Business Essentials: Can Mosaic piece a winning bid together and crack the state sector in Britain?

Kate Hilpern reports on the problems of a US technology group as it attempts to secure government contracts over here

It has built up a loyal public sector client base in the United States, but Mosaic Network can't seem to repeat the trick over here.

Alex Hyde-Parker, director of business development at the technology and consultancy firm, explains: "Mosaic came about because a need arose to integrate the various systems of care within local authorities in the US.

"Our founder, with the help of social scientists, designed a complex database system at the University of California which achieved that. It transpired that there was a commercial need for similar systems, and so Mosaic was launched in 2000, specialising in solutions for the voluntary, charitable and government sectors."

The problem is that while 95 per cent of Mosaic's US client base is in local government, it is finding the British equivalent very hard to crack. "Our work with the UK voluntary and charitable sectors has been going reasonably well since we opened satellite offices in the UK - in Edinburgh and Brighton - in 2002," says Mr Hyde-Parker "We have also worked on some interesting, albeit small, projects for local government."

Among these local government clients is Brighton & Hove Council, which runs a kiosk-based social housing information service called Homewire. In summer 2002, the council decided it needed to overhaul the system, which Mosaic Network did in partnership with a local design house, POPmedia.

But such contracts have proved thin on the ground. Mr Hyde-Parker says: "We did eight tenders for larger local government projects last year, none of which was successful."

It's not that Mosaic doesn't have the capability to take on projects that are large enough to put to tender, he stresses. Indeed, one of those it competed for was to provide an integrated system of care for the Mental Welfare Commission of Scotland, and Mosaic ranked second out of all applicants in the technical skills section (covering both patient welfare and information technology).

"But due to our small size and lack of financial resources in the UK, we were rejected," says Mr Hyde-Parker. "We had been trading for less than a year and only had interim accounts that showed less revenue than the value of this particular contract."

Mosaic's competition tends to be larger providers such as EDS, he adds. "They can provide the financial clout and the track record to win these contracts. That's frustrating for us because we have specialist skills that they don't."

Writing a tender can take several weeks - a huge overhead for a small firm like Mosaic. In fact, the tendering process is similar in the US, but there the company has large government projects behind it, which have helped lead to other contracts.

"Once you're in, you've broken the barrier," says Mr Hyde-Parker, adding that working for government entails much bureaucracy. "All the decisions take far longer to be made than in the private sector. Even our smaller projects for the public sector - those below the threshold of tendering - have a much slower turnaround. It can be very challenging in a small organisation to have resources spent hand-holding."

www.mosaic-network.com

WHAT THE EXPERTS SAY

John Stewart, director, govern-ment market and e-commerce division, Office of Government Commerce (OGC)

"For a small company, tendering for government contracts can appear to be a complicated, expensive process. However, I'd like to assure Alex that the Government fully understands how important SMEs [small and medium-sized enterprises] are to the economy and the benefits they can bring to public procurement. These include innovation, a more flexible approach to contracts and, in many cases, better value for money, too.

"To ensure easier access for SMEs to government contracts, the OGC and the Small Business Service [SBS] are currently running two pilot projects. Information about these pilots can be found at www.supplyinggovernment. gov.uk. This site also provides a single reference point for suppliers on selling to the government, contact details for every major department and a short summary of the products and services they purchase. The findings from the pilots will inform the national roll-out of an action plan to reduce the barriers affecting SMEs.

"Information on other steps the Government is taking to improve public procurement is available on the OGC website at www.ogc.gov.uk."

Barry Franklin, business adviser, Business Link for London

"The public sector has specific tendering processes that every bidder is required to follow - whether for local council, hospital or government department contracts. Initially, this may seem onerous and daunting, particularly when you receive a negative result. But it is important not to give up.

"Mosaic Network's performance to date seems strong, and the experience it has gained should further help the company to clarify its strengths and weaknesses. In addition, Mosaic's track record in the US provides leverage to build up UK customer confidence.

"For further help in this area, Mosaic Networks should consult the SBS booklet Tendering for Government Contracts, which has been produced with the aim of encouraging small enterprises to bid for government contracts. The booklet gives advice on how to find and successfully bid for tenders in a range of areas, including healthcare. To receive a copy of this and other government publications, go to www.dti.gov.uk/publications.

"Business Link for London's website also has information on tendering for public sector contracts. It can be found at www.businesslink4london. com/supplychain.

"The OGC website offers more specific information on public sector contract tendering in the UK (see www. supplyinggovernment.gov.uk/ opportunities.asp)."

Pete Ferns, director, NatWest Business Banking

"Expanding your company into another country brings with it a whole new set of challenges and can be as testing as setting up your business in the first place. Different countries have different ways of doing things, making it more difficult to win new contracts.

"It may be worth talking to some decision-makers in public sector organisations to get a better idea of the most important criteria they look for in their suppliers. Their feedback could improve your tenders for government projects in the future.

"When it comes to financing your business, there are a number of options available for an overseas company with a US trading history. You should contact your bank over here for advice.

"Bear in mind that all UK banks will require a business plan, financial statements, identification of directors, background to the business and an introduction from your company's American bank before they will consider an application for finance."