When not to bid

Every bid you submit costs you something real: a week of a senior person's time, a day from finance, an evening from whoever writes the implementation plan. On a serious tender, easily €5,000–15,000 of internal cost, and often more.

You will not win most of them. Nobody does. Public procurement is a competition, and the arithmetic of competitions is that most participants lose.

Which makes bid/no-bid the highest-leverage decision your team makes — and the one most companies make in about four minutes, on the basis of "this looks like something we could do."

The European evidence has quite a lot to say about which tenders are worth entering. Most of it is unflattering to the instinct that says when in doubt, bid.

The openness paradox

Start with the finding that inverts a piece of received wisdom.

Hoekman and Tas analysed TED data across 32 European countries — more than 200,000 tenders for participation analysis, and over half a million for winner information. It is one of the largest studies of its kind.

Open procedures increase SME participation. More small firms bid. This is the intended effect of open procurement, and it works exactly as designed.

But conditional on competing, an SME's probability of winning goes down.

Think about why. An open procedure invites everybody. That includes you — and it includes the large, well-resourced, professionally-staffed competitors who bid on public contracts as a core business function, with a dedicated bid team, a content library, and a win rate they've been optimising for a decade.

Openness gets you into the room. It does not make you the best-prepared company in it.

The uncomfortable read: the procurement policies designed to include small firms are measurably better at getting them to show up than at helping them win. Participation went up. Success, conditional on participating, did not.

Which means the burden of selectivity sits with you. Nobody is going to make the field easier.

Lots help — but only very small ones

The other standard prescription for SME access is splitting contracts into lots. Break a €5M framework into ten €500k pieces, and small firms can compete for a piece.

The same study tested it.

Lotting increased SME participation — more small firms bid for the lots. Again, working as designed.

But it only increased the probability of winning for lots below a specific size: roughly €23,469.

Above that threshold, lotting drew more SMEs into the competition without improving their odds of winning it. A €500k lot is still, from the perspective of a five-person company, a contract that larger and better-resourced competitors will also bid on — and win.

There is something almost darkly funny about this. The policy intended to open procurement to small firms works, in the win-rate sense, only for contracts small enough that the firms it was designed to help may not find them worth the bid cost in the first place.

The practical lesson is not "never bid on lots." It's that lot size is not a proxy for winnability, and treating it as one is a mistake with a measured cost.

Size wins, and pretending otherwise is expensive

Flynn, McKevitt and Davis studied Irish SMEs in public procurement and found what several other studies have found: larger, better-resourced SMEs win more. Micro-firms are structurally disadvantaged — fewer people, less specialist knowledge, less capacity to absorb the cost of a losing bid.

Hoekman and Tas found the same pattern in the cross-country data, and identified the contract characteristics that correlate with better SME outcomes: smaller contracts, lower complexity, and — a genuinely interesting one — buyers with a track record of paying on time.

This is not a counsel of despair. It's a counsel of targeting.

If size is the strongest structural predictor, then a small firm's edge cannot be "we'll try harder on more tenders." It has to be one of:

• Compete where the large firms won't. Smaller contracts, specialist niches, technically awkward work.
• Compete where your specialism is genuinely scarce. Not "we do IT" — "we do this specific thing that four companies in the country do."
• Stop being small for the purposes of this bid. Which is what consortium bidding is for, and it's under-used.

The literature on consortium and joint bidding is consistent: partnering lets SMEs meet turnover, reference and capacity requirements they cannot meet alone. It's how you clear a gate that was, structurally, not built for you.

Procedural capability is the measured edge

If size is the disadvantage, what's the compensating advantage?

Flynn and Davis surveyed 3,010 Irish SMEs active in public procurement and found that procedural capability — knowing how the process works, handling the documents correctly, managing the mechanics — was associated with both higher tendering activity and a better win ratio.

Not creative capability. Not writing capability. Procedural.

This is, on the evidence available, the single most encouraging finding for a small firm — because procedural capability is learnable. It is not a function of headcount or revenue. It is a function of whether you've built a repeatable way of doing this.

The firms that win more, controlling for size, are the ones that are better at the process. And process is the one advantage a small company can actually acquire.

So: a no-bid checklist

Here is what the evidence supports asking, before you commit the week.

1. Can we clear the gates? Not "are we good enough" — are we eligible. Turnover minimum. Insurance level. Certifications. References of the right size, sector and recency. These are pass/fail, and they're usually in the tender's own documents rather than the notice. If you can't clear one, the answer is no, and it doesn't matter how good you are.
2. Where are the points, and can we score them? Read the award criteria and their weights. If 40% of the quality score sits on a criterion where you're structurally weak — no reference in that sector, no certification, no capability — then the ceiling on your bid is low regardless of effort.
3. How is price scored? Relative or absolute? If relative, your score partly depends on your competitors' prices, not just yours. If price carries real weight and you know you're not the cheapest, be honest about what that costs you.
4. Is this contract the right size for us? Not "can we deliver it" — can we win it. A €2M framework against national competitors is a different proposition from a €150k specialist contract. The evidence says size correlates with winning; act accordingly.
5. What's the hidden cost of losing? Count it properly. Not just the bid team's hours — the opportunity cost of what those people weren't doing, and the morale cost of another loss. If the expected value doesn't clear that, the bid is a bad investment even if you might win.
6. Is there a route past our own limits? Consortium. Subcontracting. Partnering with the firm that has the reference you lack. If the answer to (1) was no, this is the question that sometimes turns it into a yes.

The part nobody says out loud

Bid teams are measured on wins. Nobody gets praised for the tender they didn't enter.

So the incentive inside most companies runs the wrong way: bidding looks like effort, and declining looks like giving up. The result is a pipeline full of tenders that were never winnable, absorbing the capacity that should have gone into the two or three that were.

The evidence doesn't tell you to bid more. It tells you that participation and winning are different things — that policies which increase the first don't reliably increase the second, and that the structural advantages in this market belong to size and process.

You can't do much about size. You can do a great deal about process, and about choosing better.

The bid you don't submit is free. The one you shouldn't have submitted costs you a week you'll never get back.

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FindWell reads the tender's own documents — the Aanbestedingsleidraad and its annexes — and shows you the stated requirements, whether you meet them, and where the points are, each quoted with the section it came from. It exists to make the first three questions on that checklist answerable in ten minutes rather than three days. The decision itself is yours; we don't pretend to make it for you.

Sources

• Hoekman, B. & Tas, B. (2020). Procurement policy and SME participation in public purchasing. Small Business Economics.
• Flynn, A. & Davis, P. (2017). Investigating the effect of tendering capabilities on SME activity and performance in public contract competitions. International Small Business Journal.
• Flynn, A., McKevitt, D. & Davis, P. (2015). The impact of size on small and medium-sized enterprise public sector tendering. International Small Business Journal.
• Nemec, P. (2024). Contesting the public works domain: examining the factors affecting presence and success of SMEs in public procurement. Empirical Economics.

Procedures, thresholds and national rules vary by jurisdiction and are revised periodically. Check the rules in force for your tender.