Policy paper

Department for Education's small and medium-sized enterprise (SME) action plan: 2025 to 2028

Published 30 September 2026

Applies to England

How we are backing your business

Through Backing your business: our plan for small and medium-sized businesses, we are delivering the most comprehensive package of support for small and medium-sized enterprises (SMEs) in a generation.

Growth is this government’s number one mission and SMEs are the engine room. Our plan is to make the UK the best place to start and grow a business, with a culture that supports entrepreneurship in every community and high street.

We’re delivering:

• the most significant legislation to tackle late payments in over 25 years, giving the UK the strongest legal framework on late payments in the G7
• a new Business Growth Service to simplify finding advice and support, including a new streamlined digital offer – Business.gov.uk, ending the chop and change of previous government business support programmes
• a package of support tailored to high streets to make it easier for SMEs to set up shop, ranging from a new licensing framework to targeted funding for places
• a massive £4 billion finance boost to increase access to finance for entrepreneurs – to inspire the next generation of small business owners, make the UK the best place to start and grow a business, and build a culture that celebrates and champions entrepreneurs

We also committed to making SMEs a national priority, ensuring they have a fair opportunity to win public contracts and setting ambitious SME targets for each department. Each departmental SME action plan sets the steps government departments are taking to maximise SME and start-up spend across their department and wider agencies.

The Procurement Act 2023 creates a more simple and transparent procurement regime, making it easier for SMEs to do business with the government. This action plan sets out why SMEs should work with us, where to find opportunities, and the actions we are taking to reduce barriers for SMEs in bidding for work.

Departmental SME action plans set the steps departments are taking to maximise SME and start-up spend across their department and wider agencies. These plans include departmental targets for direct spend with SMEs and the actions being taken to remove and reduce barriers to SMEs bidding for government contracts.

The plan is monitored through an annual publication (as a minimum), of our direct spend with SMEs as a percentage of our total procurement spend.

Foreword from Minister MacAlister

SMEs are the backbone of the UK economy, driving innovation and contributing significantly to the communities we serve. Within the education sector, SMEs play an essential role in supporting schools, colleges, and further education providers by bringing specialist expertise, fresh perspectives, and agility. Their involvement strengthens the overall system and delivers substantial social and economic value nationwide.

While DfE rightly directs most of its funding to schools, further education and colleges, we know the education sector also works closely with SMEs at a local level, ensuring that this vital funding continues to flow through the SME sector and strengthens its role in the economy. We recognise that SMEs are instrumental in enabling these institutions to thrive. Whether delivering high-quality services, championing local skills, or creating employment opportunities, SMEs make a meaningful difference to learners, families, and communities every day.

This commitment aligns with this government’s ambitions for children and young people, ensuring a great childhood and pathway to success for all. This includes ensuring every child and young person has the chance to succeed through creating clear paths into good employment, ensuring high standards and a world-class education where all children can achieve and thrive, giving every child the best start in life, and supporting safe, healthy and fulfilling childhoods. This all demands strong partnerships across sectors, and SMEs, through their innovation and local impact, play an important role in strengthening provision, driving up quality, and contributing to more equitable outcomes across the system.

I am committed to further harnessing the value SMEs offer. This includes ensuring they have every opportunity to work with us and that the playing field is genuinely level. We remain focused on removing unnecessary barriers, simplifying processes, and opening up more opportunities for SME suppliers across all areas of our work.

This action plan outlines how we will continue to support SMEs, strengthen our engagement with them, and increase the proportion of our spend with this vital part of the economy. By working in partnership, we can build a more diverse and dynamic supply chain that delivers better outcomes for the education sector and for society as a whole.

Our target for direct spend with SMEs for 2028 is 10%, however, I have already commissioned forward looking opportunities to be explored, including joined up work across government departments, which should result in achieving more in future years.

Josh MacAlister, Parliamentary Under-Secretary of State (Minister for Children and Families)

Foreword from Susan Dawson 

DfE recognises the important contribution that SMEs make to the delivery of public services, bringing expert local knowledge that can be drawn on to create added social value to public procurement.

As DfE Chief Commercial Officer, I am committed to fostering an inclusive and collaborative environment where SMEs play an active role in supporting us deliver our strategic priorities.

