The UK Government allocates a substantial amount of money to purchase a wide variety of goods and services from private companies and entities through a process known as public procurement. According to official reports, an estimated £300 billion, representing almost a third of all spending conducted by public bodies in the UK, goes towards these acquisitions, and over 50,000 contracts are issued to this end every year.
Furthermore, the changes introduced by the UK Procurement Act of 2023, which came into effect in February 2025, have reduced barriers to entry for small and medium-sized enterprises (SMEs). Therefore, venturing into public sector tendering presents a world of opportunities for businesses of all sizes and in all industries, as they can gain access to diverse markets, procure new business, build long-term beneficial relationships, ensure a steady source of income and thus grow and expand their operations.
However, for companies that have little or no familiarity with the inner workings of public procurement or how to find a government tender, winning public sector contracts also comes with unique challenges. With more companies seeking to collaborate with public sector bodies, the competition in this space is growing fiercer, pushing participants to look for solutions that could help them increase their chances of success.
In this context, innovation emerges as a critical resource that can make a notable difference. Companies that focus on innovation, particularly in technology but also in other key business areas, and know how to leverage it to their advantage, stand a better chance of securing public sector contracts than those who ignore its importance.
Therefore, understanding how innovation plays into the whole public procurement process should be a major point of interest for enterprises that want to gain a competitive advantage when tendering for contracts in the public sector.
The specifics of public sector tendering
Although both private and public entities have many things in common when it comes to procurement, as they require more or less the same types of goods and services to sustain their operations, there are also significant discrepancies between the two, especially in terms of funding and regulations.
Public procurement is a heavily regulated process, requiring all parties engaged in the tendering process to comply with very strict rules and protocols that don’t apply in the private sector. The learning curve can be rather steep for newcomers as they have to get up to speed with the numerous laws, procedures, and practices that govern this environment, commonly known as the procurement system.
One major difference is the way contracts are published and awarded. In the public sector, the organisation that wishes to acquire certain goods or services from privately owned companies has to release a public contract notice, in the form of an invitation to tender (ITT), a request for proposal (RFP), a request for information (RFI), or a request for quotation (RFQ).
All interested enterprises can submit bids and compete for government contracts. The vendor who meets the requirements outlined in the tender and offers the best value for money typically wins the contract. Things work differently in the private sector, where companies are under no obligation to make their offers public and can hold private negotiations to pick a winner.
Public sector tenders are also subject to intense regulatory scrutiny and imply strict selection criteria to ensure transparency and fairness, and guarantee that taxpayers’ money is spent responsibly. This results in a more rigid process that applicants might find more challenging to navigate. In the private sector, there is less regulatory oversight, procedures may differ on a case-by-case basis, and the focus falls on profitability, which ensures greater flexibility and freedom during procurement.
The use of technology is another aspect that sets the two sectors apart. Public contract tendering relies heavily on e-procurement systems to manage purchasing activities and thus streamline operations, reduce costs, and enhance efficiency. Private organisations, on the other hand, although open to tech integration, are less keen on resorting to digital tools and solutions.
The innovation advantage
There are many ways in which innovation can assist companies tendering for government contracts. First of all, innovations have brought major transformations to public procurement and have significantly simplified many of the tasks and activities it encompasses. The introduction of automation, data analysis, and electronic platforms has made the search for public sector tenders and the bidding process run a lot smoother. Organisations now have the possibility to use AI-powered tools to automate repetitive tasks like data analysis and conduct a more thorough evaluation of vendors.
The advent of e-procurement platforms has prompted the switch from cumbersome manual tasks to automated workflows, making procurement more efficient, transparent, and accountable. These platforms provide real-time access to procurement information, facilitating better collaboration and reducing risks.
At the same time, the use of innovative solutions can help companies stand out from the rest, serving as a differentiating factor. With so many enterprises bidding for the same contracts, it’s important to look for ways to rise above the rest. Companies focused on developing new methods and strategies that can help them deliver better products and services are seen as more dependable and reliable, which makes them more attractive to potential partners.
Given that public procurement is an ever-evolving field where emerging technologies continue to gain more ground, public sector tenders tend to favour companies that demonstrate a commitment to innovation and the ability to stay ahead of the curve. By prioritising innovations and striving to keep up with emerging trends and the changing needs of society, these enterprises are more likely to be considered for public sector tenders.
When companies embrace a forward-thinking approach and leverage innovation and creativity to anticipate future challenges and opportunities, it becomes easier for them to adjust their strategies to changing market conditions or respond to their clients’ specific requirements. This, in turn, can help them enhance their reputation and build trust with public sector stakeholders.
To sum up, there’s a strong relationship between innovation and public sector tendering, underscored by the new technologies that are transforming procurement and the very nature of the procurement system, which recognizes and rewards innovation.
