Public Procurement Transformation Brings Opportunities for SMEs

October 10, 2024
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By Leigh Hoyle

The Procurement Act, set to reform the existing Procurement Rules and create more opportunities for small and medium-sized enterprises (SMEs), received Royal Assent in October 2023. It was due to be enacted at the end of this month, but on 12th September, Georgia Gould, Parliamentary Secretary for the Cabinet Office, announced a four-month delay to allow time for a new National Procurement Policy Statement (NPPS) to be produced. The changes in the rules will bring about a significant shift in how public sector contracts are awarded, making it easier for SMEs to compete with larger corporations and win lucrative government contracts. TLD has explored the impact of these new regulations on SMEs, how they can take advantage of the opportunities that lie ahead and what they should do to get prepared.

The 2023 Procurement Act: What are the key changes?

New scoring system

One of the key changes in the new procurement regulations is the introduction of a new scoring system that prioritises factors such as social value, environmental sustainability, and innovation. This shift away from the traditional focus on price alone will level the playing field for SMEs, who often struggle to compete on price against larger competitors. By giving more weight to these non-price factors, SMEs that excel in areas such as sustainability and innovation will have a better chance of winning government contracts.

Reduction in administrative burden

Moreover, the new regulations will also introduce measures to simplify the procurement process and reduce the administrative burden on SMEs. This includes standardising documentation requirements, providing guidance and support to SMEs throughout the bidding process and streamlining the evaluation process to ensure fair treatment for all bidders. These changes are intended to make it easier for SMEs to navigate the complex world of public procurement and increase their chances of success.

Stimulating local economies

Another important aspect of the new regulations is the focus on supporting local businesses and driving economic growth at grassroots level. The government has committed to increasing the percentage of public sector contracts awarded to SMEs, particularly those based in underserved regions or communities. By channelling more procurement opportunities to SMEs, the government aims to stimulate local economies, create jobs, and promote inclusive growth across the country.

How should SMEs get prepared?Understand the changes

For SMEs looking to capitalise on these new opportunities, there are several steps they can take to position themselves for success. First and foremost, SMEs should ensure that they have a strong understanding of the new regulations and how they impact the procurement process. This includes familiarising themselves with the new scoring criteria, documentation requirements and evaluation procedures to tailor their bids accordingly. There is a collection of guidance documents on the government website intended to provide technical advice and help with understanding and interpreting the new rules.

Develop capabilities

Furthermore, SMEs should focus on developing their capabilities in areas such as sustainability, social value, and innovation to align with the priorities outlined in the new regulations. By demonstrating their expertise in these areas, SMEs can differentiate themselves from larger competitors and showcase the unique value they bring to the table. Building strong relationships with potential buyers, networking with other SMEs, and seeking guidance from industry associations can also help SMEs navigate the procurement landscape and identify new opportunities.

Benefits for SMEs

The new procurement regulations in the UK present a significant opportunity for SMEs to expand their market share, compete on a level playing field, and contribute to economic growth. By understanding the changes introduced in the regulations, developing their capabilities in key areas, and actively engaging with the procurement process, SMEs can position themselves for success in 2024 and beyond. With the right strategy and mindset, SMEs can leverage these new regulations to propel their businesses to new heights and play a pivotal role in driving positive change in the public procurement landscape.

How TLD can help

A TLD Client Legal Director can help establish good corporate governance in your business and implement and maintain a robust compliance programme. As a strategic partner, they can work with the key functions in your organisation to identify areas that require improvement. They can help you prioritise actions and evidence your capabilities, innovation and sound corporate management, to put you in the best possible position during a procurement process. We have produced a useful how-to guide on Governance, Compliance and Risk which gives practical tips about how to establish best practice and what procedures you need to follow to mitigate risk. You can download that here. If you would like some more targeted help, our ‘Compliance Blueprint’ service is designed to give businesses an accurate view of their compliance matter and a clear plan to address any gaps. Please do get in touch on 020 3056 8538 or info@thelegaldirector.co.uk if you would like to discuss more about how we can help you prepare for these incoming changes.