The landscape of public procurement is ever evolving, and the introduction of dynamic markets under the UK’s 2023 Procurement Act represents a new addition. Designed to offer greater flexibility and accessibility for suppliers, dynamic markets create new opportunities to win public contracts. But what exactly are dynamic markets, and how do they differ from other procurement systems? In this post, we’ll break down dynamic markets and explain why suppliers should keep an eye on this new tool.
What are dynamic markets?
Dynamic markets are a procurement tool in the UK introduced by the 2023 Procurement Act, aimed at streamlining public sector purchasing while giving suppliers more opportunities to compete for contracts. Unlike traditional frameworks that limit supplier participation once established, dynamic markets remain open throughout their lifespan, allowing new suppliers to join at any time.
This open structure makes dynamic markets particularly attractive for suppliers who may have missed the initial window for joining traditional frameworks. Whether you’re an SME or a larger company, dynamic markets offer an ongoing chance to enter the public sector procurement space.
How do dynamic markets work?
For suppliers, dynamic markets provide a straightforward way to become pre-qualified for public sector contracts. Here’s how it typically works:
- Creating a dynamic market: A contracting authority can create a dynamic market by issuing a Dynamic Market Notice. This notice outlines the terms suppliers must meet to join, such as financial stability or compliance with industry standards. These criteria remain fixed for the life of the market.
- Joining a dynamic market: Suppliers can apply to join at any point during the market’s lifespan, as long as they meet the pre-set conditions. Contracting authorities must evaluate applications within a reasonable time and approve those that qualify.
- Competing for contracts: Once approved, suppliers are eligible to compete in tenders that reference the dynamic market. Only suppliers that are part of the market can bid, and new applications are considered even while a tender is open.
- Awarding contracts: Contracts are awarded through mini-competitions among market members. Suppliers who win tenders through a dynamic market may be subject to certain fees, typically after a contract is awarded.
Key benefits of dynamic markets for suppliers
For suppliers, particularly those entering the public procurement space, dynamic markets offer several advantages over traditional systems like framework agreements or Dynamic Purchasing Systems (DPS):
- Ongoing entry: Unlike frameworks that close to new participants after creation, dynamic markets remain open for their entire duration, making them more accessible.
- Broader scope: While DPSs are limited to specific goods and services, dynamic markets can be created for any type of procurement. This gives suppliers in various sectors more opportunities to participate.
- More competitive opportunities: Dynamic markets encourage regular mini-competitions, meaning suppliers have multiple chances to win work rather than waiting for occasional large contracts.
- Greater flexibility: With no set limit on the number of suppliers, dynamic markets allow for broader participation, ensuring SMEs and larger companies can compete on a more level playing field.
How are dynamic markets different from frameworks and DPSs?
Dynamic markets share similarities with both framework agreements and DPSs but have distinct differences that make them a unique procurement tool:
- Ongoing access: Unlike frameworks, which are closed once established, dynamic markets remain open for their entire duration. DPSs also allow for ongoing supplier applications, but their use is restricted to certain goods and services.
- Broader applicability: Dynamic markets can be used for any procurement category, offering suppliers in diverse industries more opportunities than DPSs, which are typically limited to “off-the-shelf” purchases.
- Contract award process: Both frameworks and dynamic markets use mini-competitions to award contracts. However, in a dynamic market, even new suppliers who join late in the process can still compete for live tenders.
What should suppliers keep in mind?
While dynamic markets offer significant advantages, suppliers must remain proactive to make the most of them:
- Stay alert for opportunities: Since dynamic markets are continuously open, it’s essential to monitor relevant markets and apply when you’re ready. Keep an eye on public notices and be prepared to meet the qualification criteria.
- No guaranteed work: Being part of a dynamic market doesn’t automatically result in contract awards. You’ll still need to submit competitive bids in response to mini-competitions. Crafting strong, tailored proposals that match the contracting authority’s needs is crucial.
- Understand the terms: Each dynamic market has its own terms and conditions, which are set at the time of creation and remain fixed throughout its lifecycle. Make sure you’re fully aware of the requirements and any potential fees involved after securing a contract.
Final thoughts: Embrace dynamic markets for more procurement opportunities
Dynamic markets are poised to affect how public procurement operates in the UK, offering suppliers a new flexible, ongoing way to access public contracts. Their open nature and broad applicability make them an attractive option for businesses of all sizes, especially SMEs looking to break into the public sector.
To take advantage of public tender opportunities, consider using Tendium’s tender monitoring tools to keep track of dynamic market and other tender opportunities alike, as well as streamline your bidding process. Book a demo today to see how we can help you win more tenders with less effort.
