Rules and Regulations for Public Sector Contractors
In the public sector, there is a defined and detailed procurement process that is applied to the purchase of services, goods and work by any government department, public sector body or even central government. It could be local authorities, organisations and hospitals, schools and universities – the public sector in the UK is huge – that need equipment, building and maintenance work or telecommunications. It also includes social care, waste management and even IT development, like the recent Covid app.
When government, local authorities or a public sector organisation makes a purchase of goods, services or work, they have to put out a tender, or contract, and invite suppliers to bid for the right to supply them. However bidding for a public sector tender, or contract, is a complex process. As well as certain criteria to be met, there are a range of rules and regulations that both the public sector and the supplier have to abide by.
What are public sector tenders?
When we talk about public sector tenders, what do we mean? The term refers to the procurement (buying) process for public sector organisations and bodies, including the government and government departments. When they need to purchase anything over a minimum monetary limit, be it equipment, goods or services, they must publish a ‘tender’ on the Government’s portal, public notice boards and tender websites. The current limits are:
- Central government tenders – any requirement over £12,000 (including VAT) has to be advertised.
- Sub-central government tenders – any requirement over £30,000 (including VAT) has to be advertised.
The ‘tender’, which is also known as a contract or an ‘Invitation to Tender’ (ITT), is an invitation to companies outside the public sector to bid on the opportunity to supply the organisation, body or government entity with the relevant supplies. The reason for a public tender is because the government has a duty to buy goods and services in a manner that is transparent and fair. This also means that the cheapest bid is not necessarily the bid that wins the contract. The public entity will evaluate the bid based on price, quality and overall match to their requirements.
There are several different types of tender to be aware of:
- High value tenders.
Also known as Above Threshold Tenders, these types of tenders are of a high value and often lead to multiple contracts for a business.
- Low value tenders.
Also called Below Threshold Tenders, they are usually of a value below the public procurement threshold and, therefore, smaller in value. These types of tenders are a great entry point for businesses that haven’t bid on tenders in the past as the bidding process is often simpler.
- OJEU tenders.
These types of tenders are high in value and for EU contracts. Although the UK is no longer in the EU, some tenders are still open to UK businesses.
- Framework agreements.
This refers to umbrella agreements which detail all the terms of individual contracts that are awarded at any time during the lifetime of the framework. In most cases, these types of tenders do not have a specific time frame because the public sector body or government entity do not know when the contract may end. Whilst framework agreements can mean ongoing work, it must be remembered there is no guarantee.
- Dynamic Purchasing Systems (DPSs). These agreements are similar to the framework format but there are differences. Unlike frameworks, new bids, and therefore suppliers, are allowed to join the suppliers list during the DPS’s lifetime. In addition, a DPS has to follow the restricted procedure and the process is only electronic to streamline the buying process for the buyer and the suppliers.
Any private company, no matter their size, can bid for a public sector contract but there are very specific rules and regulations that must be followed. The Public Contracts Regulations 2015 governs the whole public sector procurement process for buyers and suppliers.
The public sector tender rules and regulations
Currently, the public sector procurement process is governed by the Public Contracts Regulations 2015 (PCR), which was implemented with effect from 26th February 2015. The PCR sets out the rules and regulations around the procurement process for public sector organisations, government departments and bodies. This includes buying supplies, works and services for central government, a non-ministerial department, a non-departmental public body or executive agency.
All must follow the PCR, with the exception of the defence and security sectors. Their procurement process is governed by the Defence and Security Public Contracts Regulations (DSPCR) 2011. For local authorities, local government, health and education, the PCR is applicable but the monetary threshold is higher. They also need to be aware of the Local Government (Transparency Requirements) (England) Regulations 2015, which need extra contracting information published over and above PCR’s requirements. Local authorities and governments have to be mindful of Crown Commercial Service (CCS) guidance when choosing suppliers and awarding contracts, including paying subcontractors within 30 days.