I am pleased to publish our updated action plan, which builds on our achievements already delivered. We made strong progress in year one, significantly improving our data to help us better understand our SME spend and the sectors we operate in. The commercial function understanding of SMEs and the barriers they face has also been strengthened. Our SME and VCSE working group has remained highly focussed on supporting colleagues to gain a better understanding of these challenges and to identify practical ways to attract more bidders from this sector. We have also set an ambitious target, with a goal for direct spend with SMEs to reach 10% by 2028, for the financial year 2025 to 2026 our direct spend exceeded the target and we hope this increase continues during the next 2 years. I am committed to ensuring that our commercial strategies are designed to enable SMEs to play a full and effective role in helping us deliver our priorities.

Susan Dawson, Chief Commercial Officer for the Department for Education

Department overview

The Department for Education (DfE) is strengthening our society, powering our economy, and enabling equality. 

We work in partnership to:

• create high-quality pathways to employment and prepare young people for the future, including through transforming technical education
• deliver a broad, more inclusive education with high standards, supporting all children to achieve and ensuring nobody misses out on opportunity
• support the most disadvantaged and vulnerable children and young people through high-quality local services
• provide the best start in life through high-quality early education and childcare to raise standards and support parents to and families

DfE believes working with SMEs will contribute to the achievement of the priorities, whether that is through directly contracting with the department, schools or colleges, through direct grants or as key partners in our supply chain.

DfE is supported to achieve the priorities by 7 Agencies and Public Bodies. Further information about DfE and our priorities is available on GOV.UK.

Why SMEs should work with us

Supplier diversity is key to a healthy marketplace, creating opportunities for entrepreneurship, supporting economic growth and business creation. DfE understands the challenges and barriers faced by suppliers, especially SMEs, when contracting with government departments and is committed to tackling them. DfE recognises that SMEs are often agile and innovative in their approach which can lead to the development of new products, services and technologies, which in turn can encourage and increase competition, leading to better value for the taxpayer. SMEs can also provide wider social benefits as they often based within local communities and create job opportunities within those communities.

In line with the government aim, DfE wants SMEs to benefit from central government procurement spend, either directly or indirectly, through the supply chain. DfE has committed to this aim by appointing a senior SME sponsor and an SME champions working group, the role of which is to develop and implement actions across the department to reduce the barriers to procurement identified by SMEs. The champions group works closely with the SME Crown Representative and is part of the cross-government SME network, helping DfE to understand issues for SMEs and actions that could be implemented to improve outcomes for SMEs.

DfE has previously published SME action plans and implemented actions to encourage SMEs to work with the department and reduce the barriers that SMEs have identified when bidding for contracts within the public sector, some examples of which have included:

• reviewing the procurement documentation to streamline and simplify
• reviewing our business case and other assurance documentation and processes to confirm that the SME agenda has been considered as part of the sourcing strategy, that SME and voluntary, community and social enterprise (VCSE) engagement has been encouraged and larger contracts have been considered for breaking down into smaller lots
• improving the transparency of our procurement opportunities through publishing our pipelines
• working with data and finance colleagues to improve our understanding of the SME markets and inform procurement decisions
• raising awareness across the department through training and engagement sessions to improve recognition of the benefits that SME provide
• reviewed our market engagement documentation and incorporated a ‘hints and tips and do’s and don’ts’ section in the presentation to enable SMEs to better understand the bid writing and evaluation process and reduce the barriers that SMEs experience
• developed case studies where SMEs have been successfully awarded contracts to raise the profile of SMEs within the department

Within this plan DfE intends to build on the actions already taken to continue to remove and reduce the barriers for SMEs.

As well as opportunities to contract directly with DFE, significant DfE funding goes to SMEs who are recipients of grants and through working directly with schools, colleges and local authorities. Based on government grants statistics data for 2024 to 2025, DfE funds around 55% of all governmental grants. When this source is matched against the department’s internal SME register, DfE provided over £272 million in funding to SMEs through general grants, including grants awarded following a competition, equating to 11.9% of the £2.3 billion total general grant expenditure for the year. This SME figure should be considered a conservative estimate, given a 97% entity match rate from the source data and SME status changes over time.

