What does the Carillion collapse mean for SME construction tenders?

Carillion has an international supplier spend of around £3 billion. Now that it has gone into liquidation, what does this mean for the future of SME construction tenders?

With contracts in the UK, Canada and the Middle East, Carillion is Britain’s second largest construction services and facilities management firm, employing 19,500 people in the UK alone.

Current projects that the organisation is involved with include HS2, new hospitals in Liverpool and Smethwick, and the provision of school dinners for 30,000 pupils.

What do we know so far?

Carillion has gone into liquidation. The company, which had a market capitalisation of £2 billion in 2016, is now in a position where its debts equate to almost that amount.

It has been reported that work at Carillion’s public sector construction sites has been paused pending decisions about the future of the sites; while private sector service contracts, such as catering and cleaning, will continue to be fulfilled for now.

What public sector tenders is Carillion working on?

One of the most recent contracts Carillion was awarded was for High Speed 2 (HS2). The UK’s new high-speed rail network will connect London to the West Midlands, the West Midlands to Leeds and Crewe, and Crewe to Manchester; it is not yet known what disruption Carillion’s collapse will cause to HS2 infrastructure developments. Carillion also carries out maintenance of schools, prisons and other public buildings.

The Government’s Insolvency Service has urged Carillion’s UK staff to continue to go to work, assuring them that they will be paid to continue providing services.

The future of construction tenders for SMEs

Many lessons can be learned from the mistakes that Carillion has made, especially when it comes to awarding construction tenders to larger organisations. National Chairman of the Federation of Small Businesses (FSB), Mike Cherry, has announced that: “Public procurement must be much more small-business friendly, in which it is easier for small firms to navigate the system and the Government should prioritise meeting its target of at least one third of taxpayer-funded contracts going to smaller firms.”

That said, it can be argued that the Government is making progress. New targets have been announced and by 2020 the Government’s aim is that £1 in every £3 of procurement spend is placed with small UK businesses. The collapse of such a large organisation as Carillion may be what is needed to convince departments such as the Ministry of Defence, the Department for Work and Pensions and HMRC to award more work to smaller suppliers.

Spend analysis for SME construction tenders

It is estimated that the Government spent £700 million a year with Carillion, a figure you can find using Tracker’s Spend Analysis function. Money spent with Carillion can be accessed on our portal as UK local and central government departments are required to publish details of all transactions over £500 and £25,000 respectively.

Looking over these details you might also discover which areas your business could increase its market share in. For more information, contact us now for a free demo with a member of the Tracker team.

Apply directly with the public sector for construction tenders

Now more than ever SMEs should be applying for public sector contracts directly, and not through the supply chain model. The Crown Commercial Service (CCS) is seeking to have a third of public contracts going to smaller companies by 2022, which means your business has a much better chance of winning construction tenders than ever before.

Sign up now for a free demo and we will show you how to use our Market Leads tool. This is extremely valuable to our customers after the collapse of Carillion as the tool allows users to add any recurrent opportunities to a watch list and receive an email alert when such opportunities are ready for re-tender.

Find out more about Market Leads.