Why Small Businesses Are Winning More Government Contracts Than Ever
For a long time, many SMEs assumed government contracts were out of reach — reserved for established corporations with large teams and endless resources. That assumption is no longer true.
Public sector organisations, including local authorities and central government, are increasingly seeking to work with SMEs.
The Procurement Act has levelled the playing field, making it easier for smaller suppliers to access opportunities, while local authorities and central government departments actively seek the innovation, flexibility, and social value that SMEs deliver. Companies of all sizes, including medium sized enterprises, can now access opportunities through government procurement portals.
The government spends £350 billion annually on procurement, and a growing proportion of that is awarded to SMEs. From local authorities prioritising regional suppliers to central government embedding social value into every evaluation, public sector buyers are recognising that small businesses often deliver more innovation, more responsiveness, and greater community benefit than larger competitors. Understanding the rules and legislation that govern the procurement process is essential, and the UK’s government’s initiatives have made it easier for SMEs to operate within this marketplace.
This creates unprecedented opportunities for small firms across every sector — from IT and construction to green services and social enterprise. The government’s focus on best value and compliance means that companies must operate within clear frameworks to win contracts.
Let’s look at five real-world case studies where SMEs turned ambition into major wins — and the lessons you can apply to your own business.
Case Study 1 – Local Digital Agency Wins Council-Wide IT Services Contract
Sector: Digital IT services (web and software development)
Contract Type: Council-wide framework (3 years)
A small agency with just five staff and limited past performance took on a highly competitive IT services tender from a city council. On paper, they looked like outsiders — but they used pre-market engagement to change the narrative.
They attended the council’s supplier open day, expressed their interest early, and engaged with the council before the opportunity became a formal tender. They asked questions and introduced themselves to procurement officers. By the time the tender was released, they were no longer an unknown name — they were a supplier who understood the council’s needs.
Recognising the scale of the opportunity, they partnered with a larger IT firm to cover additional services. Joining the framework allowed them to access additional opportunities. In their bid, they showcased their agile project delivery methods, cost savings through open-source solutions, and strong data security credentials. They also highlighted their local presence, promising community internships for young people to enhance social value. They tailored their answers to address the council’s specific requirements.
Outcome: The SME secured a three-year framework contract for IT support and development. Within two years, they had grown from 5 employees to 15, achieved a 40% increase in turnover, and expanded into neighbouring councils through call-off contracts.
Lesson: Even without a long history, SMEs can win by focusing on relationships, agility, and niche expertise. Understanding the procurement process is key. Framework contracts simplify procurement for buyers and allow SMEs to scale quickly once trust is established.
Case Study 2 – Green Consultancy Secures DEFRA Sustainability Project
Sector: Environmental consulting
Contract Type: National project with DEFRA
A niche environmental consultancy of around 20 staff identified a DEFRA tender looking for innovative approaches to environmental data. Instead of waiting until the tender went live, they engaged at the RFI stage, submitting ideas that helped shape the scope.
When the opportunity was published, they were well-prepared. Their bid proposed a cloud-based environmental monitoring platform that outperformed traditional models in efficiency and cost-effectiveness. They highlighted credentials such as ISO 14001 certification and Innovate UK-funded pilot projects, demonstrating credibility. They also demonstrated their ability to deliver innovative goods and services by providing clear evidence of value and compliance with DEFRA’s requirements.
Capacity was a concern, so they partnered with a larger engineering firm to handle infrastructure components. This allowed them to bid as the lead contractor while still playing to their innovation strengths. They also scored highly on social value by pledging apprenticeships, skills development, and community engagement.
Outcome: DEFRA awarded them a four-year, £2 million contract. The consultancy doubled in size, added a marquee client to their portfolio, and became recognised as thought leaders in environmental policy delivery. The successful implementation of their solution led to significant improvements in environmental monitoring, now informing national noise mapping and supporting local authorities in urban planning.
Lesson: Specialised expertise can beat generalists. By addressing a clear gap in the market and aligning with government priorities on sustainability and skills, this SME demonstrated that small firms can win national, high-value projects. Seeking feedback after each tender and focusing on continuous improvement in government procurement are essential for ongoing success.
Case Study 3 – Regional Construction SME Lands NHS Maintenance Deal
Sector: Construction & facilities maintenance
Contract Type: NHS trust framework (5 years)
A family-run construction firm with around 50 employees spotted an opportunity on the NHS SBS Hard Facilities Management framework. NHS trusts are among the largest public sector organisations and agencies responsible for major procurements. They had previously completed smaller projects for clinics in the region, which gave them solid references.
When the hospital trust advertised a multi-site facilities maintenance contract, the SME was ready. They attended the bidder briefing and learned that continuity of power and safety of equipment were top priorities. Their tender response addressed these directly, offering a comprehensive 24/7 emergency response plan and evidence of managing similar assets for other clients.
They also held the right certifications — ISO 9001 for quality and NICEIC for electrical safety — and went further by offering rebates if KPIs weren’t met. This confident stance reassured the trust that they would be a reliable long-term partner.
