Engagement with small and medium-sized enterprises (SMEs) is often treated as a procurement issue. In reality, it is a growth issue.
However, there remains a significant gap between the role SMEs play in the UK economy and the opportunities available to them. Despite representing around 99.9% of UK businesses, SMEs receive only 20% of public procurement spend directly, according to research from the British Chambers of Commerce.
If we want major projects and programmes to deliver lasting regional economic benefit, SMEs must have earlier and more meaningful opportunities to contribute.
Recognising this, the Government’s SME Action Plan 2025-2028 describes SMEs as the “engine room” of growth and sets out a series of measures designed to improve visibility of opportunities, reduce barriers to bidding and increase SME participation in public sector supply chains. Alongside reforms introduced through the Procurement Act and related policy measures, it reflects a growing recognition that SMEs are critical to driving economic growth, productivity and regional regeneration.
That direction of travel was recently reinforced through further government procurement reforms designed to ensure public spending supports jobs, skills and economic opportunity in every postcode. The changes increase the weighting given to local economic and social benefits from 10% to 20% for public contracts worth £5m or more.
Policy can set the direction, but delivery will depend on how clients, tier 1 organisations and supply chains change the way they engage with SMEs in practice. For large organisations, such as AtkinsRéalis, this presents an opportunity to help turn policy ambition into practical action.
The challenge now is creating procurement and delivery models that enable SMEs to participate fully and contribute at scale, while helping them better articulate and evidence the social value they create.
Maeve Glover, head of corporate impact and ESG at AtkinsRéalis
What SMEs are telling us
Many of the priorities identified in the Government’s Action Plan are echoed in recent AtkinsRéalis research. Based on responses from 220 SME suppliers, the research highlighted the importance of better visibility of future opportunities, more proportionate procurement requirements and stronger collaboration throughout the supply chain.
Perhaps most strikingly, 40% of respondents disagreed that large organisations provide sufficient visibility of future business opportunities and growth strategies, while 41% felt they did not receive timely information about upcoming opportunities. At the same time, 82% supported the idea of a clear set of supply chain engagement principles to improve relationships between large organisations and SMEs.
These findings matter because the impact of SMEs extends beyond individual contracts. Their ability to participate, invest and grow has a direct bearing on the local economies and communities that depend on them.
This is particularly important at a time when almost half (46%) of respondents reported challenges in attracting and retaining suitably qualified and experienced personnel. Without greater certainty and collaboration across supply chains, it becomes harder for SMEs to make the long-term investments needed to support economic growth.
Why SME engagement matters
The business case for engaging SMEs more effectively is compelling.
Beyond providing additional capacity, they often bring highly specialised expertise, innovative thinking and the agility to respond quickly to changing requirements. Their involvement can strengthen supply chain resilience, increase competition and improve cost efficiencies, while helping other organisations access capabilities that may not exist within traditional delivery models. For clients, meaningful SME engagement also demonstrates a commitment to responsible business practice, supplier diversity and inclusive growth.
SMEs also bring invaluable knowledge of local markets, stakeholders and communities, helping projects respond more effectively to local priorities and create stronger connections between investment and regional economic outcomes.
Importantly, SMEs play a significant role in delivering social value. As locally embedded organisations, they frequently support employment, skills development, community initiatives and regional economic activity. This is reflected in our research, where 90% of respondents acknowledged the impact their organisation has on local communities. Furthermore, 65% said they would benefit from additional support from larger organisations to achieve better social value outcomes.
Progress is happening, but remains fragmented
While the barriers facing SMEs should not be underestimated, it is important to acknowledge that meaningful progress is already underway.
Across the industry, organisations are developing innovative approaches to support SME engagement. AtkinsRéalis is contributing to a number of these initiatives, including Heathrow’s SME Academy, which helps smaller businesses build practical skills and knowledge through workshops and mentoring delivered in collaboration with more than 20 tier 1 partners. Similar programmes, such as the Aurora Engineering Partnership, demonstrate how larger organisations can work with SMEs to bring together complementary expertise, innovation and capability to support major programmes, while Mitie’s Business Boost programme is helping SMEs strengthen their capabilities and grow.
These initiatives demonstrate what can be achieved when SME engagement is approached intentionally and supported by long-term commitment.
However, much of this activity continues to take place in pockets across the industry. Effective engagement is often delivered through individual programmes and frameworks that are not connected to a broader industry approach. As a result, good practice can remain localised, limiting its impact and making it harder to achieve meaningful change at scale.
Our research suggests that successful SME engagement is less about identifying a single "best" model and more about consistently applying a small number of well-established principles. In practical terms, this means earlier visibility of upcoming work, simpler and more proportionate bidding requirements, clearer feedback, stronger relationships with delivery teams and more predictable routes from opportunity to contract award.
No single organisation can achieve this alone. Improving SME participation requires collaboration between large delivery organisations, including tier 1 suppliers, SMEs, clients, developers, universities, policymakers and procurement professionals. It also requires a shared commitment to helping SMEs thrive and contribute fully throughout the project lifecycle.
As an organisation working at the intersection of clients, delivery partners and supply chains, we see first-hand both the value SMEs bring and the challenges they face. We also recognise that lasting change will only be achieved through collective action.
Creating the conditions for growth
One potential next step is to establish, or support, an industry-wide forum focused on identifying and implementing practical solutions. Priorities could include shared SME engagement principles, proportionate procurement guidance, improved pipeline visibility, clearer routes from framework participation to work packages, and support for measuring and communicating social value.
If the industry is serious about supporting regional economic growth, strengthening local supply chains and delivering meaningful social value, SME engagement cannot be treated as a standalone initiative. It must be embedded throughout the way we plan, procure and deliver projects.
The good news is that the ambition already exists. Across our research, SMEs demonstrated optimism, capability and a strong willingness to collaborate. Given the vital role SMEs play in the UK economy, this is an opportunity we cannot afford to ignore. By working together, the industry can turn SME ambition into participation, participation into growth, and growth into lasting regional benefit.