SME, third sector organisations and supported business access to public contracts
We are working to improve access to public contracts for SMEs, the third sector and supported businesses.
This is a key part of our approach to meeting the sustainable procurement duty and it is an objective of the Public Procurement Strategy for Scotland to consider the structure of contracts in the development phase to reduce (or remove) barriers to participation for SMEs, third sector and supported businesses.
We have also published our SME and Third Sector Action Plan. The plan recognises the benefits to our communities and economy which SME and third sector organisations deliver as well as strengthening our commitment to delivering real impact and ensuring we continue to collaborate across industry and the wider public sector in Scotland.
Measures we are taking to improve access include the following.
Procurement support and advice for SMEs and third sector organisations
We have put in place a set of tools, policy support and guidance to simplify procurement processes and increase access to information and opportunities.
Public bodies are required to advertise all regulated procurement opportunities on the Public Contracts Scotland website, making it easier for organisations to find and win contracts.
Regulated procurements are contracts with a value of £50,000 and above for goods and services and of £2 million and above for works.
Before carrying out a regulated procurement, public bodies are required by law to consider how they can facilitate the involvement of SMEs, third sector bodies and supported businesses in the process.
We also fund the Supplier Development Programme which runs events and works with partners to help SMEs and third sector organisations win work and grow their business.
And we continue to develop our collaborative procurement strategies to take account of the potential impact on and ease of access for SMEs and third sector organisations. This includes splitting larger requirements into smaller lots, making it easier for smaller firms to bid for work.
Guidance on public procurement
The Supplier Journey website contains useful information on how to bid for public sector contracts. We have created a helpful page to help businesses looking to bid for public sector contracts, alongside Guidance on Public Procurement for SMEs and Third Sector Suppliers.
SME and Third Sector Action Plan
The Scottish Government’s SME and Third Sector Action Plan sets out our actions for the next two years (2024-2026) to collaborate, engage and reduce the barriers for SMEs and third sector organisations when engaging with public procurement processes.
We are committed to making it as easy as possible for SMEs and third sector organisations to bid for, and win, public contracts as well as participate in local supply chains and promote innovation.
We aim to increase SME and third sector organisations’ awareness of, and ability to engage with, public sector procurement. We are also reviewing our current processes and practices to consider how contracts are developed in order to reduce barriers and enable SME and third sector organisations’ ability to participate in public sector procurement.
Project Bank Accounts for construction projects
Our Project Bank Account model for construction projects ensures that payments to subcontractors - many of whom are SMEs - are prompt and protected.
Instead of money owed to subcontractors reaching them through the main contractor's bank account, where payments can be delayed, subcontractors are now able to be paid through the Project Bank Account.
Third sector support
The Business Support for the Third Sector Contract is currently delivered by a consortium of third sector organisations called Just Enterprise. It delivers free business support to third sector organisations. This contract provides support with procurement and tender writing and also incorporates a wider range of business support components.
Removal of the option for public contracts to be awarded on the basis of lowest cost
We have removed the option for higher value public contracts (i.e. those covered by the Public Contracts (Scotland) Regulations 2015) to be awarded on the basis of lowest cost or price only.
Our statutory guidance selection of tenderers and award of contracts makes it clear that this approach should also be applied to award criteria for contracts defined in the Procurement Reform (Scotland) Act 2014, which covers procurements with an estimated value between £50,000 for goods and services and £2 million for works and the Public Contracts (Scotland) Regulations 2015 thresholds.
Reserving contracts for supported businesses
The Sustainable Procurement Duty requires public bodies to consider how they can improve the social, environmental and economic wellbeing of the area in which they operate, with a particular focus on reducing inequality. It also requires public bodies to consider how, in conducting the procurement process, they can facilitate the involvement of SMEs, third sector bodies and supported businesses.
Public bodies are also able to reserve contracts and framework agreements for supported businesses under the public procurement rules in Scotland.
This means that a public body is able to reserve contracts and framework agreements so that only supported businesses are able to participate in the procurement process or that the contract or framework agreement is only able to be performed in the context of a supported employment programme.
In this context, a supported business means a business whose main aim is the social and professional integration of disabled or disadvantaged persons, and where at least 30% of the employees are disabled or disadvantaged persons.
A supported employment programme means an employment programme operated by a business with the main aim being the social and professional integration of disabled or disadvantaged persons and where at least 30% of those engaged in the programme are disabled or disadvantaged.
We are also making it easier for public bodies to contract with supported businesses through our national dynamic purchasing system (DPS) Requirements Reserved for Supported Businesses. The DPS runs until 08 September 2025.
A key objective of this DPS is to continue to provide the Scottish public sector and third sector bodies with a straightforward, flexible route to market for a range of goods and services provided by supported businesses and in doing so, support the integration of disabled and disadvantaged citizens into the mainstream workforce.
The DPS will be on a single lot basis that will hold a wide range of goods and services provided by supported businesses. Descriptions of these goods and services and any subsequent categorisation will be provided via publicly available guidance documentation.
Further information: