This is actually a success story: an SME (Small to Medium Enterprise) growing out of that classification because of public sector contract demand is exactly the kind of economic impact procurement is meant to generate.
For future contracting, the business simply competes on its merits as a larger supplier, and the relationships, track record and local knowledge it built as an SME don't disappear. The more important question is whether the business continues to deliver Social Value proportionate to its now-larger footprint, which it should be well placed to do.
This is one of the most common frustrations we hear from suppliers, and it points directly to the importance of proportionality.
A single-person, short-duration contract should not carry the same Social Value expectations as a multi-year programme. The fix starts at the design stage: authorities need to size Social Value requirements to the nature, value and duration of the contract, and preliminary market engagement is exactly the right moment to pressure-test whether what's being asked is genuinely deliverable.
If you're a supplier facing disproportionate requirements, it is entirely reasonable to flag this during any clarification process and to demonstrate what proportionate Social Value for that contract would actually look like.
It's also worth noting that the TOM System sets out clear rules for each measure, including how FTEs (Full Time Equivalents) should be recorded, which provides a useful framework for both sides when assessing whether a Social Value ask is proportionate.
We think this shift is already underway, and the Procurement Act accelerates it.
The move from (Most Economically Advantageous Tender) MEAT to MAT (Most Advantageous Tender), combined with greater transparency and KPI (Key Performance Indicator) publication, creates pressure to demonstrate outcomes rather than just headline numbers.
Proxy values and unit volumes have their place as a common currency, but what we're seeing among more mature authorities is a move towards asking suppliers to evidence what actually changed as a result of their Social Value activity: did someone get a job and keep it? Did a local organisation become more sustainable?
From the supply side, as markets become more mature and there is greater confidence about Social Value that can be offered and delivered, the qualitative aspects of Social Value impact will become increasingly important.
The challenge is developing evaluation frameworks that can assess quality of impact consistently and fairly. That's where a robust reporting infrastructure becomes important, not just for tracking volume but for capturing and evidencing real-world outcomes.
Genuinely helpful in principle, but variable in practice.
At their best, assessments like those offered by public bodies or accreditation schemes give SMEs a structured framework for understanding and evidencing their responsible business credentials, which can directly improve Social Value responses in bids.
The challenge for SMEs is the proliferation of different standards and the resource burden of engaging with multiple frameworks. The most useful assessments tend to be those that are recognised across multiple authorities, generate reusable evidence, and are proportionate to the size and capacity of the business.
If you're an SME deciding which to pursue, look for schemes that are explicitly referenced or accepted in the procurement frameworks most relevant to your sector.
There is opportunity through both approaches. Councils have a number of methodologies available to them to contract directly with VCFSEs (Voluntary, Community, Faith and Social Enterprises) and SMEs. Where, because of the nature or size of the requirement it is not appropriate to seek to contract directly, encouraging first-tier suppliers to do so in their supply chains is a good option.
There's nothing second-tier about this. Prime contractors on major programmes are increasingly required to demonstrate diverse supply chains, and platforms like Delta's supply chain tool are generating real volume here: one partner alone has awarded nearly 500 subcontracting opportunities to SMEs.
That said, direct award absolutely remains available, and the pipeline and preliminary market engagement notices introduced by the Act are specifically designed to give smaller organisations earlier sight of opportunities and time to prepare credible bids.
The honest answer is that scale does matter: a £50m infrastructure contract is probably not the right direct target for a five-person business, but the same programme may have dozens of accessible supply chain packages within it.
A framework that asks suppliers to absorb costs across multiple dimensions at once, and the cumulative impact makes the contract unviable or undeliverable, no-bidding is the right answer.
Our suggestion: model the full cost of compliance before deciding to bid, including the resource cost of delivering and evidencing Social Value commitments.
If you can't deliver what's being asked to a standard you'd be comfortable having published (because under the Act, KPIs will be) then either don't bid, or bid with a realistic and honest Social Value offer rather than an inflated one you can't sustain.
Authorities also have a responsibility here: unrealistic cumulative requirements ultimately reduce competition and deliver worse outcomes.
The new rules on open frameworks only apply to frameworks established after the Act went live. It is not possible for existing frameworks let under the old rules to be extended or reopened.
Beyond that, the capacity and process changes required to use the new framework provisions confidently haven't yet caught up with the policy. Many authorities spent year one focused on basic compliance with the Act's new structures, and using the open framework provisions requires procurement teams to be comfortable with rules they haven't applied before.
There's also a degree of legal caution: the public scrutiny that comes with transparency notices means authorities are moving carefully.
The expectation is that this will improve as organisations get more experienced with the Act. If you're on a framework that should be eligible for extension, it's worth raising directly with the contracting authority.
The Act creates a much more visible accountability mechanism than existed before.
For contracts above £5m, the Act requires contracting authorities to publish at least three KPIs (which can include Social Value) on contracts over £5m, so poor behaviour by contractors will be called out. Partial delivery becomes a matter of public record rather than something managed privately.
In the first instance, most authorities will look to remediation: understanding why delivery fell short and agreeing a plan to get back on track. Where a supplier consistently fails to deliver committed Social Value without good reason, this can inform future procurement decisions and, in serious cases of broader contract failure, can contribute to findings that result in debarment.
Generally, councils require Social Value to be delivered within their geographical boundaries, but definitions can range from specific postcode areas to borough level, local authority boundary, travel-to-work area and city-region.
Our view is that the definition of local should be set explicitly in the contract documentation and tied to the actual geography of service delivery. If the definition isn't clear in a tender, ask the question at clarification stage.
Authorities using Social Value Portal can set geographic parameters that align Social Value delivery to the specific area of need.
Social Value is mandatory for central government departments on contracts above the central government procurement threshold of £135,018 (including VAT).
All other public sector authorities are required to consider Social Value in procurements above £207,720 (including VAT) for goods and services, and £5,193,000 (including VAT) for works contracts, though in practice many also seek Social Value below those thresholds.
For public sector organisations outside central government, this doesn't automatically translate to a defined weighting in every tender, and there remains variation in how authorities interpret and apply the requirement, particularly for lower-value contracts.
You can read the full webinar summary here
And you can read our full breakdown of the Procurement Act 2023’s requirements here