SMEs are widely recognised as the backbone of the economy, driving innovation, local growth, and job creation. However, for many small businesses, gaining access to public sector subcontract tenders remains a significant challenge. With the upcoming Procurement Act coming into play, the spotlight is firmly on creating more opportunities for SMEs to engage in public sector tenders, particularly in the construction sector.
The Procurement Act places a clear emphasis on inclusion, requiring contracting authorities to reduce barriers for smaller firms and ensure they are given a fair chance to compete for major projects. But what does this mean in practice? How can public sector clients and main contractors rethink their approach to make procurement more accessible to SMEs? And what steps can SMEs take to better prepare for these opportunities?
To explore these questions, we’re joined by Chris Robinson (Associate Director) and Fleur Summers (Senior Consultant) of Turner & Townsend and hosts of A Procurement Podcast – The Reform Rundown.
Q: Chris, the Procurement Act is a major shift in public sector procurement. Why is it important for public sector clients and contractors to engage SMEs in their procurement processes?
The Procurement Act is a game-changer because it ensures public sector procurement is more inclusive. SMEs make up 99.9% of UK businesses, with over 5.5 million firms contributing to the UK economy. However, these businesses are often overlooked when bidding for larger public contracts, limiting their growth potential. The Act requires contracting authorities to engage SMEs more actively, ensuring they have a fair opportunity to participate in subcontract tenders.
For large construction projects, such as infrastructure and regeneration, there are often opportunities to break contracts into smaller ‘lots’. This enables smaller firms to bid for manageable parts of the project, fostering better competition and supporting local economies. By engaging SMEs in the procurement process, public sector clients help to unlock innovation, cost-effective solutions, and local expertise.
Q: Chris, SMEs offer many strengths in the construction industry, particularly around innovation and agility. How can engaging SMEs help meet public sector goals, including sustainability?
SMEs are incredibly agile and innovative, offering fresh ideas and tailored solutions. They often have the flexibility to deliver bespoke services, which is crucial in an industry where sustainability is becoming a key focus. As public sector procurement increasingly prioritises social value and sustainability, SMEs can play a vital role in driving these goals forward.
Additionally, engaging local SMEs means supporting regeneration, creating local employment, and contributing to the sustainability of the communities they operate in. Public sector clients can ensure that their procurement processes align with sustainability goals by prioritising SMEs with the necessary certifications (such as SSIP certification and the Common Assessment Standard), which demonstrates a commitment to industry best practices.
Q: Fleur, Given the emphasis on SME inclusion in the Procurement Act, how can public sector clients and main contractors make tender opportunities more accessible for smaller businesses?
A key strategy is breaking larger contracts into smaller ‘lots’, which is already common in public procurement. The Procurement Act actually mandates that contracting authorities must justify, in their tender notices, why a lotting approach hasn’t been used. This ensures transparency and gives SMEs a clearer understanding of why some opportunities may not be feasible for them.
Additionally, public sector clients and main contractors should engage with SMEs earlier in the procurement process. Too often, SME tendering feels isolating because communication is limited to formal tender documents. Buyers should look at offering pre-market engagement sessions, such as ‘meet the buyer’ events, which can help SMEs understand procurement requirements, build relationships with decision-makers, and increase their chances of securing future subcontract tenders.
Q: Fleur, What specific adjustments should public sector clients make to simplify procurement for SMEs?
Public sector clients should consider SMEs from the very start of the procurement process. It’s important to simplify pre-qualification questionnaires (PQQs) and other tender documentation, as SMEs often find the paperwork overwhelming. Ensuring that documentation is clear and concise will help small businesses navigate the procurement process more effectively.
Clients should also focus on increasing the visibility of tender opportunities. By adopting procurement platforms that are more accessible to SMEs and notifying them early about upcoming opportunities, clients can help level the playing field. Pre-market consultations and networking events can provide SMEs with a deeper understanding of what’s required and tips on how to submit winning bids.
Q: Chris, Contractors play a crucial role in providing opportunities for SMEs. How can main contractors build stronger relationships with SMEs?
Main contractors can build stronger relationships with SMEs by proactively seeking out and expanding their supply chains, including more local businesses to their PSLs. In the construction industry, where specific expertise is often required, SMEs can add significant value by providing niche services or products. By offering subcontracting opportunities to SMEs, main contractors can diversify their supply chains while giving smaller firms experience working on public sector projects.
Contractors can also run workshops or networking events for SMEs to help them understand how to become part of their supply chain. They could also provide additional mentorship and guidance on the procurement process, offering advice on the necessary certifications required that can set them up for long-term success.
Q: Chris, Finally, what advice would you give to SMEs looking to compete for public sector tenders?
SMEs need to ensure they are meeting all the necessary industry certifications and standards, including SSIP, ISO standards and Common Assessment Standard. These certifications are often prerequisites for public sector contracts, so ensuring they are up to date is essential.
Don’t be afraid to ask questions during the procurement process. Public sector procurement is built on transparency, and if there is any uncertainty, it’s crucial to seek clarification through the procurement platform. This can help you submit more accurate bids and improve their chances of success.
Finally, thoroughly read the PQQ and procurement documents, paying close attention to the evaluation criteria. Tailor your submission to meet the client’s exact needs, and if you are unsuccessful, always ask for feedback. This will help you improve and increase your chances of winning future subcontract tenders.
Get ahead of the curve
The Procurement Act presents exciting opportunities for SMEs in public sector procurement, benefiting both the construction industry and local communities. Compliance Chain’s Supply Chain Management Software supports public sector clients and contractors by connecting them with pre-qualified, local subcontractors who meet industry standards (such as SSIP and the Common Assessment Standard), making the procurement process smoother and more compliant.
Subcontractors looking to connect with main contractors and clients can pre-qualify for tenders and put their business on the map through Compliance Chain’s supplier memberships. We simplify pre-qualification, helping you obtain the necessary SSIP and Common Assessment Standard certifications to successfully compete for public sector contracts. Our Project Opportunities Portal gives you direct access to live project opportunities, while our member events foster valuable connections with industry decision-makers.
Whether you’re a buyer or a supplier, Compliance Chain can help you make valuable connections while ensuring adherence to best practices in SME tendering, supply chain management and procurement.
As Business Development Manager, Richard has the primary focus of onboarding suppliers to ensure they are fully compliant to work in the public sector.
