Key Takeaways
• Bundled contracts — where contracting authorities combine multiple services into one large procurement — are one of the most common structural barriers to SME procurement access
• The Procurement Act 2023 (in force from February 2025) places explicit duties on buyers to consider dividing contracts into lots and to explain publicly if they do not
• Four practical red flags in tender notices can indicate a contract has been bundled in a way worth questioning
• Pre-market engagement is your most powerful tool — but only if you act before the invitation to tender (ITT) locks the design in place
• Supply2Gov Tenders helps SMEs monitor the right notices at the right stage, so they can spot and respond to these opportunities in time
The UK public sector spends billions every year on goods and services — but SME procurement access to those contracts remains stubbornly low. According to data published by the British Chambers of Commerce in August 2024, just 20% of direct government spending went to SMEs in 2023, amounting to £39.7 billion of a total reported public procurement market worth £227.7 billion in 2024, according to Barkers Procurement (October 2025). There are many reasons for this, but one of the most overlooked is contract design. Bundled contracts — where contracting authorities combine several distinct requirements into one oversized procurement — can structurally exclude smaller suppliers before a single bid is submitted.
The good news is that SMEs now have clearer legal tools than ever to identify these situations and push back. This article explains how to spot a potentially challengeable bundled procurement contract, what the Procurement Act 2023 requires of buyers, and what realistic options are available at each stage of the process.
1 Why Contract Bundling Is One of the Biggest Barriers to SME Public Procurement
The UK government has long acknowledged the importance of opening government contracts to smaller businesses. Yet a significant proportion of public spending continues to flow to large enterprises through contracts designed at a scale that simply excludes smaller suppliers.
According to Supply2Gov Q1 2026 procurement data (February–April 2025), the market is getting more competitive by the year. As Supply2Gov noted in the Q1 2026 market webinar: “Market definitely getting more competitive. By numbers, yes, certain government consolidation.” That consolidation is particularly acute when contracting authorities bundle multiple service lines into single large contracts rather than structuring procurements in lots that smaller suppliers can realistically bid for.
The Department for Business and Trade’s SME Action Plan (published March 2026) formally identifies contract structure as a barrier to SME access, alongside disproportionate financial thresholds, lack of market engagement, and over-specific requirements. This is not an unofficial concern — it is a documented policy problem with a legislative response. Understanding that response is where your advantage begins.
What Are Bundled Contracts and Why Do They Happen?
Before you can challenge a bundled contract, it helps to understand what you are actually looking at — and why buyers structure procurements this way.
Aggregation vs Bundling — What’s the Difference?
Aggregation and bundling are often confused, but the distinction matters for SMEs. Aggregation means combining volumes of the same product or service — for example, a central purchasing body procuring 500 laptops across multiple departments. This is generally legitimate and efficient. Bundling is different: it means combining different types of work or services into a single contract. Even then, the combined elements may still involve separate performance obligations that must be analysed separately for accounting purposes. A procurement covering IT infrastructure, helpdesk support, and facilities management under one contract notice is bundled — and that is where SME access concerns arise.
Buyers bundle contracts for understandable reasons: fewer contracts to manage, single-supplier accountability, reduced administrative overhead, and the appeal of appointing one provider to cover the full scope. None of this makes bundling inherently wrong. However, it does become a problem when the combined scope requires capabilities that no single SME possesses, or when the financial scale of the contract far exceeds what any individual element of the work would justify.
When Is Bundling Disproportionate?
Under the Procurement Act 2023, contracting authorities must consider whether contract design is proportionate and whether it unnecessarily restricts competition. A bundled procurement may be disproportionate when the combined scope demands a range of expertise beyond any realistic SME offering, when financial qualification thresholds are set against the total bundled value rather than the actual risk involved, or when the contract could reasonably be divided into procurement lots without significant loss of efficiency. In each of these situations, an SME has grounds to ask questions — and the legal framework now backs them up.
How to Identify a Potentially Challengeable Bundled Contract
This is the practical heart of the matter. When reviewing tender notices, the following four signals indicate a contract may have been bundled in a way worth questioning.
Red Flag 1 — Absence of Lots Where You’d Expect Them
The Procurement Act 2023 requires contracting authorities to consider dividing contracts into procurement lots that can be awarded as separate contracts and, if they choose not to, to explain why in the contract notice. This transparency obligation is new — and meaningful. If you find a large contract covering multiple distinct services with no lots and no credible justification, it is a direct signal that the design may be challengeable. Lotting can open awards to different suppliers. It can also result in more than one contract being awarded through the same procurement structure. Look at the contract notice for the lot structure section. If it is absent entirely, that absence is itself informative.
