What impact has Covid-19 had on public procurement?

This report looks at what impact Covid-19 has had on UK public procurement. Read on or click the button below to read the full report, or see our COVID-19 tracker for more details.

Covid-19 has impacted every aspect of life and business. Public procurement is no exception - last month the public sector published 30% fewer opportunities than in February. In fact, it was the lowest month since Contracts Finder fully came into force in 2016. But some sectors have been hit harder than others.

While this is a challenging time for everyone, public sector suppliers will likely fare better than most. The public sector will be more reliant on its suppliers at this time of need, while meeting that demand will be a critical source of income for thousands of companies at a time of severe disruption.

In uncertain times, data matters more than ever. That is why here at Tussell we have started a new series of monthly reports measuring the impact of the crisis on public procurement. We want to fill the gap for real-time, aggregate, evidence-based reporting on what is really is going on so that buyers and suppliers can make informed decisions and allocate resources accordingly.

Impact of Covid-19 on UK Public Procurement (April 2020)

Introduction and key findings

This short report looks into the overall impact that Covid-19 has had on UK public procurement so far – and offers advice for public sector suppliers navigating this unprecedented period.

While public procurement is going through an unsurprising dip, in the medium term we expect suppliers to government to fare better than most, as public sector spending surges to re-ignite the economy. Our key findings are that:

• UK public sector opportunities were down 30 percent in March.
• More than 100 procurement processes were cancelled last month.
• IT and Telecoms sector was the least impacted by the crisis

Covid-19 dampening UK public procurement

So far, Covid-19 has had a considerable dampening effect on UK public procurement. Only 1,832 new ITTs were published in March, down 30 percent on February 2020 and 20 percent on March 2019. In fact, this is the largest monthly fall in the volume of opportunities published by the UK public sector since the beginning of 2016.

While this is clearly a considerable drop, by comparison to many parts of the private sector, it is still a relatively resilient market.

Impact felt across all levels of government...

The impact of Covid-19 has been felt across every part of the UK public sector – with opportunities falling from between 27-32% across all buyer groups.

Central Government saw the biggest drop in opportunities published last month – from 434 in February to fewer than 300 in March.

For the most urgent procurements, usual competitive tendering processes will have been bypassed.

...but not evenly across all sectors

Last month the most modest dip in demand was in IT & Telecoms – down only 15 percent. A decline in standard procurements has likely been balanced out by an uptick in demand for the technologies that allow for flexible working.

On the other side, opportunities in Education and Training as well as Business & Financial services opportunities were down 40-50 percent - this would be a good time for suppliers in these sector to start planning for the expected rebound.

Cancelled procurements

The UK public sector cancelled 105 procurement processes in March 2020 – up nearly 40 percent on the prior month. Local Government were responsible for nearly half of these cancellations.

If you are currently writing a tender, it is a good idea to check in with the customer whether they are planning to go ahead with the procurement in the circumstances.

Conclusions: what does this mean for your business?

Covid-19 has impacted every area of life and business. Public procurement is no exception - last month the public sector published the fewest opportunities since Contracts Finder fully came into force.

This is to be expected. The public sector, like all of us, is adjusting to this 'new normal'. Non-urgent procurements are naturally taking a back seat to this immense crisis that the public sector is leading the fightback against.

But companies working with the public sector will fare better than most. In the short term, provisions have been made for suppliers to continue to be paid (even if services aren't being delivered). The CCS has already announced the extension of a number of frameworks through to 2021, including G-Cloud 11. So you can take those applications off your to-do list.

Contract extensions are likely to follow. Re-procurement is time-consuming and expensive - check in with your customers about their plans for renewal.

Longer-term, procurement will be one of the levers through which the government reignites the economy. While your team may be spending less time on bidding, that is more time that can be spent on strategic planning, so you can be in the best position possible when the tap is re-opened.

Expect disruption in current/future bids

There has been a significant increase in the number of cancelled procurements in the last month, and this disruption is likely to continue for some time. It is likely that a number of the
procurement processes you are already taking part in will be affected.

Look out for extensions to current contracts

Re-procurement is a time-consuming and expensive process. Buyers are likely to prefer to extend existing contracts where possible. If you have a contract due to expire in the next few months, check with your customers about their plans for extension.

Use your time for strategic planning

Less time bidding means more time for account planning, market segmentation and competitor intel. Having a clear, evidence-based growth strategy will mean you are better positioned for the expected rebound, when competition will be even more intense.

Direct awards more likely

While public procurement is usually guided by competition regulations, in emergency situations such as this the public sector are able to directly award contracts relevant to their response to the crisis.

If you think you can help the response to Covid-19, consider reaching out directly to public
bodies to offer your services.

Comprehensive data, essential insight

To grow your business in the public sector, you need to see the whole picture and join the dots. Our database coverage includes:

• £3.5 trillion tenders since 2012
• £1.8 trillion contract awards since 2012
• £1.9 trillion spend receipts since 2016
• 7,140 buyers
• 93,411 suppliers
• 13.6 percent of UK GDP
  
  

Tussell market intelligence allows you to plan strategically and act proactively. Book a demo today if you'd like to save time, gain insight and be able to focus on where you will win more business from government.