SMEs: Securing Social Care Contracts Easily

In 2025, government reforms have significantly expanded public-sector opportunities for small and medium-sized enterprises (SMEs) by encouraging contracting authorities to simplify tenders, break down large packages into smaller lots, and reserve portions of work for local providers. This shift allows local domiciliary care agencies to compete for clusters of postcodes rather than facing off against national chains for county-wide frameworks. For care and support providers, understanding these changes—driven by the Procurement Act 2023, updated Procurement Policy Notes, and the National Procurement Policy Statement, is essential for securing new contracts and maintaining a healthy cash flow.

The Procurement Act 2023 mandates authorities to consider SME participation through three key measures: increasing visibility of upcoming opportunities, promoting early market engagement, and enforcing mandatory 30-day payment terms throughout the supply chain. In February 2025, Procurement Policy Note 001 reinforced these objectives by requiring organisations to set three-year targets for direct spending with SMEs and two-year targets for voluntary, community, and social enterprises (VCSEs). Organisations must also submit annual reports and remove unnecessary barriers, such as excessive insurance requirements, before awarding contracts. The National Procurement Policy Statement (NPPS) 2024 further encourages authorities to consider local economic growth when designing tenders, making the division of contracts into smaller lots a formal expectation.

In response, many local authorities are redesigning care and support procurements. Instead of issuing a single, comprehensive homecare framework for an entire county, councils now often divide awards into geographical clusters, such as three or four postcode areas. This approach allows an SME with deep local knowledge to bid on two clusters without needing nationwide capacity. It broadens the pool of potential bidders and helps councils meet social-value metrics by encouraging community reinvestment. For example, a domiciliary care provider in the West Midlands secured a three-lot contract covering adjacent postcode zones because the tender reserved one lot for local SMEs and another for voluntary organisations. This change enabled the provider to avoid direct competition with national chains for a single, large contract, which would have previously excluded smaller operators.

Early engagement is now crucial for success. Under the new rules, authorities must publish "forward procurement notices" well before formal tender releases. By responding to these notices, SMEs can influence requirements, such as ensuring care-package definitions account for rural travel costs or keeping lot sizes manageable relative to staffing capacity. Participating in supplier days, completing e-questionnaires, and attending preview workshops all demonstrate commitment and local expertise. When the tender is finally released, bidders who have already built rapport with commissioning officers often receive prioritised feedback, rather than trying to interpret tender documents alone.

Beyond dividing contracts, councils are explicitly reserving some lots for local suppliers or social enterprises. Procurement Policy Note 11/20, a precursor to the Procurement Act, allowed authorities to restrict sub-threshold competitions to SMEs, and recent guidance confirms this can still apply to relevant care contracts below the EU threshold. As a result, a supported-living provider that qualifies as an SME by employing fewer than 250 staff or having less than £36 million in turnover can self-declare and be fast-tracked into a reserved lot. This means the provider only competes against peers with similar scale and local presence, ensuring a small community operator is not immediately outmatched by a regional chain.

Prompt payment is another critical aspect. The Procurement Act now mandates 30-day payment terms for all public contracts and subcontracts, helping SMEs manage cash flow better. Councils must publish payment performance data on a single platform, allowing providers to verify whether a particular authority pays invoices on time before committing resources to bid preparation. In sectors like homecare, where mileage, training, and insurance costs quickly add up against thin margins, knowing that local authorities adhere to prompt payments can be the deciding factor between winning a contract and choosing not to bid.

Social value requirements have also evolved to reward localism. Under the Social Value Act (2012) and reinforced through NPPS 2024, authorities now assign up to 20 per cent of total marks for social-value deliverables. In a care contract, this might involve commitments to recruit from within the local community, offer work placements or apprenticeships to carers, or partner with a local charity for carer respite. A recent care framework in the West Midlands explicitly scored bids on community investment, awarding full marks to a local provider that pledged to reinvest 5 per cent of contract revenue into training grassroots volunteer-carer networks. In contrast, a national chain scored poorly because its social-value plan merely recycled existing corporate pledges without delivering tangible local impact.

Practical steps for SMEs and VCSEs eager to capitalise on these changes include:

Monitoring forward notices: Set up email alerts on Contracts Finder and Find a Tender.
Engaging early: Attend supplier days and complete e-market-engagement surveys.
Emphasising local knowledge: Cite concrete examples of community partnerships in bids.
Building social-value plans: Quantify benefits (e.g., "Hire 10 local staff within 5 miles").
Confirming payment records: Check authorities' payment performance data before bidding.

In summary, SMEs and VCSEs in the social-care sector now have a real pathway into public-sector frameworks if they understand how to leverage new localism and SME access rules. By subscribing to forward procurement notices, engaging at the preview stage, emphasising local relationships, and ensuring strong social-value proposals, smaller providers can unlock contracts that were once inaccessible due to scale or cash-flow constraints. With 30-day payment terms guaranteed and reserved lots explicitly for local operators, 2025 is shaping up to be a turning point where a committed community provider can turn proximity and local insight into a competitive advantage.