Red Flag 2 — Inflated Turnover and Insurance Requirements
Buyers sometimes set pre-qualification thresholds — minimum annual turnover, public liability insurance levels — that reflect the total bundled contract value rather than the work an SME would actually deliver. Under procurement rules, turnover requirements must not exceed twice the contract value. In practice, if you see a contract with a £2 million estimated value and a minimum turnover requirement of £6 million, that is disproportionate and challengeable. Scrutinising pre qualification questionnaires for financial requirements relative to scope is time well spent before committing bid resource.
Red Flag 3 — Scope That Spans Unrelated CPV Codes
Common Procurement Vocabulary (CPV) codes classify the goods, services, or works in UK tender notices. If a single contract references CPV codes from completely unrelated categories — say, professional IT services codes alongside grounds maintenance codes — that is a strong indicator of bundling. Legitimate tenders generally cluster around related codes. Mixed-code contracts that span distinct operational domains warrant closer reading of the specification to understand whether the scope could reasonably be split.
Red Flag 4 — Contract Value That Seems Out of Scale
When a contract’s estimated value is significantly higher than you would expect for the stated scope, it often signals that multiple requirements have been combined into a larger single procurement. Benchmarking against comparable contracts here. Splitting scope can also support risk reduction if one supplier underperforms or fails. If a contract for a service you deliver regularly is priced at three times what you would expect for that scope alone, the excess value is usually hiding additional bundled requirements — requirements that may be entirely unrelated to your core offer.
Track and filter contract notices by CPV code, value, and keyword at Supply2Gov Tenders.
What the Procurement Act 2023 Says About SME Access and Lots
For SMEs assessing whether to raise a concern, the Procurement Act 2023 provides the clearest legal footing the sector has ever had for a public contract. The Act came into force on 24 February 2025 and places explicit duties on contracting authorities around lot consideration, transparency, and preliminary market engagement.
Section 12 of the Act requires contracting authorities to consider whether to divide a contract into lots. Where an authority decides against this — including for Crown Commercial Service frameworks and other central purchasing body arrangements — it must document its reasons transparently, and any later contract award notice or contract details notice should reflect the outcome clearly where relevant. This is where smaller businesses gain direct leverage: the explanation is on the public record and can be scrutinised.
Section 16 permits authorities to engage with suppliers before publishing a tender notice, for purposes including developing requirements, designing the procedure, and identifying likely contractual terms. Section 17 then requires that if pre-market engagement is carried out, the authority must either publish a preliminary market engagement notice before the tender notice, or explain in that notice why it chose not to. In either case, SMEs now have a documented audit trail to reference when raising concerns about contract design — whether that means questioning lot structure, financial thresholds, or scope definition.
How to Challenge a Bundled Contract — Your Practical Options
Once you have identified a potentially challengeable bundled procurement contract, the realistic options depend on where you are in the procurement timeline. Acting early is not just advisable — it is often the only time your intervention can make a material difference.
Using the Clarification Window Effectively
Every published tender includes a clarification period during the wider tender process during which prospective bidders can submit written questions. Crucially, all answers must be shared with all registered bidders — so a well-framed question can influence the entire procurement, not just your individual position. If you have identified a red flag — absent lots, inflated turnover requirements, disproportionate scope — the clarification window is your first formal opportunity to raise it. Frame your question factually and specifically: reference the relevant section of the procurement notice, ask whether the authority considered dividing into lots, request the justification if they did not, and if bundled scope may distort evaluation, ask the authority to identify the award criteria set out in the tender documents. You can also query disproportionate or unclear selection criteria during clarification.
Pre-Market Engagement — Getting In Early
The most effective time to influence contract design is before the ITT is published. Contracting authorities are now required to consider pre market engagement, and many use soft market testing or publish Prior Information Notices (PINs) or UK2 preliminary market engagement notices on Find a Tender in the weeks or months before a formal procurement opens. Supply2Gov Q1 2026 procurement data highlights this directly: “Pre-market engagement — that’s advising other people to take a look at your contracts. So your best protection is knowing that,” as explained during the Q1 2026 market webinar. Authorities can also use soft market testing to gauge supplier interest before finalising scope. Early engagement is also the best chance to remove barriers before the design is fixed.
