The Procurement Act 2023: What Every SME Needs to Know

The UK Procurement Act 2023 came into force on 24 February 2025, replacing the Public Contracts Regulations 2015. It's the biggest overhaul of public procurement law in a generation — and it's designed to help SMEs win more government contracts. Here's what changed and what you need to do.

What Changed: The 6 Key Reforms

1. Simpler Processes

The old system had 7 different procurement procedures. The new Act has just 3: open, competitive flexible, and direct award. The "competitive flexible" procedure gives contracting authorities more room to design processes that suit the market — which often means simpler processes that SMEs can actually navigate.

2. 30-Day Payment Terms (Entire Supply Chain)

This is the big one for cash flow. The Act mandates 30-day payment terms not just from the public body to the main contractor, but all the way down the supply chain. If you're a subcontractor, you're now legally entitled to be paid within 30 days.

3. Mandatory Social Value (Minimum 10%)

Social value is now a mandatory evaluation criterion carrying at least 10% weight. This benefits SMEs who can offer genuine local community impact — apprenticeships, local hiring, environmental initiatives — over large corporations with generic CSR statements.

4. Single Digital Platform: Find a Tender

All contracts must now be published on Find a Tender (replacing OJEU for UK procurement). This is your one-stop shop. Register, set up alerts for your industry, and you'll see every opportunity.

5. Open Frameworks

Previously, if you missed the window to join a framework agreement, you were locked out for years. The new Act introduces open frameworks where new suppliers can join at defined points during the framework's lifetime. This is a game-changer for growing SMEs.

6. SME Spend Targets

From April 2025, government departments must set three-year targets for direct SME spending and report progress annually. Local authorities can also reserve specific procurements for local SMEs.

What SMEs Should Do Now

1. Register on Find a Tender and set up keyword alerts for your industry
2. Update your social value offer — make it specific, measurable, and local
3. Review your cashflow planning — 30-day terms mean you can bid on larger contracts with more confidence
4. Check open frameworks for your sector — you may now be able to join frameworks you were previously locked out of
5. Highlight your SME status prominently in bids — contracting authorities now have targets to meet

Common Misconceptions

"The Act only applies to central government"

No. It applies to all contracting authorities in England, Wales, and Northern Ireland — including local councils, NHS trusts, universities, and housing associations. Scotland has separate procurement legislation.

"Social value is just a tick-box exercise"

Not anymore. With a minimum 10% weighting, social value can be the difference between winning and losing. Evaluators are increasingly sophisticated in scoring this section.

Frequently Asked Questions

When did the Procurement Act 2023 come into force?

24 February 2025. All new procurement exercises started after this date must follow the new rules.

Does the Procurement Act apply to private sector contracts?

No. It applies only to public sector procurement — government departments, councils, NHS, universities, and other contracting authorities.

What counts as an SME under the Act?

A business with fewer than 250 staff and either turnover of no more than £44 million or a balance sheet total of no more than £38 million.