Are Public Tenders Interesting for SMEs?

It became clear, especially in the context of the COVID-19 crisis, that there is a need for action regarding the digitization of the public sector. Germany ranks 21st in the EU in this regard—behind Italy and Poland but ahead of Bulgaria and Hungary (see https://ec.europa.eu/digital-single-market/en/digital-public-services).

To address this issue and simultaneously stimulate the economy weakened by COVID-19, the federal government is making an additional 3 billion available for the digitization of public administration. This amount is roughly equivalent to the total annual IT expenditures of the public sector and can therefore be regarded as a significant boost.

Even today, between 100 and 200 larger projects are initiated monthly by the public sector in Germany. Due to the measures that have been decided, these numbers are expected to increase significantly. The projects are primarily found in the following areas (sorted in descending order by the number of contracts per sector):

But back to the question: Is participating in public tenders worthwhile for SMEs? Here are some relevant figures:

• On average, about 4 providers apply for a project
• Only 38% of the bids come from SMEs.
• When SMEs are among the bidders, 70% of the contracts are awarded to them.

These figures clearly show that the chances for SMEs to receive public contracts are quite substantial. This aligns with the explicitly stated strategy of the EU, which indicates that:

• Contracts should be divided into smaller units to minimize obstacles for SMEs as much as possible.
• Digital platforms should be used for tenders to further reduce hurdles.
• Intellectual properties should largely remain with SME providers to support them in expanding their market position.

The strengthening of SMEs is thus a declared goal of the European Union, and the figures indicate that this strategy is indeed being pursued in practice.