HELLO THERE! Samielle Drake advises small businesses on how to navigate public procurement

There are many reasons why small businesses often struggle to win public contracts: lack of resources, complex specifications, oversized contracts – these are just a few examples. Recently graduated economist Samielle Drake gives her best advice to small businesses looking to improve their chances in public procurement.

Congratulations on your dissertation! What have you studied and how did you go about it?

– My thesis examines how rules, requirements and market conditions affect participation, competition and outcomes in public procurement. The research is important because public procurement makes up a large part of Sweden’s GDP, and it would benefit everyone – buyers, suppliers, and taxpayers – with more fair, cost-effective, predictable, and sustainable procurement.

– I combine theoretical models with empirical analysis. By using data from Swedish procurements, appeals and other industry-specific statistics, I have been able to analyze both market structure, regulation, and behavior of bidders.

What are your main practical achievements?

– Research shows that when mandatory requirements are widely used, fewer companies participate in procurement. This may be because some requirements are difficult or expensive to meet – which means that smaller companies do not even try. Furthermore, we can see that when requirements are imposed on companies only after the company has won a tender, so-called contractual requirements, bids become larger and more companies participate. This is because if companies only have to make a certain investment after they have won the contract, more companies will be willing to bid.

– Another finding is that appeals seem to scare away smaller firms. Appeals reduce the likelihood of SMEs participating in future tenders by 5-6%. They are probably considered too cumbersome.

– Finally, we can see that in local markets (municipalities) where a few large companies dominate procurement, SMEs’ chances of winning a contract are reduced.

What is your advice to small businesses that want to enter local and regional government?

– First of all, be prepared for possible appeals, so bear in mind that margins in both time and resources may be required. Secondly, learn to interpret requirement texts carefully, misunderstandings can lead to exclusion. Finally, small businesses should focus on building local references and presence, as in some cases local knowledge can have advantages in procurement.

What can regulators do to give small businesses a better chance of participating and winning tenders?

– Reduce barriers to entry, for example by avoiding complex requirements that are not effective in their purpose. Consider whether it is possible instead to focus partly on contractual requirements – perhaps these types of requirements meet needs equally well? Finally, I recommend breaking down large contracts into smaller sub-contracts to allow SMEs to bid.

Contact samielle.drake@umu.se

More about the thesis
Samielle Drake recently defended her doctoral thesis Navigating Public Procurement at Umeå University.