30% to SMEs: what the new spend targets mean for small businesses

UK public procurement is being pushed, deliberately, towards smaller suppliers. Two linked documents make that concrete: the National Procurement Policy Statement (NPPS), in force from 24 February 2025, and Procurement Policy Note (PPN) 001 on SME and VCSE spend targets.

Targets, not just warm words

All central government departments (including executive agencies and non-departmental public bodies) must set a three-year target for direct spend with SMEs from 1 April 2025, and a two-year target for direct spend with voluntary, community and social enterprises (VCSEs) from 1 April 2026 — and report results annually, publishing the data by 30 September each year.

The headline ambition: 30%

The Cabinet Office has set an ambition of 30% of procurement spend with SMEs by the end of 2027/28 — acknowledged as a challenging target, and a clear signal that buyers are expected to open more contracts to smaller firms.

Are you an SME?

For this purpose an SME is broadly a business with a turnover of £44 million or less, or a balance-sheet total of £38 million or less. If that's you, it's worth making sure buyers can see it.

The insight: a preference is worthless if you don't claim it

Targets only help suppliers who turn up, qualify and make their SME status visible. Keep your registration and accreditations current, and watch for contracts shaped to be SME-friendly (lots split into smaller parcels, proportionate requirements). Many small firms miss out not on eligibility, but on awareness.

Sources: GOV.UK — PPN 001: SME and VCSE procurement spend targets · GOV.UK — National Procurement Policy Statement