Within the PCR, there are regulations regarding EU thresholds, or sub-threshold contracts, particularly about publishing and awarding contracts with a value below the EU threshold. There are also regulations surrounding utilities contracts and concession contracts.
There are a plethora of handbooks, guidance documents and training materials on the government website to help you understand the PCR in full.
The legal framework for publishing tenders
When publishing public sector tenders, there are several legal requirements that must be adhered to:
- The Small Business Enterprise and Employment (SBEE) Act 2015.
- The Late Payment of Commercial Debts Regulations 2013.
- The Energy Efficiency Directive Article 6.
- The Equality Act 2010.
- The Public Services (Social Value) Act 2012.
- The Local Government (Transparency Requirements) (England) Regulations 2015.
This is to ensure that the seven core principles of the public procurement process are followed. The principles are:
- Open and transparent bidding.
- Good governance.
- Human rights.
The PCR combined with the legal framework is designed to encourage transparent and open competition, as well as value for money.
Changes to the UK’s public procurement rules
On 25th May 2023, several changes to the PCR came into force which were implemented to reflect the UK’s recent new free trade deals with New Zealand and Australia. There are three main amendments that public sector organisations, government bodies and departments, local authorities, health and education need to be aware of. Made under the Public Procurement (International Trade Agreements) (Amendment) Regulations 2023, these are:
- Contract valuation. If a buyer is not able to put a value on a contract, it will be valued at the relevant threshold in order to trigger compliance with the Public Contracts Regulations 2015.
- Contract termination. Contracts can no longer be terminated as a way to ‘circumvent’ the PCR’s Parts 2 and 3 procurement rules. This is a new provision to the procurement process, despite the existing principles of equality, transparency and non-discrimination. However, this new addition makes compliance with the PCR a specific requirement when terminating contracts.
- Prior Information Notices (PIN). No longer will public procurement buyers be able to use a PIN as a ‘call’ to the competition when publishing a tender contract. Although this tactic was rarely used, this amendment is valid for all procurements, even those published using the ‘light touch regime’.
It must be noted that these changes are not applied to the procurement process for devolved Welsh authorities at the moment.
The new Procurement Bill
The recent amendments to the PCR have been implemented as part of the Cabinet Office’s new Procurement Bill. The new Bill, which has already passed through the House of Lords, is set to replace both the Public Contracts Regulations 2015 and the Defence and Security Public Contracts Regulations 2011.
The aim of the new Procurement Bill is to improve the current public procurement process by:
- Creating a simpler, more flexible and commercial system to better meet the UK’s needs, but also ensuring we remain compliant with international obligations.
- Opening up public procurement to new companies, including small businesses and social enterprises, to enable them to compete for and secure more public tender contracts.
- Embedding transparency throughout the commercial lifecycle so the spending of taxpayer’s money is properly monitored and scrutinised.
So far, the latest notable changes to the current PCR include:
- A duty for public sector buyers to have a regard for small and medium enterprises (SMEs), including a prohibition on requiring insurance to be in place before awarding a contract.
- When a contracting authority undertakes preliminary market engagement, it will be mandatory for them to publish a notice prior to this, which is currently optional.
- A voluntary standstill period relating to contract modifications must not be less than eight working days.
- Open frameworks relating to ‘light touch services’ will no longer be limited in terms of length.
- The threshold for publishing KPI (Key Performance Indicator) information will be increased for contracts valued at £5 million or more (this was previously set at £2 million).
The Bill is set to be considered by the House of Commons and subsequently Royal Assent shortly before it becomes a new Act of Parliament, provisionally 2023/24.
Bidding for a public sector tender
The process, although involving multiple steps, is very structured and therefore can take some time to understand. The good news is that almost any business, no matter its size, can apply for public sector tenders or contracts.
If you have not bid for a public sector tender before, or you have but were not successful and want to improve your chances, we’ve set out a process for bidding on public sector tenders.
