The government has issued new guidance instructing public sector buyers to make it easier for small businesses to win a larger share of the £400 billion spent annually on goods and services.
The national procurement policy, which comes into effect on 24 February, encourages 20,000 public agencies to simplify tendering processes for small and medium-sized enterprises (SMEs), as well as voluntary, community, and social enterprises. The move is designed to reduce bureaucracy, drive social change, and help small businesses compete for government contracts.
The Cabinet Office has told buyers to “maximise procurement spend” with SMEs without compromising value for money or quality, as part of broader efforts to boost economic growth.
With SMEs already receiving around 20 per cent of public procurement spending, the reforms could unlock billions of pounds in contracts for smaller firms. The 2023 Procurement Act, set to take effect at the end of the month, will introduce greater transparency, potentially saving over £4 billion a year, according to the National Audit Office.
“Businesses tell me that the current system isn’t working. It is slow, complicated, and too often means small businesses in this country are shut out of public sector contracts. These measures will change that.”
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