Escalating to the Procurement Review Unit
If early engagement does not resolve a concern, the Cabinet Office Procurement Review Unit (PRU) provides a formal escalation route within wider UK government procurement oversight. The PRU was established alongside the Procurement Act 2023 reforms to receive and handle supplier concerns about public procurement practice. In other systems, federal agencies may investigate anticompetitive bundling practices, but in the UK the relevant route is through domestic procurement oversight and remedies. Formal complaints should be considered after exhausting the clarification process and the authority’s own complaints procedure. Legal challenge is a further option but is expensive and rarely the first-choice route for smaller suppliers — early engagement, by contrast, carries no such cost barrier.
How Supply2Gov Tenders Helps SMEs Spot and Respond to These Opportunities
The challenge for most SMEs is not understanding the theory — it is having the practical visibility to act on it. Spotting a bundled contract at the PIN stage, before the ITT drops, requires consistent monitoring of Find a Tender, Contracts Finder, and sector-specific portals. Doing that manually across multiple sources is time-consuming and unreliable.
Supply2Gov Tenders aggregates notices across these sources, allowing SMEs to filter by CPV code, keyword, and contract value — and to receive alerts when notices that match their profile are published. This means procurement teams can identify preliminary market engagement notices and prior information notices at the stage where intervention is still possible, rather than discovering a contract after the ITT has locked its design. This helps ensure suppliers can respond before requirements are fixed. In a wider supply market that Supply2Gov Q1 2026 data describes as increasingly competitive, the suppliers who act on intelligence early hold a structural advantage over those who respond reactively.
Frequently Asked Questions About Bundled Contracts and SME Access
Are contracting authorities legally required to use lots?
No — but under the Procurement Act 2023 (Section 12), they must consider doing so and explain in the contract notice why they chose not to divide the contract. That explanation is a transparency obligation, and its absence or inadequacy gives SMEs grounds to ask questions during the clarification period.
What are procurement lots and how do they help SMEs?
A lot is a subdivided portion of a larger contract that can be tendered and awarded separately. When a contracting authority uses lots, a larger procurement can be divided into separate lots and awarded to multiple suppliers while keeping individual contracts at a scale SMEs can realistically bid for. Crown Commercial Service frameworks, for instance, are often divided into lots by specialism or geography. This can open access for medium sized enterprises and smaller firms that cannot deliver the whole requirement alone. The absence of lots in a large multi-scope contract is one of the clearest signals of potential bundling. Lots can also be organised by geographical areas where that makes operational sense.
Can an SME successfully challenge a bundled contract?
Outcomes depend on the strength of the grounds and the stage of the process, with the strongest cases often arising where the authority has chosen one supplier for a broad scope that could have been competed differently. The most successful outcomes tend to come from early engagement — clarification questions during the tender window, or pre-market engagement responses before the ITT is published — and a challenge may be stronger where the authority could have run a competitive bidding process for lots instead. Formal challenges through the Cabinet Office Procurement Review Unit are available, but legal challenge is expensive and rarely the first route an SME would pursue.
What is pre-market engagement and how do I use it?
Pre-market engagement is formal or semi-formal contact between a contracting authority and the market before a procurement begins. It may take the form of a Prior Information Notice, a supplier day, a Request for Information, or direct meetings. Buyers should also check any applicable framework rules before using an EOI-style approach or other early engagement within an existing framework agreement. For SMEs, this is the window to raise concerns about proposed contract design — including lot structure and financial thresholds — before the ITT is finalised, which can help encourage small suppliers to comment on scope before it is fixed.
Where do I find prior information notices (PINs)?
PINs and preliminary market engagement notices are published on Find a Tender. Setting keyword and CPV code alerts — or using a monitoring platform like Supply2Gov Tenders — ensures you see them at the point where responding can still influence contract design.
Spot the Problem Early — and Act Before the ITT Drops
The central argument in this article is a timing one. Bundled contracts are not always the result of bad faith — often they reflect administrative convenience rather than deliberate exclusion. However, the effect on SME procurement access is the same either way. The Procurement Act 2023 has given smaller suppliers more transparency and more formal standing to raise concerns than at any point in recent memory.
The window to use those tools is narrow. Once an ITT is published, the design is usually fixed. The pre-market stage — PINs, preliminary market engagement notices, supplier days — is where contract structure can still be shaped. Consistent, structured monitoring of the full procurement pipeline, from preliminary notices through to contract award, is what separates suppliers who influence opportunities from those who simply respond to them.
As Supply2Gov put it in the Q1 2026 market webinar: “Don’t assume that you’re going to just roll over.” The SME procurement landscape is more competitive than ever — and the suppliers building proactive intelligence habits are the ones positioned to win.