What the Procurement Act 2023 Actually Requires of Your Supplier Market
Quick answer: The Procurement Act 2023 places a formal legal duty on contracting authorities to consider barriers faced by SMEs and to take active steps to remove or reduce them. It formalises preliminary market engagement through mandatory published notices, and the National Procurement Policy Statement that sits alongside it requires in-scope authorities to set and meet SME spend targets. Taken together, these obligations mean that the state of your supplier market is no longer something you observe. It is something you are responsible for improving.
The Procurement Act 2023 has been live since February 2025. While all procurement teams know it brought new procedures, new terminology and a new approach to transparency, fewer have thought carefully about what it requires of them when it comes to the suppliers they buy from.
That gap matters, because within the Act, and in the National Procurement Policy Statement that sits alongside it, are obligations that go well beyond how you run a competition. They are about the state of your supply market before a tender even goes live, and whether the organisations bidding for your contracts are genuinely ready to deliver what you are asking of them.
The duty to consider SME barriers: what the Procurement Act 2023 requires
One of the most significant changes in the Act is a formal duty on contracting authorities to have regard to the barriers faced by small and medium-sized enterprises and to consider whether those barriers can be removed or reduced. This is not a soft aspiration. It is a legal duty and it applies throughout the procurement lifecycle, not just at the point of evaluation.
In practice, this means asking some uncomfortable questions. If your last procurement attracted mostly large suppliers, is that because smaller businesses genuinely could not deliver, or because the way you designed the competition made it harder for them to compete? If your social value questions require evidence that smaller businesses simply do not have the systems to produce, have you inadvertently excluded a whole segment of the market? If your compliance requirements around Carbon Reduction Plans and Modern Slavery statements are set at a level that assumes large corporate resources, what does that mean for an SME with 15 employees trying to bid for your work?
The Act expects you to ask these questions. It does not expect you to lower your standards, but it does expect you to think actively about whether your supply market is capable of meeting them, and what you might do to help.
Preliminary market engagement is now the norm, not the exception
Under the old regime, preliminary market engagement was something many buyers did occasionally and informally. Under the Procurement Act, it has been formalised. If you carry out preliminary market engagement, you must publish a notice on Find a Tender before your tender notice goes out. If you choose not to, your tender notice must explain why.
Since the Act went live, the volume of preliminary market engagement notices has been striking. At the Social Value Conference in October 2025, it was reported that of the 27,000 notices published since February 2025, the majority were preliminary market engagement notices. Buyers are engaging with their supply markets earlier and more deliberately than before.
This is a good thing. But it also raises a question about what you find when you engage. If your suppliers are not yet compliant with the policies you need them to meet, if their Carbon Reduction Plans are incomplete or non-existent, if their social value thinking amounts to a generic paragraph copied from a previous bid, engaging with them early only reveals a problem. It does not solve it.
Solving it requires a different kind of intervention, one that helps suppliers build genuine capability before the competition opens, not just understand the requirements after it closes.
PPN 002 changes the stakes for your supply chain
Since 1st October 2025, PPN 002 has been mandatory for all in-scope central government procurements. It requires a minimum 10% weighting for social value in tender evaluations, aligned with the government’s five missions and eight policy outcomes under the updated Social Value Model. Many local authorities are already going further, with weightings of 20 to 30% not uncommon.
For buyers, this creates a practical challenge. If social value carries 10% or more of the total evaluation score and your suppliers are not ready to respond to it properly, two things happen. Your evaluation process becomes more difficult, because you are scoring a category where responses vary widely in quality and specificity. And you risk awarding contracts to suppliers who score well on paper but whose social value delivery is vague, unmeasured and unverifiable.
The suppliers who score well on social value are not necessarily the ones doing the most. They are the ones who have been tracking what they do, structuring it against recognised frameworks and presenting it in a way evaluators can actually assess. That is a capability, and it takes time to build.
The NPPS and SME spend targets
The National Procurement Policy Statement that accompanied the Act goes further still. In-scope authorities are now required to set spend targets for SMEs and VCSEs. Central government departments must set a three-year SME spend target from April 2025 and a two-year VCSE spend target from April 2026.
Meeting those targets is not simply a matter of running more open competitions and hoping smaller suppliers win. It requires that smaller suppliers are in a position to compete effectively, and that means they have the compliance documentation, the bid capability and the social value evidence that your procurements require.
If your SME supply market is not ready, your targets will be difficult to hit.
What proactive supplier development actually looks like under the Procurement Act
None of this is an argument for lowering evaluation standards or awarding contracts on the basis of effort rather than quality. It is an argument for investing in your supply market before the competition opens, so that when it does, you have a broader, more capable pool of suppliers to choose from.
In practical terms, this means giving your suppliers access to the tools, knowledge and frameworks they need to build the right capabilities. Understanding what PPN 002 actually requires. Building a compliant Carbon Reduction Plan that covers Scope 1, 2 and 3 emissions properly. Developing social value evidence that is specific, measurable and aligned to the outcomes you care about as a buyer.
The Procurement Act does not prescribe how you do this. But it is clear that the intention is for buyers to take an active role in shaping the quality and capability of the markets they buy from, not simply to evaluate whatever arrives in the tender portal and hope for the best.
The buyers who take that role seriously, and build it into their procurement planning from the earliest stages, will find their evaluation processes easier, their award decisions more defensible and their contract delivery more reliable. That is what the Act is asking for. The Supplier Development Programme exists to help you deliver it.
Frequently asked questions
What does the Procurement Act 2023 require of buyers regarding SMEs?
The Act places a formal legal duty on contracting authorities to have regard to the barriers faced by SMEs and to consider whether those barriers can be removed or reduced. This applies throughout the procurement lifecycle, not just at evaluation. The National Procurement Policy Statement also requires in-scope authorities to set three-year SME spend targets from April 2025.
What is preliminary market engagement under the Procurement Act 2023?
Preliminary market engagement is the process of researching and engaging with the market before a tender goes live. Under the Act, if you carry out preliminary market engagement, you must publish a Preliminary Market Engagement Notice on Find a Tender before your Tender Notice. If you choose not to engage, your Tender Notice must explain why.
When did PPN 002 become mandatory?
PPN 002 became mandatory for all in-scope central government procurements from 1st October 2025. It requires a minimum 10% weighting for social value in tender evaluations, aligned with the updated Social Value Model and the government’s five procurement missions.