What is the UK government SME spend target?

The UK government's SME spend target is 33% of total procurement spend by 2022, including direct contracts and subcontracting through the supply chain.

UK Government SME Spend Target

The UK government has set a target for 33% of total procurement spend to go to small and medium-sized enterprises (SMEs) by 2022. This target encompasses both direct contracts awarded to SMEs and indirect spend through subcontracting arrangements within the supply chain.

Target Implementation and Progress

This 33% target was established as part of the government's commitment to supporting smaller businesses and promoting economic growth across the UK. The target applies to central government departments and their arm's length bodies, representing a significant increase from historical SME participation levels in public procurement.

The target is measured using the Cabinet Office's comprehensive spend data, which tracks both: - Direct awards to SMEs (contracts won directly by small and medium enterprises) - Indirect spend (subcontracting opportunities where SMEs work as part of larger supply chains)

Definition and Measurement

For procurement purposes, SMEs are defined as businesses with fewer than 250 employees and either an annual turnover not exceeding €50 million or an annual balance sheet total not exceeding €43 million. This aligns with the European Commission's SME definition, which continues to apply in UK procurement contexts.

The government publishes annual statistics on SME spend performance, tracking progress towards this target across different departments and sectors. Recent data shows steady progress, with SME spend representing approximately 27-30% of total government procurement in recent years.

Supporting Measures

To achieve this target, the government has implemented various initiatives including simplified bidding processes, prompt payment requirements, and the removal of unnecessary barriers that traditionally prevented smaller businesses from competing for public contracts. The SME procurement guidance provides detailed information on how these measures support smaller suppliers in the public sector marketplace.