Why “The Procurement Act Doesn’t Apply to Small Businesses” Is a Dangerous Assumption

If you're running a small business, it's easy to assume that public procurement legislation is something for the bigger players to worry about.

After all, the Procurement Act 2023 sounds like the sort of legislation that concerns government departments, multinational contractors and organisations with entire teams dedicated to compliance. Not a small construction company, an independent consultancy or a growing facilities management provider.

But here's the problem: the Procurement Act doesn't just affect businesses already winning major government contracts. It changes how public sector opportunities are advertised, how suppliers compete for them and, importantly, how smaller businesses can get involved.

It's quite literally designed with smaller businesses in mind.

So assuming it doesn't apply to you could mean missing opportunities, misunderstanding new requirements or continuing to approach tenders in ways that are no longer particularly effective.

This blog will cover what does the Procurement Act actually mean for small businesses and why should SMEs be paying attention.

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First Things First: Does the Procurement Act Apply to Small Businesses?

Yes, although there's an important distinction to make.

The Procurement Act 2023, which came into force in February 2025, primarily governs how contracting authorities purchase goods, services and works.

In other words, it's public sector buyers who have the legal responsibility to follow the legislation. However, if your business wants to supply those organisations, the changes will directly affect how you find opportunities, qualify for contracts and submit tenders.

And there's no general exemption simply because your business is small.

Whether you're a sole trader bidding for a local authority contract or an established SME competing for a place on a national framework, the procurement rules governing that opportunity can affect your experience.

Of course, not every contract falls under the same requirements - different thresholds, exemptions and procurement arrangements apply and contracts started under previous legislation may continue under the old rules.

But the important point is this: being a small business doesn't mean the Procurement Act is irrelevant to you.

In fact, several of its reforms were specifically designed to make public procurement more accessible to smaller suppliers.

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The Act Was Designed to Give SMEs More Opportunities

One of the biggest misconceptions surrounding public procurement is that government contracts are reserved for organisations with enormous resources, established public sector relationships and dedicated bidding departments.

Historically, smaller suppliers have faced genuine barriers to entry.

Lengthy tender documentation, disproportionate financial requirements, complex qualification processes and limited visibility of opportunities have all made competing for public contracts more difficult than it needs to be.

But the Procurement Act attempts to address some of these issues.

For example, contracting authorities must have regard to the fact that SMEs may face particular barriers when competing for contracts and consider whether those barriers can be removed or reduced.

This doesn't mean authorities are required to award contracts to smaller businesses, nor does it guarantee SMEs preferential treatment. It does, however, place greater emphasis on making procurement processes accessible and proportionate.

Other changes include restrictions on requiring audited accounts as a condition of participation, unless the supplier is otherwise required by law to have them, and measures intended to improve payment practices.

For businesses previously discouraged by complicated procurement processes, these are meaningful developments. But here's the catch - those opportunities only matter if you understand how to take advantage of them. That's where BWS comes in.

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You Might Be Missing Contracts You Didn't Know You Could Bid For

Have you spent years assuming your business isn't big enough to compete for public sector contracts?

You might occasionally check a local council's website, perhaps respond to an invitation from an existing customer, but otherwise concentrate on private sector work.

Meanwhile, contracting authorities are advertising opportunities that could be perfectly suited to your services.

Under the new regime, the central digital platform (accessed through Find a Tender) plays an important role in improving transparency and visibility across public procurement. For smaller suppliers, this means there are more structured ways to discover opportunities and understand how public sector organisations are purchasing services. The Act also introduces greater transparency around certain procurement activities, including planned procurements and contract awards.

Some of this information can be particularly useful when developing a longer-term bidding strategy:

Rather than simply reacting to an opportunity when a tender lands, businesses can start identifying potential customers, monitoring upcoming requirements and preparing well in advance - and preparation can make the world of difference.

If you discover a £500,000 contract two weeks before the submission deadline, you might struggle to assemble the necessary policies, evidence and case studies.

Identify that same opportunity several months earlier, and suddenly you've got time to assess whether it's suitable, strengthen your documentation and decide whether it's worth pursuing.

That's a considerable advantage for a small team working with limited resources.

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Being Small Doesn't Automatically Mean You Can't Meet the Requirements

Another common assumption is that public sector contracts come with financial and operational requirements that smaller businesses simply can't satisfy. Sometimes, that's true - certain contracts genuinely require substantial capacity, specialist accreditations or experience delivering at scale.

But not every procurement should be approached with the assumption that bigger automatically means better.

Under the Procurement Act, conditions of participation must be proportionate to the nature, complexity and cost of the contract. This matters because a supplier shouldn't face unnecessarily restrictive qualification requirements that have little relevance to the work being procured.

For example, a small consultancy delivering a relatively modest professional services contract shouldn't automatically need the same financial capacity as a contractor responsible for a major infrastructure programme.

Similarly, buyers must consider whether a requirement to hold particular insurance before contract award is justified, rather than unnecessarily preventing capable suppliers from competing.

That's not to say businesses can ignore financial standing, insurance, technical capability or compliance requirements - they absolutely can't. But it does mean SMEs should assess the actual tender requirements rather than ruling themselves out based on assumptions.

You might be more eligible than you think.

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The Rules Have Changed So Your Old Bidding Habits Might Not Work

Let's say your business has successfully tendered for public sector contracts before. You've got a collection of previous submissions, a handful of policies and a bid library you've gradually built over the years.Surely you can just continue using those?

Well, not quite.

The Procurement Act introduced changes to supplier information requirements, procurement procedures and the way contracting authorities evaluate tenders.

For example, suppliers competing for covered public contracts now need to engage with the Central Digital Platform, which allows them to register and share core business information with contracting authorities.

The Act also provides for a competitive flexible procedure, giving buyers more flexibility in how they structure competitions. While the legislation aims to reduce unnecessary barriers, suppliers still need to demonstrate that they can meet the requirements of individual contracts.

For SMEs, this creates two risks:

1. Continuing to rely on outdated tendering processes without understanding what's changed.
2. Assuming that simplified procurement means less preparation is necessary.

Neither is a particularly good strategy. A strong tender still needs relevant evidence, convincing responses, clear delivery methods and an understanding of what the buyer actually wants.

The legislation might help you get through the door, but your submission still needs to give the buyer a reason to choose you.

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What Should Small Businesses Actually Be Doing?

The good news is that preparing for the Procurement Act doesn't require employing a full-time procurement specialist. For most SMEs, a few practical changes can make a significant difference.

Start by reviewing your existing tender documentation:

• Are your policies up to date?
• Do you have relevant case studies?
• Can you demonstrate your capacity, experience and approach to contract delivery?

Next, register on the Find a Tender service and familiarise yourself with the Central Digital Platform.

It's also worth developing a more structured approach to opportunity monitoring. Rather than waiting for contracts to appear, identify the authorities, sectors and contract types that are most relevant to your business.

Finally, be selective. Just because a contract is accessible doesn't automatically make it suitable. Consider your resources, capacity, profitability and likelihood of success before committing time to a submission.

For smaller businesses especially, knowing when not to bid can be just as valuable as knowing when to pursue an opportunity. At BWS, we offer opportunity assessment services, allowing you to gain an expert opinion as to whether a bid is worth your valuable time and resources.

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Don't Let an Assumption Cost You Your Next Contract

The Procurement Act isn't a magic solution to every challenge SMEs face in public procurement. Larger organisations will still have advantages in certain competitions and complex tenders will continue to demand considerable time and resources.

But dismissing the legislation as something that only affects bigger businesses means overlooking reforms intended, in part, to make public contracts more accessible.

Whether you're completely new to tendering or looking to improve your existing approach, understanding the new procurement landscape is an important part of staying competitive.

At Bid Writing Service, we work with businesses of all sizes, helping them identify suitable opportunities, understand tender requirements and prepare competitive submissions.

From initial tender readiness assessments and bid strategy development to full bid writing, reviewing and management, our team can help you make informed decisions about where to invest your bidding resources.

Not sure whether your business is ready to compete for public sector contracts? Email us at info@bidwritingservice.com or call us on the number above to discuss your tendering position and how we can help you take the next step.