Public Sector Contract Awards Quarterly Review – A Bidder’s Insight

At the end of January, market intelligence platform and public procurement experts Tussell published analysis on LocalGov detailing how the total value of local government contracts awarded in Q4 2023 was less than half of the previous quarter. The analysis also noted that total procurement spend is at a two-year low, behind the £5 billion amount awarded by local councils and authorities in Q2 2023.

Although the data can seem concerning, we take a deep dive into contract award notices to show that bidders should still be confident they can receive a steady, reliable pipeline of work from the public sector.

Q4 contract awards – breaking down the data

Based on data obtained from Tussell, we can see the historic value and volume of contract awards does fluctuate significantly between quarters, as per the table below:

There does not appear to be any discernible pattern in contract awards, such as authorities ‘frontloading’ or ‘backloading’ spend at the end of financial or calendar years. However, it is understandable that bidder organisations could be nervous about a perceived lack of local authority spend given recent news on their fiscal health.

In the second half of 2023, many local authorities reported increasing budget pressures and strained finances. Birmingham City Council and Woking Borough Council issued Section 114 (S114) notices, effectively declaring bankruptcy. In September, an anonymous report indicated that around a third of local councils were considering issuing S114 notices, many of those serving the poorest areas of the country.

What does this mean for bidders currently tendering for contracts?

For bidder organisations looking to submit public sector tenders there is no large cause for concern. As above, the volume and value of contract awards can vary from quarter to quarter, and local government bodies such as councils and integrated healthcare boards remain committed to involving small- and medium-sized businesses in their supply chain. Furthermore, despite a flurry of S114 notices, ‘essential services’ such as health and social care will not see their funding reduced as a result.

Potential reasons Q4 of 2023 saw a lower volume and value of contract awards from local governments could include:

• Reluctance to issue new tender notices due to the financial constraints currently faced by local councils and authorities
• A lower than usual number of cyclical, high-value frameworks for this quarter, resulting in disparate impact in financial numbers
• Delay in anticipated contract award dates due to a large number of tender submissions to be evaluated or the holiday period.

Lastly, as per Tussell’s analysis, there was a 4% quarterly increase in the proportion of contracts awarded via framework agreement, suggesting some positive signs. This aligns with the central government’s targets to ensure greater flexibility in commercial framework agreements, avoiding prospective suppliers from being ‘shut out [of public procurement] for long periods of time’. It is likely that local authorities will adopt a similar approach – particularly as framework agreements can be more appealing and achievable for small- and medium-sized businesses.

Tender contract notices – Q1 2024 so far

Our team monitor government websites Contracts Finder and Find a Tender daily, ensuring our clients receive notice of opportunities as soon as possible. To date this year, there has been no concern regarding the volume or value of contract notices published.

To illustrate, some examples of high-value framework agreements and individual contracts the local government has put to tender include (but are not limited to):

Based on the data, framework agreements with multiple purchasing authorities and planned works are issuing notices as usual. For bidders and SMEs in particular, it may be important to be mindful that when dealing with multiple authorities, the geographic scope of works will be larger. Regardless of the sector or industry, your organisation’s ability to resource multiple sites, assets or buildings should be a crucial factor in your ‘bid/no-bid’ decision.

Supporting you with bid and tender opportunities

As thought leaders within the bid and tender writing industry, we monitor trends and updates within the bid writing sector. This includes a series of blogs on the Procurement Act 2023, the introduction of biodiversity net gain and reduced central government procurement spend with SMEs across financial years.

Last year, we also partnered with Tussell to release a podcast around how to write bids with authority, ensuring high-quality, competitive and tailored responses are at the forefront of your bid team’s mind. This enables us to stay abreast of changes to public procurement law and best practice, providing the highest quality bid writing and bid review services for our clients.

If you would like to learn more about how we can support you with an opportunity, get in touch with our sales and marketing team at info@executivecompass.co.uk or via telephone 0800 612 5563 today.