Are there contracts reserved for SMEs in the UK?

No, the UK does not have contracts specifically reserved for SMEs, but the Procurement Act 2023 introduces new measures to improve SME participation including simplified procedures and prompt payment requirements.

No Reserved Contracts, But Enhanced Support

The UK does not operate a system of contracts specifically reserved for small and medium-sized enterprises (SMEs). Unlike some other jurisdictions that set aside certain percentages of public contracts exclusively for SMEs, the UK approach focuses on removing barriers and improving accessibility for smaller businesses within the general procurement framework.

New SME Support Under the Procurement Act 2023

The Procurement Act 2023, which comes into effect in February 2024, introduces several measures designed to help SMEs compete more effectively. These include a new competitive flexible procedure that allows for more tailored procurement approaches, simplified qualification requirements, and mandatory consideration of lots and sub-contracting opportunities. Contracting authorities must now actively consider whether contracts can be divided into smaller lots that SMEs can realistically bid for.

The Act also strengthens prompt payment obligations, requiring prime contractors to pay subcontractors within 30 days, which particularly benefits smaller suppliers who often struggle with cash flow. Additionally, the new transparency requirements mean SMEs will have better visibility of upcoming opportunities through improved procurement pipelines.

Existing SME Support Measures

Under current regulations, public bodies are already encouraged to consider SME participation through various means. The Crown Commercial Service runs specific initiatives to support SME access to frameworks, and many contracting authorities have adopted SME-friendly practices such as shorter tender documents, earlier supplier engagement, and proportionate selection criteria. The government's target is for 33% of procurement spend to go to SMEs by 2022, though this is achieved through improved access rather than reserved contracts.

For detailed guidance on SME participation opportunities, contracting authorities should refer to the government's SME action plan and consider how their procurement strategies can be structured to encourage broader market participation while maintaining value for money and competition principles.