Can SMEs Finally Compete in Procurement? A New Opportunity Emerges

Public procurement in the UK—£407 billion in 2023/24—should, in theory, be a powerful lever for economic growth. It buys everything from IT infrastructure to prison catering, and it ought to be the friend of the small, nimble, and innovative.

And yet, for the UK’s 5.6 million small and medium-sized enterprises (SMEs), procurement often resembles a high-stakes game played with rules no one ever quite agreed on. Despite accounting for 99.9% of UK businesses (British Chambers of Commerce), SMEs secured just 20% of direct central government procurement spend in 2021 (Gov.uk), falling well short of the 33% target once touted by ministers. Progress has stalled.

Now, with the Procurement Act 2023, the government says it’s getting serious about change. But SMEs have heard this tune before. The real question is whether this time, the system will change—or just the paperwork.

The New Package: Promises and Pitfalls

The Act introduces several headline reforms intended to create a “simpler, more transparent” procurement regime:

• A central digital platform for public sector buyers and suppliers, aimed at reducing duplication and administrative fatigue.
• Reserved contracts that allow contracting authorities to limit competitions to local or SME bidders.
• A transparency dashboard, where all opportunities, decisions, and contract awards must be published—finally putting a stop to those mysterious “invitation-only” tenders that no one outside the big players ever seems to see.

These measures are a step in the right direction. But there’s a difference between removing friction and rebalancing power. And if public bodies aren’t incentivised (or compelled) to use these tools fully, the status quo will endure—albeit with a shinier front end.

Gross spending on public sector procurement was £407 billion in 2023/24 across the UK – House of Commons Library

The SME View: Still Waiting at the Gate

Speak to SMEs directly, and the same story repeats: bidding for public contracts is time-consuming, high-risk, and often fruitless. Many SMEs can’t afford a bid team, a compliance consultant, or the time to decode shifting procurement requirements.

Take Jennings Facilities, a Midlands-based cleaning company. After spending £8,000 on external help to submit a compliant bid, they were told their application was invalid—due to a digital signature placed two millimetres outside a box. They haven’t bid since.

This isn’t just frustrating—it’s systemic. As the British Chambers of Commerce noted in a 2024 report, “many SMEs feel locked out of government procurement due to the complexity, cost and opacity of the process.” The result: a narrowing pool of suppliers, less innovation, and poorer value for taxpayers.

A Turning Point—or a Cosmetic Change?

If implemented boldly, the new regime could shift the dial. According to the Cabinet Office, the reforms could open up £40 billion in annual procurement spend to more diverse suppliers—including SMEs.

But if adoption is patchy or performative, it risks becoming another procurement policy that promised transformation and delivered templates.

So what must happen?

• Buyers must be held accountable for SME engagement, not just box-ticking transparency reports.
• SMEs need support tools, not just more portals. Navigating procurement still requires getting your data, documents, and compliance in order.
• Success stories must be shared—where local authorities have reserved contracts for local firms, or where SMEs have triumphed without needing legal degrees.

Conclusion: Time to Hold the System to Its Promises

The Procurement Act lays the foundations for fairer competition. But foundations don’t build houses—people do. Councils, procurement officers, and business support organisations must now turn policy into practice.

For SMEs, this is the moment to get ready. Build your credentials. Organise your documents. Be visible. Because when the gate opens—even slightly—you need to be in position to walk through it.

At Canopy, we help procurement teams stay ahead of risks and streamline supplier data management, so you’re always prepared for change in a dynamic market. If you’re looking to navigate supplier challenges, we’d love to help.

References

1. New public procurement rules to drive growth, opportunities for small businesses and exclude suppliers that fail to deliver
2. British Chambers of Commerce: Government contracts still out of reach for many SMEs
3. Government tells its buyers to help small businesses win more work
4. Efficiency in government procurement of common goods and services
5. Procurement Act 2023