Get help buying for schools support offer to schools and academies continues to play an important role in supporting SMEs. In 2025 to 2026 53% of the contracts were awarded to SMEs (20 of 38 contracts), with a combined value of circa £28.5 million. These awards represent 34% of the total circa £83.9 million contract value awarded, demonstrating strong SME participation by volume alongside significant spend with SME suppliers. In addition, many programmes provide funding to schools and colleges that is subsequently procured from local SMEs, further extending the sector’s contribution to SME growth and participation in the wider education supply chain.

We have focussed on ensuring that SMEs have great opportunities through our supply chains. For example, the Schools rebuilding programme and Free schools building programme spend almost £2 billion every year addressing the condition of the school estate, with 82% of the contract value spent indirectly with SMEs through Tier 1 contracting supply chains. We have awarded a new framework, CF25, for delivery of future construction activity and 5 of the suppliers awarded contracts on the framework are SMEs. Across its lifetime, this framework is expected to deliver up to £15.4 billion in projects and the Tier 1 suppliers on the framework have a target of up to 90% of contract value to be spent indirectly with SMEs.

Links to departmental commercial opportunities

Direct opportunities

One of the most important things contracting authorities can do is to provide the market with information about current and future public contract opportunities by publishing a forward-looking procurement pipeline. The Procurement Act 2023 achieves this by requiring the publication of pipeline notices in certain circumstances. This is of particular benefit to SMEs, as it provides them with time to plan for future work, ensuring a competitive and diverse market.

Pipeline notices (UK1) for any intended requirement over £2 million are published on Find a Tender Service (FTS). View our pipeline of potential activities by searching for Department for Education UK1 Pipeline Notices.

Our pipeline notices are a forward look for 18 months and are reviewed and updated every 6 months, or as necessary. The forward look is not yet available on FTS; however the individual notices can be viewed.

Read about how to look at the notices, notifications and the use of data.

Search and apply for contract opportunities.

How to bid for government contracts as a consortium - GOV.UK.

Joining frameworks, dynamic purchasing systems and dynamic markets

Joining a commercial agreement, such as a framework, dynamic purchasing system (DPS) or a dynamic market, can put SMEs in front of buyers actively seeking their services.

• framework agreements establish terms for future contracts, providing a pool of pre-selected suppliers from which public sector buyers can call off orders
• DPSs are an ‘always open’ electronic list of pre-qualified suppliers that public sector buyers use to quickly and flexibly purchase goods, services, or works

Search the Government Commercial Agency commercial agreement pipeline for upcoming agreements.

Joining a supply chain

DfE advertises procurement opportunities on FTS. Procurement opportunities prior to that date can be accessed on Contracts Finder. SMEs may want to search for contracts that have been awarded to larger suppliers and look on their websites for any contract opportunities or approach them with an offer to work with them. Working with larger suppliers can be a method of gaining experience of working with government departments.

Further information on how to do business with our department.

Other useful information:

Selling to government

Find high value contracts in the public sector

How to bid for government contracts as an SME effectively

Departmental supplier events

DfE recognises that engaging with the market before starting any formal procurement process is good practice and ensures adherence to the principles of fairness, equal treatment, and transparency. Participation in market engagement events allows SMEs to understand what opportunities exist and to share views from SMEs of how the opportunities could be shaped to deliver the best outcomes for the end users.

Early market engagement is also used to inform the development of the delivery model approach, testing of the specification and the financial assumptions, the potential procurement procedure, possible bid evaluation criteria, and overall project timetable to ensure that when going to the market, potential suppliers have sufficient time to respond to tenders.

To help ensure the department meets these objectives, it is recommended that market engagement is undertaken. Market engagement is an important part of the commercial lifecycle and can help:

• gain valuable insight into the current market and potential capability and capacity of future markets
• improve understanding of the current supplier landscape and to identify potential barriers to entries, particularly for SMEs, both in the short and long term
• build the department’s commercial intelligence, market health and delivery model assessments to confirm that there is capability and capacity in the market, to test that the proposal is financially viable and to avoid market failure
• promote the department’s commercial activity and give the market early insight to encourage competition for upcoming opportunities

The government is committed to creating opportunities for all types of businesses through its buying opportunities. This ranges from large corporate organisations to supporting small businesses and social enterprises, in line with the government’s SME agenda. Supplier diversity is key to creating a healthy marketplace, creating opportunities for entrepreneurship, supporting economic growth and business creation.

