New Report Reveals How The Public Sector Market Is Changing For SMEs

A new report from Executive Compass, Thornton & Lowe and Procurement Growth Group has revealed how the public sector market is changing for SMEs, highlighting where opportunities are emerging, why track record still matters and how businesses need to prepare earlier to compete successfully.

The SME Tendering Market Report brings together the Group’s own Tender Pipeline analysis, live bid experience, official policy, independent market evidence and expert insight. It aims to give SMEs a clearer picture of where opportunities sit, how buyers are procuring and what is likely to change next.

Among the report’s key findings, 46.1% of the 12,477 award notices analysed had a published maximum value below £250,000. In the latest three-month snapshot, 52.2% of local government award lines analysed went to suppliers registered in the same region as the buyer. The median winning SME in the same snapshot had been established for 17.8 years.

Of the award notices analysed, 2,983 had a published maximum value of £100,000 or less.

The findings point to a substantial lower-value market where smaller suppliers may have a more realistic route into public sector work, particularly where the buyer, geography and delivery model are a good fit.

Local government also emerged as a particularly strong market for regional suppliers.

Across the latest snapshot analysed by Executive Compass, Thornton & Lowe and Procurement Growth Group, 42.9% of award lines analysed went to suppliers registered in the same region as the buyer. This rose to 52.2% of local government award lines analysed, compared with 33.4% for the NHS and 29.5% for policing.

The figures relate to the number of recorded award lines, rather than contract value or overall spend. Supplier location is based on its registered region, which may not always reflect where the business delivers its services.

The report also highlights the importance of track record and evidence when competing for public sector work.

The median winning SME in the most recent three-month snapshot had been established for 17.8 years. Across matched winning suppliers overall, just 7.5% were under five years old and only 2.2% were under two years old.

Executive Compass, Thornton & Lowe and Procurement Growth Group say company age alone does not prove experience or capability, but the figures reinforce the importance of having strong evidence and a track record that buyers can assess.

Taken together, the findings point to significant opportunity for SMEs, but also show why businesses need to be more selective about where they compete and build the right evidence before pursuing larger or more complex opportunities.

Dave Thornton, Group CEO of Procurement Growth Group, said: “There is a huge amount of opportunity for SMEs across the public sector, but one of the clearest messages from this report is that businesses need to be strategic about where they focus their time and resources.”

“Nearly half of the award notices we analysed had a published maximum value below £250,000, and more than half of the local government award lines we analysed went to suppliers registered in the same region as the buyer. That should give SMEs confidence that there are realistic routes into the market.”

“But opportunity alone is not enough. The businesses that are winning tend to be well established and have built up the evidence, experience and track record that buyers need to see.”

“For an SME looking to grow in the public sector, the answer is not simply to bid for more tenders. It is about understanding where you are most likely to compete successfully, choosing the right buyers and routes to market, and building the evidence that will help you progress to bigger opportunities over time.”

The report also identifies a wider shift in when competition for public sector work begins.

Executive Compass, Thornton & Lowe and Procurement Growth Group say competition is increasingly beginning before the formal tender is published. Pipeline notices and preliminary market engagement give businesses earlier insight into what buyers are planning and how contracts may be structured.

It also highlights frameworks, dynamic markets, below-threshold contracts, subcontracting and partnerships as potential routes into public sector work. Which route is most appropriate will depend on the supplier’s experience, capacity and commercial objectives.

Christian Rowe, Group Commercial Director at Procurement Growth Group and Chief Executive of Executive Compass, said: “There can be a temptation to look at every tender as an opportunity, but that is rarely the best approach.”

“For some SMEs, the right starting point might be a smaller local contract that gives them a strong reference and measurable evidence. For others, it could be a framework, a subcontracting opportunity or a larger competition where they already have the right experience. The key is understanding the opportunity properly before committing the time and resources to bid. Data and early planning can help businesses make those decisions.”

“But ultimately, they still need to demonstrate that they understand the buyer, can deliver what is being asked for and have strong evidence behind their response. The strongest businesses will be those that combine better market intelligence with good bid decisions and high-quality tender responses.”

The report has been published as businesses prepare for further changes to the public sector procurement landscape in 2027. It identifies social value, insourcing, devolution, frameworks and increased transparency around contract performance as some of the areas suppliers should be preparing for now.

Among the changes highlighted is the introduction of new social value requirements for qualifying central government procurements from January 2027. Further changes will follow from April 2027, when Public Interest Tests and Insourcing Strategies take effect for certain central government service projects.

The Group says SMEs should use the months ahead to strengthen their evidence, identify priority buyers and review the routes those buyers use. Businesses should also build a clearer pipeline of opportunities rather than waiting for individual tender alerts.

The SME Tendering Market Report also examines areas including AI use and disclosure, frameworks, buyer behaviour, competition, procurement case law and the changing role of market intelligence in public sector growth.

The full report is available https://procurementgrowthgroup.com/insights/state-of-public-sector-tendering-2026-27/