I am constantly coming across small and medium sized companies that are wasting their time and energy bidding for contracts that they have little chance of winning because the buyer will rule them out on the basis of the 25% rule. This is not a hard and fast written rule but part of the financial and risk assessment.
Basically the rule of thumb is that public sector buyers are unlikely to award a contract to a company where the value of the contract per year is more than 25% of the annual turnover of the company, as this is considered too high risk.
The perceived risks are that the company will have to grow too much to deliver the contract so may not be able to cope and will also be too dependent on the buyer's business.
Commentary on funding and innovation with a major focus on UK government research and development tax incentives (R&D tax credit and relief) including what qualifies and how to get it!
1 comment:
I too find this situation occuring quite often. Why on earth do these companies waste valuable time and resource bidding for tenders and contracts which have little chance of winning?. Perhaps if there were better information out there regarding what type of contract is achievable depending upon company size, then this problem could be resolved.
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