The Procurement Act 2023: A Game-Changer for SMEs in the Public Sector 

The UK public sector is about to shift significantly in how it buys goods and services from private sector suppliers. The Procurement Act 2023, set to go live soon, is designed to simplify the procurement process, create more opportunities for small and medium-sized enterprises (SMEs), and boost competition. If you’re a small business owner, this could open doors that were previously hard to access. 

What Is the Procurement Act 2023?

The Procurement Act 2023 is a new legislation replacing older, complex rules with a more straightforward, transparent system. It will apply to all public sector organisations, including central government, local authorities, NHS trusts, and other public bodies. 

Historically, small businesses have struggled to compete for public sector contracts. The system was seen as too bureaucratic, favouring large companies with dedicated bid teams. This new Act aims to level the playing field, making it easier for SMEs to win contracts and supply goods and services to the government. 

Why Does This Matter for SMEs?

For years, small businesses have faced barriers when entering the public procurement market. Complicated bidding processes, excessive red tape, and a lack of transparency meant that only larger firms could easily compete. The Procurement Act 2023 combats these barriers by introducing: 

• Simplified Bidding Processes: The new system will reduce unnecessary paperwork, making it easier for SMEs to submit bids. 
• Greater Transparency: A new digital platform will allow suppliers to see all opportunities in one place. 
• More Flexible Contracting: Public sector buyers will have more freedom to consider social value, sustainability, and innovation when awarding contracts. 
• Faster Decision-Making:  The process will be more streamlined, reducing delays and uncertainty. 

These changes will offer SMEs a much better chance of securing contracts, whether they provide IT, construction, catering, or other goods and services. 

How Will the Act Support Local Businesses?

A key focus of the Procurement Act 2023 is supporting local businesses. The government wants more of its spending to go to SMEs, keeping money in local economies and creating jobs. Public sector buyers will now have more flexibility in choosing local suppliers, rather than being forced to choose the cheapest national or multinational option. 

This is a significant change, which means that councils, hospitals, and schools will have greater freedom to work with businesses in their communities, encouraging local growth and sustainability.

The Importance of Strong ESG Credentials in Winning Public Sector Contracts 

Sustainability and environmental responsibility are becoming increasingly important in public procurement. The UK government has introduced policies such as PPN 06/21 (Procurement Policy Note 06/21), which requires businesses bidding for major government contracts to demonstrate a credible carbon reduction plan. Additionally, the NHS Net Zero initiative aims to ensure that suppliers contribute to reducing carbon emissions, aligning with the healthcare sector’s goal of achieving Net Zero by 2045. This means that having strong Environmental, Social, and Governance (ESG) credentials is no longer optional but essential. Businesses demonstrating a commitment to sustainability, social value, and ethical governance will have a competitive edge in securing public sector contracts.

How Positive Planet can help SMEs Strengthen their Sustainability Credentials

Many SMEs may struggle to meet the sustainability requirements expected by the public sector. This is where Positive Planet can help. Positive Planet is a specialist sustainability consultancy that helps businesses measure, manage, and reduce their carbon footprint. We provide expert guidance on complying with government Net Zero procurement frameworks and implement robust ESG strategies to align with Net Zero goals. 

By working with Positive Planet, SMEs can improve their sustainability credentials, making them more attractive to public sector buyers and increasing their chances of winning contracts. Whether calculating carbon emissions, setting reduction targets, or developing sustainability reports, Positive Planet provides the tools and expertise needed to thrive in the evolving public procurement landscape.

Key Benefits for SMEs: 

1. More Opportunities: With an estimated £300 billion spent by the public sector each year, SMEs will have more chances to secure contracts than ever before. 
2. A Fairer System: The Act introduces the concept of single supplier registration, which means businesses won’t have to submit the same information repeatedly for different tenders. 
3. Greater Innovation: Procurement teams will be encouraged to work with innovative suppliers, helping smaller businesses that offer unique solutions to compete more effectively. 
4. Faster Payments: One of the most significant issues for SMEs has been slow payment times. The new system will make payments quicker, helping with cash flow and financial stability.
5. Stronger Support for Social and Environmental Goals: Rather than just cost, contracts will be awarded based on wider benefits, such as social impact and sustainability. This means businesses focused on green initiatives or community support could have an advantage.

Preparing Your Business for the Change

 
With the new law in effect already, SMES need to understand the new legislation. Here are some steps to take: 

1. Get Familiar with the New Rules: Make sure you understand how the new system works. The government has published guidance, and training courses are available to help businesses navigate the changes. 
2. Register on the New Procurement Platform: The government will introduce a centralised digital platform to post all contract opportunities. Ensure your business is registered and set up to receive alerts for relevant opportunities. 
3. Focus on Your Strengths: SMEs should highlight their unique selling points, such as flexibility, innovation, and local impact. Public sector buyers will have more freedom to consider these factors when awarding contracts.
4. Build Relationships with Buyers: Local councils and public sector bodies are looking for new suppliers. To get your business noticed, attend industry events, networking opportunities, and supplier engagement days. 
5. Implement a Sustainability Strategy: Developing a sustainability strategy that aligns with public sector Net Zero goals is crucial. Demonstrating compliance with PPN 06/21 and other sustainability policies will increase your chances of winning contracts. Focus on carbon reduction, responsible sourcing, and social value initiatives to make your business more attractive to buyers. 
6. Improve Your Bid Writing Skills: With increased opportunities comes more competition. Understanding how to write clear, compelling bids will be essential. Consider attending bid-writing workshops or seeking expert advice. 

In Summary

The Procurement Act 2023 marks a significant shift in how the public sector buys from the private sector. For SMEs, it’s a golden opportunity to tap into a market that has historically been difficult to access. With simpler processes, more transparency, and a focus on local businesses, the Act is set to make public sector contracts more accessible.

Now is the time for small businesses to get informed, get prepared, and get involved. Whether you’re a start-up, a family-run firm, or an established SME looking to expand, the opportunities are there for the taking. The future of public sector procurement is changing – and SMEs have a significant role in shaping it.