework with high risk products or services, as these may be business critical, have few alternative sources or are difficult or costly to effect a change of supplier. The policy also recognises that SMEs and start-up companies may not be able to provide the level of financial detail or audited accounts that are often required, so allows for alternative means of financial assessment of a supplier’s financial standing and capacity to provide the level of service required.
- Insurance: One immediate concern for many SMEs when they talked to us was the level of insurance and whether premiums for the levels required on frameworks were affordable. As with financial vetting, we now take a risk based approach to setting insurance levels. Some smaller companies have ‘off the shelf’ policies with lower levels of cover than required for frameworks for some requirements. We don’t require them to have the additional insurance to tender, only to commit to doing so if successful, meaning they can simply take a one-off ‘top-up’ to their existing cover (usually at a lower premium as the risk for the ‘top-up’ is lower) which can be priced into their bid.
- e-tendering: ESPO joined forces with other local authorities in the East Midlands to adopt and implement electronic tendering through a shared portal; eastmidlandstenders.org. This has established an easier route for suppliers to access tendering opportunities and once they have registered, alerts the suppliers to tender opportunities – a significant step forward for ESPO and procurement and a convenient tool for suppliers.
- Debriefing unsuccessful bids: ESPO pride ourselves on providing feedback to unsuccessful suppliers about their bid, and ensure that each one receives care and attention from us in the form of a debriefing to help them to grow and improve as much as possible. This can help newer enterprises to hone in on their weaker areas and make improvements.
A recent unsuccessful supplier got in touch with us after his debriefing with some extremely positive feedback, stating we were, ‘professional, transparent and thorough’; an indication our commitment to making changes to our tendering system is so far a success, and our debriefings are appreciated by suppliers who may otherwise have been left feeling neglected and without any idea as to why they were not awarded a place on a framework.
It’s a myth that ESPO frameworks are only for ‘large firms’; they provide a sustainable route to market for small and medium companies in a volatile economy.
Although ESPO have already made several positive changes to make our tenders more accessible to all suppliers, and to SMEs in particular, we are conscious there is still room for improvement. Our tendering processes and documentation are constantly reviewed against the feedback we receive from suppliers, and from ‘lessons learned’ as a result of tender exercises.
As a public sector buying organisation, ESPO’s main priority is to provide trusted, value for money procurement solutions to public sector organisations. Small and medium sized companies have a key role to play in helping us to achieve this and as far as they are concerned ESPO wants them to know we’re ‘open for business’.
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