- Step 1 – Source relevant tender opportunities
Public sector organisations, like the NHS, government bodies and departments must publish tender contracts on the Government Contracts Finder tender portal, as well as via the Department for Education portal and their Find a Tender Service (FTS). They also publish them on a variety of different independent tender portals. So, go through these and source the tenders of interest to you.
- Step 2 – Check you fulfil the tender requirements
Once you’ve found a tender you’re interested in, check the buyer’s requirements and make sure you are able to fulfil them completely before you submit a bid.
- Step 3 – Download or request full tender documentation
The next stage, if you’re confident you match the buyer’s needs, is to ‘express an interest’ to the buyer and request the full tender documentation. In some cases, these may have been added to the tender contract listing already and you simply need to download them.
- Step 4 – Complete the buyer’s Selection Questionnaire
Read through the documentation thoroughly to be particularly certain you can fulfil the contract and if you can, complete the buyer’s Selection Questionnaire (SQ) and submit it to the buyer. Sometimes this may come with the tender documentation if the buyer is using an Open procedure.
- Step 5 – Receive Invitation to Tender (ITT)
If the buyer accepts your SQ and feels you are a good match for them, you will be sent an Invitation to Tender (ITT) by the buyer and added to their shortlist of potential suppliers.
- Step 6 – Submit a tender response
It’s at this stage a tender bid is lost or won so, it’s worthwhile spending the time and resources on your tender response so that it stands out from the competition. Most tenders are awarded to companies that not only match the buyer’s requirements, but are also the strongest contract bid response. You will normally hear back from the buyer in 4 to 6 weeks.
Advantages of bidding on public sector tenders
It might seem like it’s a lot of trouble to bid on public tender contracts and whether it’s worth the time and effort. However there are plenty of advantages too, particularly for SMEs. Here are six benefits we think you should consider before you say no.
- Regular, long-term work.
We hesitate in using the word ‘guarantee’ however public sector contracts do generate long-term work that often lasts over a number of years. With the buyer not being allowed to terminate the contract mid-term without just cause, you can feel confident that you have a ‘secure’ income for a while.
- The buyer won’t go bust.
Working for a public sector organisation, authority, government body or department means you won’t suffer from them going bust. With an annual billion-pound budget for goods and services to be spent with external suppliers, the risks can be lower with the public sector.
- Better payment terms.
Public sector organisations are committed to paying 100% to subcontractors within 30 days, or 95% within 60 days for government contracts of £5 million and over. In Scotland, the payments have to be made within 60 days however organisations are encouraged to settle within 30 days. These payment terms mean smaller businesses can be safe in the knowledge they won’t be waiting months on end for payment.
- Boosts business growth.
Winning a public sector contract is a really positive way to boost business growth as well as your reputation. With medium and long-term contracts for years almost guaranteeing your income and 30 day payment terms, you’re putting your business in a good position for success.
- Easier to attract and retain staff.
Long-term contracts, regular payment of invoices, guaranteed work and developing partnerships attract top talent and helps to retain existing staff.
- A fair and transparent procurement process.
The public sector procurement process eliminates the potential of buyers awarding contracts to favoured suppliers as they must adhere to the PCR, which promotes a fair and transparent process.
Find your next public sector contract
At Public Sector Tenders, we deliver quick and easy access to the latest public sector tenders. Our daily email alerts will notify you of new published tenders, giving you the opportunity to bid ahead of the competition. We also offer a treasure trove of useful information and resources at your fingertips, with access to more than 270,000 public sector contracts across the UK. Get started now with our 14-day free trial or get in touch with us if you have any questions
If you’re involved in the public sector, understanding how to navigate tenders and contracts is essential for your success. With so many rules, regulations, and laws surrounding the process, it can feel overwhelming, and you may not know where to begin.
So, we’ve created this comprehensive guide to help you understand the basics of tenders and tendering for contracts in the public sector, from how to find a tender service , how to apply for them and how to write a winning bid.
With this knowledge, you’ll have the confidence to successfully take on any tender or contract that comes your way.
What is the Public Sector?
The public sector is the group of organisations responsible for providing public services, many of which are funded by the government through taxes.
