What’s new in Public Procurement and how will it affect SMEs

The all-island public procurement market is worth an estimated €15bn/£13bn, and it represents an outstanding opportunity for SMEs to win steady business and increase their sales. However the market is undergoing some important changes, including the introduction of new Social Value and Environmental clauses, and these will have an impact on how companies tender for public contracts in Northern Ireland and Ireland. Companies who are considering bidding for public sector contracts will need to be aware of these changes in order to stay competitive.

Before we consider what’s changing in more detail, let’s reflect on the very positive opportunities that continue to emerge from a buoyant public sector market, and two positives in particular: Continuity and SME success.

Continuity is one of the attractions of the public sector market, and despite the challenges of the past two years, it has provided business continuity for many SMEs that have encountered more volatile trading conditions in the private sector. Governments have sought to provide continuity during the pandemic, and now post-pandemic, are looking to stimulate growth with ambitious programmes of investment in housing, health, education, cyber security and all areas of infrastructure.

SME success in the public sector market continues with over 200 frameworks operating on the island of Ireland. Data confirms that SMEs make up at least 70% of all framework members on the 150+ frameworks operated by the Office of Government Procurement in Ireland and 50+ operated by the Construction and Procurement Delivery in Northern Ireland. Public sector buyers do want to work with SMEs because their owners tend to be invested in securing good outcomes and are often agile, innovative and very accessible.

Responding to the changes

In continuing to access the opportunities presented by a diverse all-island public sector market, companies now need to respond to the changes emerging in procurement.

1. Social Value criteria being scored in Northern Ireland from 1 June 2022

Tenders must include a minimum of 10% of total scoring to social value, on service contracts above £123,000 and on construction contracts above £4.7million. The option to introduce social value criteria and scoring below these thresholds is also available.

So, what is social value? There are four themes:

1. Increasing secure employment and skills
2. Building ethical and resilient supply chains
3. Delivering Zero carbon
4. Promoting wellbeing

The new Social Value provisions require contracting authorities to clearly define the social value criteria and evaluation process to be used in the tender, and then to take responsibility for working with the supplier on the monitoring of social value delivered during the contract. As a business, you need to ensure that the information you are providing is realistic and achievable in addressing these new requirements.

Evaluation is based on a structured points-based system for larger tenders over £250,000, and for tenders below this value, a non-points-based system is used. The structured points-based system requires the submission of a Social Value Delivery Plan by bidders, based on a set spreadsheet format. When a non-points-based system is used, scoring is based on how well your tender methodology addresses Social Value themes prioritised by the buyer, and the specific indicators that you propose to meet these themes (specific activities, timescales, and allocation of responsibility).

Successful bidders then have to report to the buyer – based on either a progress report format prescribed in the Request for Tender, or (for larger contracts) a web portal established to capture monitoring information on the actual delivery of Social Value.

In Northern Ireland, these new Social Value provisions are to be reviewed during 2023 and an option to increase the minimum weighting to 20% of total scoring will be considered.

2. Sustainability

Sustainability is becoming a central part of public procurement in Ireland, in response to a number of policy drivers related to the circular economy, the Paris Agreement on Climate Change, conventions on Biodiversity, Net-zero emissions, and Social Value.

The Office of Government Procurement has established clear GPP (Green Public Procurement) criteria by sector and these are being introduced on a phased basis: 1. Construction; 2. Energy; 3. Transport; 4. Food & Catering; 5. Cleaning Products & Services; 6. Paper; 7. Textiles & Uniforms; 8. ICT.

Sustainable public procurement (SPP) in Ireland is focused on achieving value for money on a whole life-cycle basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst reducing negative impacts on the environment. Hence SPP is designed to deliver positive outcomes that are economic, social and environmental.

There are significant similarities between Social Value policy in Northern Ireland and Sustainable / Green Procurement policy in Ireland. In Northern Ireland, the policy headline focuses on social value, but embraces criteria and weighting in relation to environmental considerations, carbon performance, waste management, biodiversity etc. In Ireland, the policy headline focuses on Sustainability but embraces Social Value criteria and outcomes.

There are differences in timing and detail, but SMEs planning to apply for public contracts in either jurisdiction must get familiar with these new requirements.

Help is at hand

The good news for SMEs is that they do not need to work through these complex changes on their own – there are supports available. For example, InterTradeIreland’s tendering supports help SMEs to improve tendering capability and our dedicated team will advise companies on what they need to do to incorporate these changes, when bidding for public sector contracts.

Go-2-Tender workshops are also available to assist SMEs to analyse the public sector market, to consider the most appropriate bids to pursue and crucially, the workshops (and supporting mentoring packages) help companies to develop stronger bid content, which includes content relating to Sustainability and Social Value.

InterTradeIreland also runs sector-specific Meet the Buyer events. The events provide SMEs with the opportunity to meet with relevant buyers and organisations within specific industry sectors. The next Meet the Buyer event is in partnership with Translink and takes place on 22^nd June at Titanic Belfast. Find out more and register

In summary, if you want to give your business the edge and win more public contracts as part of your overall growth strategy, then you will want to excel in relation to scoring on Social Value and Sustainability.

Data confirms that the scoring margin between winning and losing is very small, so strong performance on Sustainability and Social Value can really make the difference between winning and losing!