“Suitable for SMEs”: what that label is actually worth

Plenty of notices carry a flag saying the contract is suitable for small and medium-sized enterprises. It is worth knowing exactly what that flag is, because it is not what most people assume.

It is the buyer’s opinion, and nothing else

Nobody checks it. It is not a set-aside, it does not reserve anything for you, and it does not commit the buyer to anything at all. A contract marked suitable can still ask for three years of audited accounts and £10m of public liability cover.

On this site the flag is reproduced exactly as published and never inferred. Where a buyer did not state it, no page here will guess, and about half of all notices held do not state it either way.

What the law actually requires

Section 12 of the Procurement Act 2023 puts a duty on the contracting authority. In carrying out a covered procurement it must:

“(a) have regard to the fact that small and medium-sized enterprises may face particular barriers to participation, and (b) consider whether such barriers can be removed or reduced.”

Have regard, and consider. It is a duty about how the procurement is designed, not a guarantee of outcome and not a quota. It is, however, a legitimate thing to raise with a buyer: if a £60,000 contract demands financial standing that only a £50m company could show, asking whether that barrier was considered is a fair question with a statutory hook behind it.

The signals that actually predict whether you can win

The flag is weak. These are stronger, and all of them are on the notice or on the buyer’s page here:

• What the buyer has awarded before. A council whose last six awards in your category all went to firms your size is telling you far more than a checkbox. Every buyer page here lists exactly that.
• Whether it is split into lots. Lots exist to let smaller firms bid for part of something. A single undivided contract worth several million is not for you whatever the flag says.
• The value against your turnover. A common rule of thumb among buyers is not to award a contract worth more than a large fraction of a bidder’s annual turnover. Look at the value and be realistic.
• Whether it is a dynamic market. You can join at any time and there is no cap on members. Structurally the most open route there is.
• Who currently holds it. If the incumbent is a firm like yours, the buyer has already shown they will take that risk.

How to use the filter anyway

It is still useful, just not as a guarantee. Treat it as a filter that removes obvious no-hopers rather than one that finds winners, and then check the buyer’s award history before you spend a day on the bid.

Open contracts the buyer says suit small firms is a reasonable starting point. Browsing your category and looking at who has been winning is a better one.