Outcome: The SME secured a five-year, £500k+ contract, stabilising revenue and enabling the business to hire apprentices. Their preventative maintenance approach impressed the hospital, preventing outages during critical times and leading to referrals for other NHS sites. The SME ensured they were paid promptly and provided clear reporting so the trust could account for the value delivered through these procurements.
Lesson: Frameworks are gateways. By pre-qualifying onto NHS SBS, the SME had already proven quality, making it easier to win contracts. Local presence, reliability, and lifecycle value were the differentiators that set them apart from national FM giants and larger suppliers, showing that SMEs can compete effectively in public sector procurements.
Case Study 4 – Tech Startup Awarded National E-Procurement Module
Sector: Procurement technology
Contract Type: National platform development (Cabinet Office)
A young tech company specialising in modular procurement software aimed high — targeting the government’s new Unified Procurement System. Competing against established IT vendors seemed daunting, but they found a smarter route: listing their product on the G-Cloud framework. By using the search features on G-Cloud, they identified high value contracts and government contract opportunities that matched their capabilities.
By securing Cyber Essentials Plus and ISO 27001 accreditation, they signalled readiness for handling sensitive public data. Their modular design meant the Cabinet Office could adopt just the “supplier registration and analytics” component without committing to a full overhaul.
Their bid was enhanced by a transparent pricing strategy, clearly outlining value for money, and included flexibility for negotiation where required. Live demonstrations at govtech events showcased compliance with the Procurement Act, including features for tracking pipeline notices and reporting on social value metrics as part of the contract requirements. This future-proofed their proposal and showed thought leadership.
Outcome: The Cabinet Office awarded them a £400k contract via direct award under G-Cloud. The engagement expanded, and the SME became a subcontractor to the prime integrator, securing a long-term role in government digital transformation. The success ultimately led to their acquisition by a larger firm.
Lesson: Getting onto the right framework is often the fastest way into government supply chains. Combine that with compliance readiness and innovation, and even micro startups can win national projects.
Case Study 5 – Social Enterprise Wins Multiple Local Authority Contracts
Sector: Social enterprise (waste management & training)
Contract Type: Regional local authority contracts
A social enterprise in the North West built its bids around one thing: social value. Targeting bulky waste collection tenders, it focused less on price and more on community outcomes such as reducing landfill, redistributing furniture to low-income families, and training unemployed individuals.
Crucially, they didn’t just promise — they measured. Using Social Return on Investment (SROI) metrics, they demonstrated how every £1 spent created £x of social value. To further strengthen their bid strategy, they clearly showed how their proposals offered the best value by balancing quality, social impact, and value for money, ensuring councils could achieve maximum benefit for the money spent. This evidence-based approach resonated with councils tasked with embedding social value under Procurement Policy Note 06/20.
They also leveraged references from successful deliveries, building momentum across five neighbouring authorities. By the time they were bidding for their fourth contract, they were already known regionally as a “safe pair of hands” for both service delivery and community benefit.
Outcome: As an example of their success, their approach led to winning multiple public sector contracts, now managing contracts worth over £1m annually, having trained dozens of people, and significantly reduced landfill. Their achievements earned them national awards and cemented their role as a leading social value provider in waste services.
Lesson: Do good and prove it. With procurement increasingly weighting social value, SMEs that measure and communicate their impact have a real edge.
What These Government Tender Success Stories Have in Common
While each story is unique, they all share common threads that SMEs can replicate:
- Preparation & Compliance – From Cyber Essentials to ISO accreditations, these SMEs made sure buyers had no doubts about their professionalism.
- Frameworks & Portals – G-Cloud, NHS SBS, and Supply2Gov alerts gave them visibility and simplified access to opportunities. In addition, effective marketing and building a strong presence in the digital marketplace are essential for increasing visibility and attracting potential clients.
- Value Beyond Price – They focused on innovation, lifecycle savings, and unique expertise rather than competing on cost alone. Seeking feedback from unsuccessful bids and making improvements based on evaluation comments can significantly enhance future submissions.
- Social Value Impact – Measurable commitments to apprenticeships, sustainability, and community benefits boosted their evaluation scores.
- Partnerships & Collaboration – SMEs partnered with larger firms or consortia to scale capabilities and strengthen bids.
The message is clear: small businesses win by combining preparation, innovation, and impact, and by embracing continuous improvement throughout the bidding process.
How to Get Government Contracts as a Small Business: A Quick Checklist
Here’s a five-step checklist to get tender-ready:
✅ Register on procurement portals
✅ Build a strong capability statement – Include case studies, certifications, and references.
✅ Understand evaluation criteria – Buyers assess price, quality, and social value, so cover all three.
✅ Respond clearly and on time – Use templates to avoid missed details or late submissions, and be aware of all requirements and deadlines.
✅ Track tenders regularly – Set up tailored alerts so you only see relevant opportunities.
Tip: Always provide clear contact details for follow-up, and ensure your answers in bids are complete, evidence-based, and directly address all questions.
You Could Be the Next Success Story
Every major supplier started small — and these case studies prove that SMEs can and do win major government contracts. With the right preparation, platforms, and partnerships, your business could be next.
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