All market engagement events are advertised on FTS and the table shows planned market engagement events for contracts that are suitable for SMEs which you may wish to register to attend. Once the actual dates are confirmed the events will be advertised on FTS.

Planned market engagement events for contracts suitable for SMEs

Name of project	Proposed ME or supplier event date	Procurement suitable for SMEs	Value of project
School Transport	October 2026	Yes	£200 to £300m
Books	October 2026	Yes	TBC
Mandarin Excellence Programme	October 2026	Yes	Up to £2.4m

Government Commercial Agency (GCA) formerly Crown Commercial Services (CCS) maintains an events page for frameworks.

DfE have also participated, and will continue to do so, in a cross government market engagement event programme. In the past year DfE have attended and contributed to panel discussions, presentations and the organisation of 6 engagement events at venues across the country.  As an action we intend to organise a DfE focused event, further details of which will be advertised when established.

The learning captured from market engagement will be considered as future iterations of the SME Action Plan are developed, helping the department identify opportunities to reduce barriers, strengthen supplier relationships, and increase direct spend with SMEs and VCSEs.

Actions and milestones

Improvement action	Benefit to SMEs	Milestones for 2025 to 2028
Improve education and awareness for DfE staff and the SME sector	Greater understanding of DfE markets and requirements Knowledge of access routes to contracting opportunities	Investigate alternative methods for gathering market and supplier information to inform sourcing decisions Market engagement and awareness raising sessions planned for 2025 to 2026 for DfE colleagues and SMEs to continue our communication campaign to ensure that SMEs are considered at every stage of the procurement process Implement a survey via our eSourcing system to SMEs that expressed an interest but did not go on to bid to understand the barriers Continue to work collaboratively with government departments to participate in and contribute to cross government engagement and supplier awareness sessions
Improve accuracy of current and future spend data around SMEs	Greater understanding of the markets that SMEs are interested in Opportunity to undertake focussed market awareness to increase access to opportunities	Review and improve the quality of the management information in respect of suppliers, particularly their status as SMEs Improve the data accuracy to enable focussed reporting and data analysis of the SME market Strengthen further engagement with our EAs and NDPBs to include SME data capture and reporting
Improve SME accessibility to bid	Improved bidder understanding of DfE requirements Minimised bureaucracy in tender documents	Continue to review procurement documentation based on feedback Extend the publishing of pipeline notices to include procurements of below £2m to improve transparency

Our actions and milestones updated for 2025 to 2026

We accept that there is more to do to develop a good understanding of the barriers specifically facing SMEs in DfE markets. In light of this, we remain focused on addressing the following barriers to entry into public sector contracts:

• understanding of the sector
• supply chain issues
• awareness of opportunities
• contracts marked as suitable for SMEs
• document design

In our SME action plan for 2025 to 2026 we said we aimed to do this by:

• increasing DfE understanding of the sector, educating commercial practitioners and policy customers to understand the definition of an SME, the markets they operate in and the benefits they can bring to DfE
• improving knowledge within the SME sector, improving awareness of DfE markets and opportunities, and how to access them

During 2025 to 2026 we:

• increased the number of SME champions to ensure representation across all the functional areas of the department

• invited Social Enterprise UK (SEUK) to deliver an awareness raising event to the department and followed this up with awareness raising sessions within our commercial teams

• worked with a cohort of other government departments and the SME Crown Representative, Shirley Cooper, to develop our action plan

• worked alongside other government departments to participate in market engagement events for SMEs to gain insight into public sector contracts and establish contacts within the department

• included wording in our procurement notices to encourage SMEs to bid

• revised and improved our market engagement process to reduce some of the barriers experienced by SMEs

• held a workshop with DfE senior managers to identify how we could do things differently to increase the number of SMEs awarded contracts. Numerous ideas and suggestions were made and further workshops are planned to identify how we can bring some of the ideas into reality

