Procurement Act comes into force with reforms designed to boost small business access to public sector contracts
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Posted: Mon 24th Feb 2025
The long awaited Procurement Act becomes law today with measures designed to reduce bureaucracy and help small and medium businesses win a greater share of the £300bn spent on public sector contracts each year.
The changes include:
Find a Tender, the platform used for searching and applying for contracts worth above £139,688, has been overhauled as the central digital platform (CDP). It is the place where suppliers can keep their standard tender responses and core details to make it easy to apply for multiple contracts. More details on the new Find a Tender here.
Strengthened provisions to ensure suppliers and subcontractors are paid within 30 days on a broader range of public sector contracts.
New "most advantageous tenders" check for deciding which suppliers should be awarded contracts. It replaces the previous "most economically advantageous tender" and allows contracting authorities to consider wider factors than cost, such as social value, and sustainability.
To help businesses improve their bids and learn from unsuccessful qualifications, contracting authorities must provide "specific, informative, and timely feedback" for all public contracts.
The government's National Procurement Policy Statement says contracting authorities must "maximise procurement spend with small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs)". Government departments and arm's length bodies are required to set three-year targets for direct spend with small businesses, charitable organisations and social enterprises, and publish their annual progress towards meeting those goals. The three-year targets for direct spend with SMEs will begin on 1 April 2025, and for VCSEs from 1 April 2026.
The government is working on changes to allow local councils to reserve contracts for local small businesses.
Larger contracts can be broken down into smaller lots to help create more opportunities for micro, small and medium businesses.
Emma Jones, founder of Enterprise Nation, said:
"Today marks the dawn of a new era in public procurement, opening a window of opportunity for UK small businesses to grow.
"Accessing public sector work can act like a growth accelerator for SMEs. Government contracts are solid and reliable and pay within 30 days. They help SMEs develop and invest in new processes, products and efficiencies, as well as take on more staff in their local community.
"By seeing Government procurement through this lens, opening up contracts to more diverse and community-based businesses will be a very powerful way to deliver economic growth.
"My business has already been busy readying SMEs for this moment, boosting the eco-system for tier one suppliers like Deloitte and supply chain transition work on behalf of the West Midlands Combined Authority (WMCA).
"The legislation going live today is the beginning of the next step in the journey to increasing government spend with SMEs and boosting the economy."
To help more small and micro businesses win public sector contracts, Enterprise Nation has appointed one of the UK's most accomplished SME inclusive sourcing experts.
Maggie Berry OBE, who has spent her career helping diverse-owned SMEs to sell their services and products into the global corporate supply chain, will be leading our procurement and supplier-ready programme strategy as the Act opens up new opportunities for growth for the UK's small business community.
Relevant Procurement Act resources
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