In the UK, some of the main public sector organisations include the NHS, schools and universities, and government offices such as the Department for Work and Pensions (DWP).
The public sector is often contrasted with the private sector, which refers to organisations that are privately owned and operated for profit, such as supermarkets and telecom companies.
Both sectors overlap in many areas, including healthcare, transportation, energy, and telecommunications. For example, public transport in the UK is a mixture of the public and private sectors.
In London, the local government operates the bus network on a not-for-profit basis; however, in Scotland, the Scotrail Network was owned and operated by a private company until 2022, when it was taken back into government ownership.
Another example of the overlap between these two sectors is education. Schools across the UK are, for the most part, within the public sector and run by local councils.
However, there are a large number of private education institutions that are privately owned and operated on a for-profit basis.
There are specific rules and regulations associated with the public sector that private companies aren’t subject to, including different types of procurement and contracting.
Procurement refers to the process of acquiring goods and services for government programmes or projects.
Contracting refers to the process used to acquire those goods and services.
Procurement and contracting have different rules and regulations based on the type of organisation and whether it’s in the public or private sector.
What is a Tender?
A tender is an invitation to supply a good or service. Tenders are used in the public sector to purchase goods and services, and they often involve multiple companies bidding on a specific contract.
Tenders often operate like mini markets where a group of sellers compete to win the business of a single buyer.
Types of tender include procurement tenders, an invitation to tender (ITT), a request for proposal (RFP), a request for information (RFI), and a request for quotation (RFQ).
Tender in Business
How to get a government contract
When tendering for contracts to bid on, your method will depend on your budget, industry, and experience finding and securing tenders.
The process can seem quite overwhelming and daunting if this is the first time you’re searching for public sector tenders. However, once you know where to look, it gets easier.
Here are some methods you can use when tendering for contracts to find a tender service that works for you.
- Tender alert services
Tender alert services work by allowing you to set up personalised alerts that you’ll receive via email whenever a new opportunity arises in your industry. Although these are usually paid services, the time you save when using a contracts finder or tender alert service makes it a worthwhile investment.
- Official databases
Official databases are another option when tendering for contracts and can be especially useful if you’re looking for contracts that are a bit further afield – for example, in Europe.
- National portals
Each country within the UK has an individual national portal to help you find local opportunities for public sector tenders. These can be a great place to begin if you’re just getting started with tendering for contracts.
Free or paid tender services: which is better?
If you’re just starting and tendering for contracts for the first time, you might find that the paid options above are out of your budget and would prefer to look at free options instead.
However, you should consider if the time spent researching and finding free options is worth the cost savings.
In many cases, free tender services look like a good option, but the extra benefits, expertise, and time saved when using a paid service are more beneficial in the long run.
When to bid on tenders?
The answer to this question depends on the individual and, of course, when you feel ready.
However, when tendering for contracts in the public sector, the process outlined in the tender itself needs to be followed exactly, so it’s vital that you understand what’s required and that you can meet this before submitting your bid.
Here are a few key questions you should ask yourself before deciding whether to submit your tender bid:
- How long have you been in business?
Although there’s no legal requirement to have been trading for a certain amount of time, it’s generally expected that the buyer will want to see at least two years of trading in the form of business accounts.
However, as always, you should pay attention to the listed requirements in the tender, as this can vary.
- What does your financial history show?
Buyers want to know that your business is operating at a profit, isn’t in any serious debt, and that you’ve covered yourself with the appropriate insurance where needed.
- Are you able to meet the contract requirements?
This is the most important thing to consider before you apply for any tender. As well as meeting the requirements to bid on the tender, if you win it, you must ensure you have the skills, experience, and resources to fulfil it to the best of your ability.
Tendering for Contracts
What is a tender contract?
The most common contracts in the public sector are procurement contracts and service agreements. Procurement contracts are legally binding agreements between an organisation and a supplier to exchange goods and services.
Service agreements are legally binding contracts that outline an organisation’s and its employees’ responsibilities.
