The benefits of working with small and medium enterprises for public sector buyers

Small and medium enterprises (SMEs) are the backbone of any healthy economy; they help to create job opportunities and support economic growth and innovation. 

At Crown Commercial Service (CCS) we understand the importance of having a diverse range of suppliers working with the public sector. That’s why we take positive actions to make sure that SMEs are well represented in our agreements. 

Currently around 75% of suppliers on our commercial agreements are SMEs. Our 2025/26 SME action plan outlines our role in helping customers increase how much of their procurement spend goes through them. 

What are small and medium enterprises?

An SME is any organisation that has either:

• fewer than 250 employees and an annual turnover of less than £44million
• fewer than 250 employees and a balance sheet total less than £38 million

SMEs make up an essential component of the private sector business landscape, making up 99.8% of all businesses. They employ 60% of the private sector workforce and generate £2.8 trillion in total sales revenue.

What are the benefits of working with small and medium enterprises?

There are many benefits of working with SMEs, including:

• good levels of customer service – they often have highly skilled and experienced workforces with smaller chains of command
• greater potential adaptability to situations than larger organisations – their smaller nature, allows them to respond quickly to changing requirements and tight timescales
• often based locally – this can reduce carbon footprints associated with work, helping public sector organisations reach net zero
• creating local jobs –  they can contribute to the local social value goals, often being more committed to the community they live and work in

What barriers are small and medium enterprises facing in public procurement?

Historically, SMEs have faced barriers in accessing public buying opportunities and winning contracts. These barriers include but are not limited to: 

• buyers not having time to engage the market to understand the types of goods and services they could provide 
• buyers are sometimes perceived to favour existing suppliers – this is known as incumbency bias
• SMEs viewing the procurement process (often rightly) as long and complex 
• SMEs not being aware of upcoming procurements or knowing where to find the right information in enough time to plan 

How does the Procurement Act 2023 support small and medium enterprises?

The Procurement Act 2023 supports SMEs by:

• removing barriers – all public sector buyers must now consider how to include SMEs and remove barriers to their participation
• providing greater flexibility –  the competitive flexible procedure helps SMEs to show what they can offer through site visits, presentations and dialogue
• increasing transparency with a central digital platform
• faster payments with mandatory 30-day terms
• all public sector buyers must now consider lots – allowing more SMEs to bid where they otherwise would not have

How can buyers remove barriers for small and medium enterprises?

We’ve outlined 4 ways public sector buyers can remove barriers for SMEs:

1. Fostering open communication:

• initiate pre-market engagement with potential suppliers to discuss upcoming opportunities
• learn about their skills and capabilities – this may reveal innovative solutions that offer better value than other options

2. Simplify and streamline documentation:

• make sure opportunities are easily accessible to SMEs by keeping documentation clear and concise
• draft Invitations to Tender using plain English to help understanding

3. Set fair contract terms and weightings

• adjust the social value weighting in tender evaluations to match your organisation’s most important goals.
• avoid overly complex contract terms that could increase costs for SMEs

4. Guarantee fair and open opportunities:

• tailor requirements to match the capacity of SMEs
• for larger contracts, encourage joint bids (where SMEs work together as a team; otherwise known as consortium bids)

Note for buyers on joint bids: you must give clear guidance on joint bidding to make the process easy to understand. You can also break up your requirements into smaller lots.

Find out more about public procurement

Download our latest digital brochure for the latest information on our agreements and how we can help you achieve value for the nation.

Discover more of our Procurement Essentials articles for helpful guidance on buying policies and processes.