The Procurement Act 2023: Why It Matters for SMEs

If you’re an SME looking to win public sector work, you’ll hear a lot about the Procurement Act 2023. It’s the biggest shake-up of UK procurement rules in a generation, replacing the EU-derived regulations that have shaped public contracts for decades.

Now, let’s be clear: laws don’t usually get the blood pumping for business owners. But this one matters. It changes how government, councils, the NHS, and other public bodies will buy goods and services. That means it changes the rules of the game for suppliers too.

Here’s what you need to know, why it matters, and how SMEs can prepare.

What Is the Procurement Act 2023?

The Procurement Act is the UK’s new legal framework for public sector purchasing. It replaces four separate sets of rules — Public Contracts, Utilities, Concessions, and Defence & Security — with a single unified regime.

The government’s aim was to simplify procurement post-Brexit, making it faster, more transparent, and more SME-friendly. It was passed in October 2023, with implementation rolling out in 2024 and beyond.

Think of it as a reset button. Instead of working within EU rules that were often seen as rigid and overly bureaucratic, the UK now has a home-grown system designed to be simpler and (hopefully) better suited to British business.

Why Does It Matter for SMEs?

Because procurement is no small market. The UK public sector spends over £300 billion a year on goods, services, and works. For SMEs, getting a share of that can be transformational.

But historically, the system hasn’t always been kind to smaller businesses. The old EU-driven rules were heavy on red tape, often favouring large suppliers with big bid teams and deep pockets.

The Procurement Act is meant to level the playing field. It includes specific measures designed to give SMEs more opportunities and reduce the burden of bidding.

In other words: it’s not just another law. It could reshape your growth prospects if you’re looking at the public sector as a client.

The Big Changes SMEs Should Know

Here are the headline reforms that directly affect suppliers:

1. A Single Rulebook

  • Old world: four sets of complex regulations, depending on the contract type.
  • New world: one simplified framework.
  • Why it matters: Less confusion, fewer barriers to entry. SMEs no longer have to navigate different rules depending on the buyer.

2. Greater Transparency

  • Buyers must publish more data at every stage of the process.
  • You’ll see early notices about pipeline opportunities, not just tenders once they’re live.
  • Contract performance and spend data will also be published.
  • Why it matters: You can plan ahead, see what’s coming, and understand how existing suppliers are performing — giving you more intelligence to compete.

3. Simpler Procedures

  • The old system had multiple procedures (Open, Restricted, Competitive Dialogue, etc.).
  • The new system has just two:
    • Open Procedure – anyone can bid.
    • Competitive Flexible Procedure – buyers design the process they think works best.
  • Why it matters: Less bureaucracy, more flexibility. For SMEs, that means faster, easier competitions and fewer hoops to jump through.

4. SME-Friendly Duties

  • Contracting authorities must consider the barriers SMEs face and actively work to remove them.
  • This could mean breaking contracts into smaller lots, paying suppliers faster, or reducing unnecessary qualification requirements.
  • Why it matters: For the first time, there’s a legal duty to think about you — the smaller supplier.

5. A Focus on Value, Not Just Price

  • The Act reinforces the principle of Most Advantageous Tender (MAT), rather than just Lowest Price.
  • Buyers must weigh factors like quality, innovation, and social value.
  • Why it matters: SMEs that can’t always compete on price alone now have a better chance to stand out with quality and niche expertise.

6. Faster Payments

  • 30-day payment terms will be extended down the supply chain — not just for prime contractors, but also for subcontractors.
  • Why it matters: Cash flow is a major pain point for SMEs. This should ease it and reduce the risk of late payments.

7. Stronger Remedies and Exclusions

  • Poor-performing suppliers can be excluded from future contracts.
  • Why it matters: For good SMEs delivering quality, this is positive — it stops “cowboy” operators undercutting the market.

Pros for SMEs

  • Clarity: One rulebook instead of four.
  • Visibility: More data means more opportunity spotting.
  • Fairness: Buyers legally required to consider SME barriers.
  • Flexibility: Simpler procedures mean less wasted time.
  • Protection: Faster payments down the chain.
  • Opportunity: Quality, innovation, and social value matter more than rock-bottom pricing.

Cons or Risks to Watch

No reform is perfect. Here are the caveats SMEs need to keep in mind:

  • Flexibility cuts both ways – the new “Competitive Flexible” procedure could mean wildly different processes from one buyer to another. You’ll need to stay adaptable.
  • Transparency = more competition – if everyone sees the pipeline, you’re not the only one spotting opportunities. Expect crowded markets.
  • Still paperwork – while simpler, there will still be compliance requirements around policies, insurance, and certifications. SMEs need to keep up.
  • Unproven system – this is new. Buyers will interpret rules differently, and there will be teething problems. Expect bumps in the road.

Practical Steps SMEs Can Take Now

  1. Get Your Business PS Compliant
    • Make sure your policies (data protection, social value, environmental, etc.) are up to scratch.
    • Buyers will still expect compliance.
  2. Track Pipelines
    • Use Contracts Finder and Find a Tender for England, Sell2Wales, Public Contracts Scotland, and eTendersNI.
    • You’ll see more early-stage notices under the new regime.
  3. Be Call-Off Ready
    • Frameworks will still dominate. Make sure you know which ones matter in your sector and region.
  4. Lean Into Social & Environmental Value
    • The Act emphasises value beyond price. SMEs often shine here — local employment, sustainability, innovation. Use it to differentiate.
  5. Watch Payment Practices
    • If you’re subcontracting, hold primes to the 30-day payment rule. If you’re a prime, make sure your supply chain is paid on time.
  6. Stay Flexible
    • Expect buyers to experiment with procedures. Be ready for mini-tenders that don’t look the same as before.

Conclusion

The Procurement Act 2023 is not just another layer of regulation. It’s a reset designed to make public sector procurement simpler, fairer, and more open to SMEs.

Will it solve every problem overnight? No. But it does tilt the system in your favour if you’re prepared.

For SMEs, this is the moment to get serious about the public sector. The Act increases your chances of being seen, being trusted, and being paid fairly.

The opportunity is huge — but only if you lean in, get compliant, and position yourself as a supplier who can deliver quality, innovation, and value.

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