Should small businesses go after public tenders?

"Tenders are probably mostly for the big players." That is one of the most common reasons small businesses give for staying out of public tenders. But the picture holds up worse than many think. Here we take four of the most common myths and look at what actually applies.

Myth 1: "There is too much paperwork"

Paperwork has been a real barrier, and that is precisely why the rules were changed. The European Single Procurement Document (ESPD) means you do not have to submit every certificate up front. You first declare that the requirements are met, and as a rule only the winner has to document everything at the end. The barrier to taking part is lower than it used to be.

Myth 2: "The contracts are too big for us"

Big contracts exist, but they do not have to be advertised as one large package. For procurements above the EU threshold value, the contracting authority has a duty to consider splitting the contract into smaller lots, partly so that smaller suppliers can take part. If they choose not to split it, they have to give reasons. This is set out in the EU public procurement directive (2014/24/EU, Article 46) and applies across the EU and EEA. It means you can more often than before bid for a piece you actually have the capacity to deliver.

Myth 3: "The incumbents win anyway"

It is true that some suppliers win often. But the contracting authority has to choose the bid based on the award criteria that were set, not on who is biggest or best known. If you are strong on a sub-criterion that carries a lot of weight, you can beat a larger player. Local presence, flexibility and specialist expertise are often advantages small businesses have.

Myth 4: "Our company is too young to qualify"

Many competitions set qualification requirements about experience, for example that the supplier must have completed a certain number of similar deliveries, or have been active in a field for a certain number of years. For a newly established company that can look like a closed door: the company does not have the track record, even though the people in it have worked in the field for years.

But the company's date of birth and the expertise inside the company are two different things, and the rules are less categorical than many think. The procurement directive lets contracting authorities ask for evidence of the educational and professional qualifications of the people who will actually carry out the work, not only of the company as a legal entity. Selection criteria must also be proportionate, meaning no stricter than the contract requires.

Norway offers a useful illustration. The Norwegian procurement agency DFØ writes in its guidance on buying consultancy services that newly established suppliers can document the necessary experience by pointing to experience the proposed people or resources have built up in the service of others than the supplier. DFØ also advises buyers to let employee experience count as much as the company's own, since experience requirements can otherwise shut out newly started businesses. The Norwegian complaints board for public procurement, KOFA, has assessed exactly this. In case 2023/1152 the chosen supplier was a relatively new business, and the board took as its starting point that an experience-based qualification requirement does not rule out giving weight to experience the employees have built up elsewhere. Norwegian decisions do not bind contracting authorities in other countries, but they rest on rules from the same directive.

This does not mean anything goes. The contracting authority can still set requirements for the company's own experience, and every competition has to be read on its own terms. But it does mean a young company with experienced people is less often out of the running than the requirement list can suggest. Our advice: document the experience of your key people concretely (CVs and reference projects from previous employers), and if the requirement is worded as absolute company experience, put the question to the contracting authority before the deadline for questions: can the experience of the proposed key personnel meet the requirement? The question costs nothing, and the answer becomes part of the tender documents for everyone.

The EU is pulling in the same direction

This is not a national quirk. The EU is actively working to open the market to small and medium-sized businesses, not least through the split into lots and lighter documentation in the first round. The thinking in this article therefore applies just as well to a supplier looking to bid across borders in Europe.

What you should do

If you recognise yourself in any of the myths, there is no reason to wait for a perfect opportunity. Here is how to get started:

• See what is actually being advertised in your field. Search Cobrief for what you deliver. Many are surprised by how many competitions there are in their own industry and region. Set up tender alerts so you do not have to check manually.
• Read the requirements before you spend time on the bid. Go through the contract notice and the qualification requirements early. Do you meet them, or can employee experience count, as described above? If something is unclear, ask the contracting authority before the deadline.
• Look for lots. You do not have to take the whole delivery. If the competition is split up, you can bid for the part you have capacity for.
• Start small. Pick a smaller competition as your first attempt. The point of the first one is as much to learn the process as to win.

In closing

Public tenders are not reserved for the big players. On the contrary, the rules are built to let more suppliers in, through simpler documentation in the first round, the split into lots, and qualification requirements that have to be proportionate to the contract. The biggest barrier is often the belief that this is not for us.

We at Cobrief are happy to talk about how a smaller business can get started with public tenders.