Section 12 of the Procurement Act 2023 (PA23) requires that contracting authorities (a) have regard to the fact that small and medium-sized enterprises may face particular barriers to participation, and (b) consider whether such barriers can be removed or reduced.  

There is a similar obligation in section 86 for regulated below thresholds contracts, recognising that lower value contracts may especially be of interest to SMEs.  There are some practical steps all contracting authorities could take to immediately start levelling the playing field. 

Market engagement: Consider how and when you engage with your markets – early market engagement will almost always pay off.  Good market engagement will involve a two-way conversation and goes beyond “meet the buyer” events.  It is as much about listening to the market as it is about telling the market what the contracting authority is seeking. 

Simplify procedures: Review and revise your “standard” approaches to procurement – simplify procedures where appropriate to do so, with a particular focus on areas of spend which might be appropriate for SMEs to bid for.  It might be possible to permanently change your standard approach so that barriers are not erected in the first place. 

Plan ahead: The PA23’s requirement to publish Pipeline Notices for contracts above £2m over an 18-month timescale fosters an expectation of transparency and forward-planning, which could usefully extend to all future spend, including lower value contracts.  Consider what additional transparency you can provide about anticipated spends and procurement processes, and share that information at the earliest opportunity. 

Highlight suitable opportunities: The PA23 requires contracting authorities to highlight in their Tender Notices whether they consider the contract (or individual lots forming part of the procurement) may be particularly suitable for award to SMEs. It is worth considering how other notices (particularly at the early stages can be used, and thinking about how else you provide information for the marketplace to signpost SMEs toward the central digital platform. 

Set suitable award criteria: Be conscious of the impact that inappropriate award criteria can have, particularly on SMEs, and the barriers that these create.  Be alive in particular to award criteria and scoring methodologies that are disproportionate to the nature, complexity and cost of the contract.

Break down your contracts: Section 18 of the PA23 makes it clear that before publishing a Tender Notice at the start of a procurement, contracting authorities must consider whether the subject of the contract could reasonably be supplied under more than one contract, and especially whether breaking down the procurement into lots is appropriate. This can be a simple but impactful way of breaking down barriers to SMEs, by enabling SMEs to tender for separate lots which are smaller, more specialist, or geographically limited. 

Consider ringfencing competition: The PA23 provides the opportunity to “reserve” contracts to supported employment providers – organisations that operate wholly or partly for the purpose of providing employment to disabled or disadvantaged individuals.  While not all supported employment providers will be SMEs, many are, and the rules set out in section 32 of the PA23 provide an opportunity to prioritise spend on organisations with this specific social purpose.

Talk more: Many procurements fail to provide opportunities for SMEs to engage not because there is an unwillingness to do so, but rather because the right decisions are not made early enough in the commissioning cycle, and by the time the Tender Notice is published and the procurement commenced, there is little chance that the barriers experienced by SMEs can be broken down.  More than anything else, therefore, contracting authorities and SMEs alike are encouraged to engage in conversation at the earliest possible opportunity.