All government contracts, including those awarded at the national, regional, and local levels, are subject to the Public Contracts Regulations 2015.
How to apply for tenders and contracts in the public sector
As with any business transaction, the first step in applying for a tender or contract in the public sector is to find the specific terms and conditions for the procurement.
Many organisations post these details on their website so that you can start your research there.
If the information isn’t easily accessible on the website, it’s generally a good idea to call or email the contact listed on the site to ask for more details.
Once you have the tender or contract information, you should review the details carefully to understand what the organisation is looking for.
After reviewing the document, you can decide whether or not to apply for the procurement if you feel it’s the right fit and meet the eligibility criteria.
Understanding the rules and regulations of tenders and contracts
Contracts are governed by laws and rules, many of which are designed to protect the organisation awarding the contract and the public.
In the public sector, these laws and regulations are often referred to as the procurement system.
The procurement system is designed to promote fairness, equity, and openness in the award and administration of contracts funded in whole or in part by the government.
There are two key procurement systems: the commercial and the competed systems.
The Commercial Procurement System purchases goods and services that are available on the commercial market.
The Competed Procurement System is used for purchases not available on the commercial market or when particular circumstances warrant a different procurement system.
How to write a winning bid
Bids are a critical part of the procurement process. A bid is a statement of commercial business from one or more suppliers offering goods or services in exchange for a contract.
Your bid is the foundation of your relationship with the company or organisation issuing the tender.
While there are no guarantees that you’ll win the tender, there are several strategies you can employ to help increase your chances of success.
First, thoroughly review the tender specifications and ensure that your product or service fits the requirements.
Next, create an offer that is tailored to the procurement.
The best way to understand how to write a winning bid is to study examples of successful bids or hire a bid writer who has knowledge within your industry and knows how to structure them correctly.
How to evaluate tenders and contracts
Before taking on any kind of contract, you should ensure that you fully understand everything expected from both parties.
One of the most important things to look for when evaluating a contract is the risk associated with the contract. The risk associated with a contract is often referred to as the critical path.
The critical path is the sequence of activities that must be completed to deliver a successful outcome.
Next, examine the contract terms and conditions. Make sure that you understand the responsibilities of both parties and the potential risk associated with non-performance.
The contract terms will define the obligations of each party and the conditions under which the contract can be terminated.
Tips for successful tenders and contracts
To succeed in the public sector, you must understand the process and the environment. To be successful, you will likely need a different approach from the one you may have used in the private sector.
A few tips for success in the public sector include:
- Becoming familiar with the contracting process
- Understanding the rules and regulations
- Be prepared to follow the process
Being familiar with the contracting process will help you know what to expect at every stage, from applying for the tender or contract to negotiating the final terms of the agreement.
Understanding the rules and regulations of contracting will help you avoid any costly mistakes that could jeopardise your success.
And finally, being prepared to follow the process will help you move smoothly through each stage and ensure that everything is in place when needed, helping you have the confidence to succeed in the public sector.
In some cases, you might find that the process you’re being asked to follow is different to what you’re used to, or it might even seem like there could be a better way of doing things.
However, there typically isn’t much room for negotiation the way there might be within the private sector due to the strict regulations, so even when things seem inflexible or counterintuitive, you must follow the process as requested if you want to secure the tender.
Resources for Understanding Tenders and Contracts in the Public Sector
While there’s certainly a lot of information out there on the process of tendering for contracts, many websites use overly complex language and jargon.
This can feel intimidating and confusing and leave you more overwhelmed than when you started trying to find a tender service.
Let Us Help You Find Your Next Tender
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You’ll save time and money by avoiding hours searching the internet for tenders that might not be relevant to your needs, and you’ll be able to access all the information and resources you need in a single dashboard.
With unlimited access to live tenders, daily personalised email alerts, a tender-ready toolkit, and ongoing training and resources in your low monthly membership, you’ll be fully supported throughout the process of finding, securing, and managing your public service tenders.