Spring Budget Public Procurement Opportunities, Explained
The Spring Budget offered new routes for leveraging business growth through public procurement opportunities as Chancellor of the Exchequer Philip Hammond made commitments to boost productivity, and improve skills and infrastructure to boost economic growth.
Hammond delivered an upbeat assessment of the UK economy, which has outperformed the mostly pessimistic predictions for what would happen after the vote for Brexit last June. Growth in the UK economy picked up through 2016, and the Office for National Statistics (ONS) estimates that the economy grew 1.8% in real terms in 2016, second only to Germany among major advanced economies. The Office for Budget Responsibility (OBR) now forecasts that the UK economy will grow by 2% in 2017.
This outlook, combined with spending initiatives announced in the Budget, indicate that there will be public procurement opportunities to win new business regardless of your sector. To help you take full advantage, here is our breakdown of the who, why, where, what and when of 2017’s Spring Budget.
Who is likely to benefit most from this Budget?
Throughout the Spring Budget, the Chancellor focused on national productivity and was keen to stress that national debt remains too high while productivity remains too low.
Mr Hammond also noted that the Government is looking for innovative solutions to bridge this gap. To support the creation of such solutions, Mr Hammond announced the National Productivity Investment Fund (NPIF) in last year’s Autumn Statement. The fund, which will invest £23 billion into the British economy over the next five years, will focus on four key areas: transport, digital communications, R&D and housing.
The first funds from the NPIF will be allocated this year with £300 million committed to science and innovation research, £270m to researching disruptive technologies of the future, £16 million to a 5G mobile technology hub and £200 million to the Government’s National 5G Innovation Network.
With the Government explicitly stating that they are looking for new and innovative ways to solve their problems, suppliers who are able to differentiate themselves from competitors by offering previously unconsidered and innovative solutions will potentially see the most public procurement opportunities from the Spring Budget.
Why are critics calling this a ‘wait and see’ Budget?
Whilst a number of announcements were made, many have noted that the Government is keeping its powder dry in preparation for a post-Brexit economy and deferred making any big decisions until Article 50 has been triggered and the Brexit process has unfolded.
Whilst Mr Hammond delivered the Budget against a backdrop of better than expected economic performance, by delaying any significant spending announcements, he has given himself room to manoeuvre in the future should Brexit have more damaging economic consequences than currently forecast.
This was made clear prior to the Budget itself when Hammond, appearing on the BBC’s Andrew Marr programme, vowed to build a £60 billion Brexit war-chest in case the EU gives the UK a bad deal.
Where will there be subcontracting opportunities?
It’s often the case that government spending has a ‘trickle down’ effect with large companies winning sizeable contracts, but relying on subcontractors to deliver certain aspects of the work. Indeed, data from the National Audit Office shows that 60% of the Government’s spending with SMEs came via a larger contractor in the supply chain.
With a number of specific spending announcements in the Spring Budget, it is possible to identify where there are likely to be subcontracting opportunities in certain sectors or geographical areas in the near future; identifying these public procurement opportunities ahead of time can pay dividends in the future.
For example, the Government is investing £200 million into a programme of local projects to test ways to accelerate delivery of superfast broadband networks to every corner of the UK – with an emphasis on rural businesses that struggle with poor connections. Suppliers who win these contracts may be able to deliver innovative solutions with regards to the technology, but may find it harder to provide inventive construction solutions to lay the cables in these rural areas. This means that there are likely to be tendering opportunities for those in the construction industry who can provide this type of service.
What are the opportunities in my sector?
The Chancellor announced funding for specific projects in areas such as national productivity and social care, as well as investments in infrastructure to boost economic growth.
As previously mentioned, the £23 billion National Productivity Investment Fund is starting to be allocated this year, which will create opportunities across a number of sectors including technology and infrastructure. Additionally, the transport sector is in line to receive fresh investment with £690 million to be spent on new local transport projects, and £490 million made available by early autumn 2017. Moreover, £149 billion will be spent on health in 2017/18, with an additional £425 million for investment in the NHS to come over the next three years.
To get started, you should identify what the public procurement opportunities in your sector and if you can supply the relevant services. Our Industry Highlights blog features the main takeaways from each sector, including a breakdown of where the money will be spent and what it will be spent on.
When should I get started?
You may have earmarked a particular investment as a key opportunity to sell to the public sector and be waiting until the tender officially goes to market. However, with the competitive nature of tendering for government contracts, by then it may already be too late.
As soon as you have identified the opportunity, you should be striking up pre-tender conversations with buyers and looking for ways to put yourself in the best position to win the tender.
Pre-market engagement is crucial to success in winning government contracts. If you’re not engaging as early as possible, it’s likely that you’re already falling behind the competition.