Manage Risk in Uncertain Times – Why Public Procurement Is a Safe Haven

Public procurement not only offers a stable and reliable stream of business opportunities, it also serves as a strategic shield for suppliers aiming to mitigate risk and maintain growth during periods of economic uncertainty. The structured nature of public contracts, combined with long-term engagements and clear regulatory frameworks, provides suppliers with a level of predictability that’s often lacking in the private sector. In this article, we’ll dive into how public procurement helps reduce financial and operational risks, share best practices for managing risk in long-term agreements and learn how Mercell can help suppliers stay ahead, even in economic downturns.

 

How Public Procurement Provides Revenue Stability

One of the key reasons why public procurement remains a safe haven in uncertain times is the consistency of public sector purchases. Governments and public institutions are committed to fulfilling their responsibilities, regardless of economic conditions, meaning that their procurement processes continue, and the need for goods, services, and works remains stable.

Unlike the private sector, where companies may scale back or delay projects in response to market shifts, public sector organisations must maintain their operations and services. This consistency creates a more predictable and reliable demand for suppliers, providing an opportunity for steady revenue. Public procurement is typically governed by strict regulations and frameworks, meaning that public contracts offer a high degree of security for suppliers, as long as they meet compliance requirements.

Public procurement's stability makes it an attractive avenue for suppliers looking to reduce the financial risks associated with reliance on private-sector business. Moreover, many public contracts are long-term in nature, meaning that suppliers can secure continuous business for years, offering even more certainty in times of economic upheaval.

 

Best Practices for Managing Risk in Long-Term Agreements

Long-term contracts with public sector entities offer attractive revenue stability, but as a supplier, you must actively manage the associated risks to protect your business. These agreements may span several years and are subject to changes in regulations, political climates, and operational realities. By implementing proactive strategies, you can minimize disruptions, maintain performance, and strengthen your reputation as a reliable public sector partner. Here are some best practices tailored specifically for suppliers.

 

Ensure Compliance and Transparency 

Maintaining regulatory compliance is one of the most critical aspects of long-term public procurement success. Regulations may change throughout a multi-year contract, and compliance requirements can become more stringent depending on jurisdiction or policy shifts.

• Stay up to date on procurement legislation, ESG mandates, and reporting standards.

• Design internal processes to flag non-compliance early, including audit trails and documentation checkpoints.

• Use digital platforms to ensure that every step of the bid journey is compliant.

 

Diversify Your Portfolio

Relying heavily on one buyer, contract, or geography can expose your business to significant risk if funding is cut, political priorities shift, or project scopes change. A broader contract base enhances financial security.

• Target a mix of contract types: framework agreements, recurring services, and project-based work.

• Expand your reach across multiple public agencies, municipalities, and sectors.

• Consider participating in joint bids or subcontracting models to gain exposure while reducing individual risk.

• Use market data gain insights and identify untapped sectors or underrepresented regions where your offerings are a good fit.
  
  

Set Clear Terms and Conditions 

The foundation of any risk-managed contract is well-defined and mutually understood terms. This ensures that both you and the contracting authority are aligned—and protected—when unexpected changes occur.

• Define service-level agreements (SLAs), KPIs, and delivery milestones in measurable terms.

• Include clauses for renegotiation in the event of macroeconomic disruptions, force majeure events, or unforeseen regulatory changes.

• Ensure billing schedules and payment terms reflect cash flow needs over the full project lifecycle.

• Work with legal advisors to validate contract resilience before signing, especially for multi-year frameworks.
  
  
  

Build Strong Relationships

Long-term success in public procurement often hinges on relationships, not just pricing. Trust, consistency, and communication with public buyers play a vital role in mitigating contract risk.

• Maintain ongoing dialogue—not just during procurement, but throughout contract execution.

• Schedule regular performance reviews with contracting authorities to address challenges before they escalate.

• Be transparent about risks you foresee and proactively suggest solutions.

• Strong partnerships can lead to contract extensions, better evaluations, and early insight into future opportunities.

 

Why Public Sector Buyers Seek Reliable, Vetted Suppliers in Uncertain Markets

During economic downturns, public sector buyers are under greater pressure to ensure that they are spending taxpayer money efficiently and effectively. In times of uncertainty, buyers prioritize reliability and trustworthiness, making it even more important for suppliers to prove their worth.

Public procurement is often subject to public scrutiny, and any failure to meet contract requirements can result in reputational damage, delays, and additional costs. As a result, public sector buyers are looking for suppliers who have a proven track record of delivering on their commitments, even in uncertain markets.

To secure contracts in these challenging times, suppliers must:

• Demonstrate Stability: Public sector buyers want suppliers who are financially stable and capable of delivering consistently.
  
  

• Showcase Reliability: Delivering high-quality products and services on time is essential to maintaining long-term contracts.
  
  

• Prove Compliance: Suppliers who demonstrate compliance with regulations, sustainability requirements, and other standards are more likely to win public tenders.
  
  

The more you position your company as a reliable, compliant supplier, the more likely you are to secure contracts in uncertain times.