Will getting rid of PQQs help small businesses win Government contracts?

Today we continue our review of the recent Government announcements aimed to help smaller businesses compete better for public contracts. The suggestions around a standard PQQ are not new and are very sensible; the trick will be in making it work. Here's the proposal;

Allowing firms to submit their prequalification data once for all procurements in common commodities. This will put an end to companies having to submit the same data time and time again, saving time and money for the suppliers and for government.

There are loads of practical issues around who own the data, how updates are managed, the need for verification, integrating with users’ own sourcing platforms... but in principle this has to be right.

The second part of this is more controversial. "Seeking to eliminate PQQs (Pre-Qualification Questionnaires) for all central government procurements under £100,000."

We didn't see that coming (until late in the day, anyway).  At first sight, it would seem to add to procurement workload, as there wil potentially be many more tenders to evaluate; and surely suppliers will still have to give all the usual PQQ type detail, just at tender stage instead of PQQ? So you might have literally hundreds of bidding organisations, all completing a pretty full tender document.

But I’ve talked to a couple of informed folk in public procurement, who argue that cutting out potentially innovative new suppliers at PQQ stage based on turnover, lack of the right certificates etc. is very bad practice (hard to disagree with that). They see this move then as opening up the opportunity for suppliers to propose interesting new approaches directly at tender stage. But what about the danger of far too many suppliers bidding, and overwhelming hard-pressed procurement functions?

“We’ll have to work harder to make sure only serious suppliers bid” was the response from one senior (and very progressive) public sector procurement person I spoke to.  Doesn’t that take more time though?

“We’re doing it already” he said. “We find that putting a bit of effort into things like supplier briefing sessions more than pays back in terms of time saved later – you can discourage no-hope suppliers, and put good ones on the right track to making high-quality bids”.

So I guess I’m now sitting on the fence. My original view was that this measure was crazy. Having heard the positives from people I respect...I’m not sure. I still think there is political risk in that suppliers will get frustrated when they find that the tender document is even more demanding than the PQQ they’re used to, and they still statistically have little chance of success. And the scheme working depends on procurement people acting in a thoughtful and fairly skilled manner; and suppliers responding sensibly (for example, not responding to tenders that don’t suit them).

But it’s a brave attempt to do something different, and we’ll watch with interest to see how it develops.

Voices (3)

  1. M S:

    I’m curious as to how these “progressive” procurement people define and identify a “no hoper” in advance of a tender without having done a PQQ? Actively discouraging people from bidding without any formal process of assessment behind it seems to be inviting trouble. To me, the problem isn’t in having a PQQ, it’s with people applying blanket requirements regardless of the type and value of the contract being tendered, and in having requirements that make it impossible for new entrants to the market to get through.

  2. Andrew F Smith:

    An interesting debate; as someone who has worked across both public and private sectors I am also sitting on the fence on this one. I do see value in PQQ’s, both for the organisation awarding the contract(s) and for the bidders. There are occasions when the ability to down-select works well for both parties; for the bidder it helps prevent time and money be expended on bidding for a contract that they have no real prospect of winning and for the organisation to get to a manageable number of suppliers. If the PQQ is removed I can already predict grumbles from organisations about the increased effort with few results. Perhaps another option would be to improve the guidelines for developing PQQ’s to promote innovation and to ensure SME’s are not excluded from bidding.

  3. Rob:

    Though slightly uncomfortable, it’s probably best to stay neutral (on the fence) for this one Peter. You’ve spoken to some very progressive public sector procurement people and they are already doing it – which is very encouraging and to good to hear – but many aren’t.

    Let me also share with you an important insight into ‘innovative companies’. There are two types of innovative companies: radical and incremental. Each has a different attitude and approach to growth. In each category there are firms who have demonstrated either rapid or slow but sustainable growth and one’s confidence is these companies is high. There are others who have great ideas, and often a great product, but if business management and, in particular, ‘hitting growth targets’, was compared to pugilism, they couldn’t punch a phone box if they were stood inside one. That could be a problem if you’re awarding any mission/business critical contract. I’m sure you remember that if you move too rapidly from ‘leading edge’ to ‘cutting edge’ to then find you’re on the ‘bleeding edge’, don’t be too surprised if there’s blood on the carpet.

    So, do purchasers need to have a better grasp of broader business economics if they are going to award more of their business to smaller businesses? A robust cross-functional team to undetake the various analyses (at pace)? A sound approach to their governance arrangements, populated with stakeholders and SROs who are willing and skilled to assess (and accept) any risks? And I think I’ve only just scratched the surface with these questions…

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