• significantly improved our knowledge and identification of SME supplier and spend data and have established a reporting method to enable us to track our % spend target to be achieved by 2028

• worked with our Non-Departmental Public Bodies (NDPB) and Executive Agencies (EA) to include their total procurement spend (TPS) within our target setting and encouraged them to improve SME spend data and adopt similar actions to work with SMEs within their organisations

The activity undertaken during 2025 to 2026 has had the following impact:

• SMEs have been awarded 88 new contracts during 2025 to 2026 with a total contract value of £57,383,262

• increased awareness within our commercial teams of the SME sector and opportunities to attract bids from these organisations

• improved reporting and data capture

• we had a direct spend of 12.3% in 2025 to 2026

We will continue to build on these improvements and develop further actions as our understanding of the market increases.

Case studies

During the past year we have developed SME cases studies a few examples of which are detailed here. Further development of case studies is included in our actions to improve education and awareness for both DfE and SMEs and we plan to add a link to case studies within our suite of procurement documents.

Learning from SME Suppliers

In May 2026, DfE participated in a cross-government supplier engagement event and invited 2 SME organisations with current contracts with the department to share their experiences of engaging with the DfE procurement process and contract delivery. The session provided valuable insight into the opportunities and challenges faced by SME suppliers when working with government.

The common themes and insights that emerged will inform and shape the future approach to supplier engagement and procurement strategies to encourage and increase SME participation in public procurement.

Feedback from both suppliers highlighted the importance of:

• early and meaningful market engagement to improve supplier understanding, confidence, and preparedness
• clear requirements and transparent communication throughout the procurement lifecycle, particularly for smaller organisations with limited bidding resources
• strong contract management and relationship building to support successful delivery and long-term collaboration
• recognising and utilising supplier expertise to improve outcomes and encourage innovation 
• embedding social value considerations, which remain a key driver and differentiator for many SME organisations
• providing continuity of contacts and consistency in policy direction, which is particularly important for organisations delivering long-term programmes and services

Supporting schools to access better value-for-money procurement solutions

The DfE Sector Strategy team supports schools and trusts to achieve better value for money by identifying and promoting approved Public Sector Buying Organisation (PSBO) arrangements through the Get help buying for schools service. Part of this work entails the team undertaking a robust assessment of supplier frameworks and deals, considering factors such as:

• procurement compliance
• value for money
• governance standards
• contractual terms
• suitability for the education sector

The details are then published on the Get help buying for schools website enabling schools and trusts to access trusted, compliant routes to market with confidence.

Through signposting to these approved deals, the team helps schools:

• reduce procurement complexity
• minimise procurement risk
• maximise the value of public money

This approach supports a diverse supplier market, which includes SMEs on approved frameworks ensuring schools have access to a broad range of high-quality providers while maintaining compliance with public procurement requirements. By making vetted procurement solutions more visible and accessible, the team enables education settings to make informed purchasing decisions and focus resources on improving outcomes.

Supporting SME participation through the award of contracts from schools to SMEs

DfE recognised a need for schools to be able to easily compare supplier offerings of classroom supplies. School business managers have many demands on their time within the school environment and schools have different procurement requirements which often means they cannot leverage benefits of aggregation.

DfE scoped a pilot tool to save schools time and to:

• provide clarity on pricing
• see real like for like prices to make informed procurement decisions
• provide data to DfE to determine strategies to support schools and manage the markets 

Via a short quotation process, an organisation was appointed to design, build, test, iterate upon and ultimately provide a web application for a subset of 200 schools, providing easy access to price comparison across the main educational suppliers.

The procurement was designed to encourage competition from SMEs by using a proportionate and accessible procurement process. Tender requirements were aligned to the size and risk of the opportunity, enabling innovative smaller suppliers up compete effectively alongside larger organisations.

This resulted in an SME being awarded a contract for £98k for 12 months and included regular reviews and quarterly deliverables. Through working closely with the SMEs and a small group of schools the scale was manageable and feasible for an SME.

Our direct spend with SMEs

DfE has published details of the direct percentage spend with SMEs on GOV.UK since 2019 to 2020 with concerns that not all data in respect of total procurement spend was available. One example of this is the Education Estates spend data, which historically has been categorised as non-procurement spend within systems, despite the activity being considered procurement.

