Empowering SMEs: The National Procurement Policy and the Role of Be Connected

The UK government’s recent introduction of the National Procurement Policy Statement (NPPS) marks a significant shift in public sector procurement, aiming to foster economic growth, innovation, and social value by prioritising small and medium-sized enterprises (SMEs). This policy, effective from 24 February 2025, outlines strategic priorities for public procurement, emphasising the inclusion of SMEs and voluntary, community, and social enterprises (VCSEs) in public contracts.

Key Objectives of the National Procurement Policy

The NPPS sets forth several strategic priorities:

• Maximising SME Participation: Encouraging public agencies to allocate a greater share of procurement spending to SMEs and VCSEs, thereby stimulating local economies and fostering innovation.
• Enhancing Transparency and Efficiency: Streamlining procurement processes to reduce complexity and administrative burdens, making it more accessible for smaller enterprises to compete for public contracts.
• Promoting Social Value: Utilising public procurement to achieve broader societal goals, such as job creation, skills development, and environmental sustainability.

Real-World Examples of SME Challenges in Procurement

Despite the favourable policy landscape, SMEs often encounter significant hurdles in accessing public sector contracts:

Case Study 1: The Framework Barrier

A digital consultancy SME in the UK struggled to secure government contracts as they were not included in a major government procurement framework. Despite offering innovative and cost-effective solutions, they were locked out of bids restricted to framework suppliers. The SME had to navigate complex and expensive application processes to even be considered, demonstrating a common challenge in framework-based procurement.

Case Study 2: Bid Complexity and Risk Concerns

A construction SME, despite having the necessary qualifications, faced rejection due to perceived financial instability and lack of prior public sector experience. The company had delivered successful projects in the private sector but was deemed too risky for a long-term public contract.

Statistical Insight:

Currently, SMEs account for only 20% of total public procurement spending, despite making up over 99% of UK businesses. A study by the Federation of Small Businesses (FSB) found that over 50% of SMEs that attempted to bid for public sector contracts reported difficulties with complex procurement requirements and framework restrictions.

Addressing Framework Issues: Policy Recommendations

To ensure that the National Procurement Policy delivers real benefits for SMEs, the government must address framework-related challenges by:

1. Reducing Framework Entry Barriers

• Simplifying the application process and lowering financial requirements for SMEs.
• Allowing SMEs to join frameworks on a rolling basis rather than being limited to infrequent application windows.

2. Ensuring SME Representation on All Major Frameworks

• Setting a minimum threshold for SME inclusion in government frameworks.
• Creating flexible framework lots specifically designed for smaller suppliers.
• Introducing dynamic purchasing systems (DPS) that allow SMEs to apply as their capabilities grow.

3. Creating SME-Specific Frameworks

• Establishing separate procurement frameworks dedicated to SMEs in sectors like IT, consultancy, and construction.
• Incentivising large suppliers to subcontract to SMEs as part of framework agreements.

The Financial Trade-Off: Short-Term Costs vs Long-Term Gains

While increasing SME participation in public procurement may initially seem costlier, the long-term benefits far outweigh the short-term expenses. The key advantages include:

• More Agile Service Delivery: SMEs often offer more flexible and responsive services than large suppliers, adapting quickly to changing public sector needs.
• Greater Innovation: SMEs are known for bringing fresh ideas and innovative solutions to the table, driving advancements in public sector service delivery.
• Strengthening Local Economies: Increased SME participation supports job creation, local business growth, and reinvestment in communities, ultimately leading to higher tax revenue and a stronger economy.

Governments and public sector bodies must look beyond initial cost comparisons and consider the broader economic and social impacts of engaging SMEs in procurement.

Be Connected: Bridging the Gap

To address these challenges, platforms like Be Connected play a pivotal role in levelling the playing field for SMEs:

• Simplified Access to Opportunities: Be Connected aggregates public sector contract opportunities, providing SMEs with a centralised portal to discover and engage with potential projects.
• Resource and Training Support: The platform offers guidance and resources to help SMEs understand procurement processes, prepare competitive bids, and comply with regulatory requirements.
• Facilitating Networking and Partnerships: By connecting SMEs with other businesses and public sector buyers, Be Connected fosters collaborations that can enhance competitiveness and open doors to larger contracts.

Conclusion

The National Procurement Policy represents a transformative approach to public sector procurement, aiming to harness the potential of SMEs to drive economic and social benefits. However, the success of this policy hinges on effective implementation and the active participation of SMEs. By embracing policy improvements and leveraging supportive platforms like Be Connected, SMEs can position themselves as vital contributors to public sector projects, driving innovation, efficiency, and social value across the UK.

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