Busting the myths: The lowest price always wins a contract - myth 2
Many small business owners I speak to want to grow their business.
To be honest who doesn’t want to grow their business?!
Yet, most of those business owners I speak to have not given much consideration to selling to the public sector. Why would you? Its complicated, your business is too small, the cheapest supplier will always win, right? Wrong!
What if I told you these objections were all myths? That the public sector actually WANTS to buy from you!
Join me over the next few weeks while I bust these myths and get you to realise just how to take advantage of the lucrative and plentiful opportunities that are waiting to be filled by you and your small business
Myth #2 is: the lowest price always wins a contract (which means you count yourself out because you know there are others in the market place who deliver lower quality products or services at a lower price.
The reality of this is that price cannot be the sole reason for awarding a contract. Instead, most bids are awarded to the Most Economically Advantageous Tender (MEAT). This is laid down in the Public Contracts Regulations 2015.
What do I mean by the Most Economically Advantageous Tender (MEAT)?
The Most Economically Advantageous Tender is the tender that offers the best price, not necessarily the lowest price. They will use a cost-effectiveness approach or price/quality ratio.
MEAT evaluation can include:
Quality
Technical Ability
The proposed design
Accessibility
Social characteristics
Environmental benefits
Innovation
Customer service or ongoing support
Ability to delivery on time.
The evaluation section of the tender will outline exactly how the opportunity will be evaluated. It is common for a maximum percentage to be given for price and a percentage to be allocated for quality. For example, 60% Quality, 40% Price.
Abnormally Low Prices
If one of the prices of a bidder appears to be abnormally low, it can be rejected. Although the buyer must first ask the bidder to explain the relevant calculations/characteristics in detail to justify the low price. The supplier may have a more efficient manufacturing process, the technical solutions chosen, favourable conditions and/or the originality of the bid. However, if the price is low because it does not comply with UK environment/social or labour laws, it must be rejected.
Some Tips to help you identify and win public sector opportunities
Make sure you understand the selection criteria. If you do not use the clarification/question and answer function. (We’ll have more about this in a few weeks).
Consider where you provide real value to the client (buyer). Review the specification and see where you can exceed their requirements.
Think about what is important to the buyer.
Understand the market you are operating in and your capacity within this. Download our Business Growth Guide which will take you through the things to consider.
What are you waiting for?
Last week in our blog we busted the myth that the public sector only wants to buy from bigger businesses. You can find it here.
If you want to find out more about the opportunities, you are missing out on book a virtual coffee here. We’ll talk to you about your business and the opportunities available to you and your business.