In the previously published SME action plans DfE committed to improving our reporting and data to enable a more accurate and complete total procurement spend to be identified. An approximate estimate of procurement spend data for Education Estates has been added to the total procurement spend for DfE for 2023 to 2025, alongside the Education Estates direct spend with SMEs.

PPN001, published in February 2025, stated that departments must now include the total procurement spend of Non-Departmental Public Bodies (NDPBs) and Executive Agencies (EAs) in the total procurement spend. DfE has a large number of NDPBs and EAs and has worked collaboratively with those that have an annual procurement spend of over £100 million initially for the purpose of inclusion in the action plan and target setting. Work to establish a reporting process with other NDPBs and EAs is one of the actions for 2025 to 2026.

The inclusion of both Education Estates, NDPBs and EAs has resulted in a significant change to both the total procurement spend and percentage spend with SMEs as detailed in the table below.

In setting the percentage target, analysis has been carried out of potential changes to departmental budgets, contracts ending during the period up to April 2028, new services which may be suitable for SMEs and departmental resources. The outcome from this analysis has been factored into the final evaluation of the target set for 2027 to 2028 allowing for the volatility and some level of uncertainty which will remain.

DfE spend with SMEs including Education Estates, NDPBs and EAs

Financial year	Direct spend with SMEs % Target	Published Total procurement spend (£m)	Published Direct spend with SMEs (£m)	Published Direct spend with SMEs %	Total procurement spend (£m) Including Education Estates and NDPBs and EAs*	Direct spend with SMEs % Including Education Estates and NDPBs and EAs	RE-calculated Direct spend with SMEs %
2019 to 2020	NA	£550	£200	36.30%	NA	NA	NA
2020 to 2021	NA	£769	£223	29.00%	NA	NA	NA
2021 to 2022	NA	£606	£177	29.20%	NA	NA	NA
2022 to 2023	NA	£803	£256	31.90%	NA	NA	NA
2023 to 2024*	NA	£983	£284	28.89%	£2,638	£429	16.30%
2024 to 2025*	NA	£968	£295	30.5%	£3,023	£386	12.8%
2025 to 2026	NA	£748	£203	27.2%	£2,720	£333	12.3%
2026 to 2027	NA	NA	NA	NA	NA	NA	NA
2027 to 2028	10%	NA	NA	NA	NA	NA	NA

*Figures for these years were in part indicative estimates whilst methodological assessment and changes were underway as outlined in the action plan.

NDPB and EA spend with SMEs

DfE NDPBs and EAs with a total procurement spend greater than £100 million in 2025 to 2026 are detailed in the table here.

Organisation	Total procurement spend (£m)	Total direct spend with SMEs £m	Percentage of direct spend with SMEs %
Student Loans Company	£148	£9	6.26%

DfE grant spend with SMEs

Separate from the total procurement spend data in the tables, based on Government Grants Statistics data for 2024 to 2025, DfE funds around 55% of all governmental grants.

When this source is matched against the department’s internal SME register, DfE funded over £272 million to SMEs through general grants. This SME figure should be considered a conservative estimate, given a 97% entity match rate from the source data and SME status changes over time.

View historical central government spend with SMEs

Our payment performance

Government is leading by example and paying our suppliers promptly. Late payment is an issue for businesses, especially smaller businesses, as it can adversely affect their cash flow and jeopardise their ability to trade. The government recognises that the public sector should set a strong example by paying promptly. The public sector is required to pay their suppliers in 30 days and report on their performance on an annual basis. 30-day terms also apply in public sector supply chains. Our department’s latest payment performance is set out here.

The latest report covering October 2025 to March 2026 shows:

• 97% of invoices were paid within 30 days

View our historic payment statistics.

Information for 2025 onwards can be found by going to the FTS and searching for DfE UK17 notices.

View further information on government’s payment policy and legislation.

SME hub

The small and medium business hub is a dedicated space for SMEs looking to work with the government. Here you will find links to other departmental action plans and centralised guidance on bidding for government work.

Contact us

PolicyAssurance.COMMERCIALQUERIES@education.gov.uk

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