Sharing to succeed: From targets to outcomes – how collaboration between primes and SMEs can unlock government's SME ambitions

This post is part of "Sharing to succeed" - a blog series from the techUK Central Government Council exploring how knowledge sharing and collaboration between buyers and suppliers can be a key to successful market engagement, resulting in procurements that support digital transformation. You can find the introduction to the series here.

One of the things I value most about the techUK Central Government Council is the mix of organisations around the table. Large system integrators, mid-sized firms and SMEs all bring different perspectives, but are ultimately trying to answer the same question: how can we work more effectively with Government to deliver outcomes?

SME spending targets are a good example. They expose where SME engagement is working, where it is falling short and where barriers remain across procurement, commercial models and delivery.

It’s easy to fall into a narrative where primes and system integrators are seen as part of the problem, absorbing Government spending through large, complex contracts. The reality is more nuanced.

This blog reflects conversations across the Council, supported by research undertaken by CGI. I’ll start by being slightly provocative. A proportion of SME spend will inevitably flow through system integrators and prime contractors. Government does not have the capacity to manage hundreds of individual SME contracts across every major programme. The question isn’t whether primes have a role to play, it’s how they play it.

When prime contracts are in place, what does good look like for Government, SMEs, primes and ultimately citizens? Rather than focusing solely on targets, how can collaboration unlock both greater SME participation and better delivery outcomes?

From targets to outcomes

The Government’s renewed focus on SME spending targets is welcome. Department-level, ministerially owned targets create stronger accountability. However, targets alone will not shift the dial. Recent industry analysis suggests that only 11% of central Government procurement spend goes directly to SMEs, a figure that has remained broadly unchanged in recent years. At the same time, other parts of the public sector, particularly Local Government, have shown that much higher SME participation is achievable.

The challenge is no longer policy ambition, but execution. Collaboration sits at the heart of turning that ambition into delivery.

Levelling the playing field

One of the most effective levers available to Government is also one of the most underused: mandating meaningful SME participation within procurements. Done properly, this does more than increase SME spend; it levels the playing field. Every prime is required to build and deliver through an SME ecosystem, shifting the focus from whether SMEs are used, to how effectively they are integrated.

This moves SME inclusion from a compliance exercise to a collaborative delivery model.

Beyond “badgeless”: enabling real collaboration

The industry often talks about “badgeless teams”. Multiple suppliers working alongside Government within integrated delivery teams. In principle, this is exactly right. In practice, collaboration can still be constrained if SME engagement is fully mediated through the prime.

Departments increasingly want visibility of SME partners. They want direct relationships with specialists and open, two-way conversations. Those of us who understand the value SMEs bring know that no single organisation can do everything.

This is not about bypassing the prime. It is about making the ecosystem work properly.

“From an SME perspective, the most effective partnerships are those where we are brought in early, with a clear role in solving the problem, not just delivering a component. When there is strong alignment between the department, the prime and the SME, and open communication across all three, it allows us to deliver real impact. That triangulated relationship – client, prime and SME – is where the value is.”

Designing procurements that unlock SME value

If Government is serious about SME outcomes, procurement design needs to enable collaboration from the outset.

“SMEs add most value when they are involved early in shaping the solution, not brought in later to deliver against a predefined specification. We must move beyond ‘partner in name only’ arrangements, where an SME is included to strengthen a prime’s bid but has little meaningful involvement in delivery.

SME engagement should be treated with the same seriousness as Social Value. It should be measured by procurement teams, including how well primes work with their supply chains and whether SME voices are heard in the room throughout the life of the contract.

That means allowing enough time for pre-market engagement, then backing it up with effective supplier relationship management and contract management. Done well, this helps SMEs, primes and Government co-develop better approaches, strengthen delivery and achieve better societal and economic outcomes.”

If SMEs are only engaged once the solution is fixed, Government limits the innovation and fresh thinking it wants SMEs to provide.

Recognising commercial realities

For collaboration to succeed, it must reflect the commercial realities of both prime and SMEs. Primes often own overall delivery accountability, and the associated financial and SLA liabilities. This inevitably shapes commercial models and the way in which primes approach pricing, to manage that overarching risk. Whereas SMEs can find themselves operating within commercial arrangements they had little opportunity to influence.

If the goal is to maximize SME value, there’s an opportunity to think differently. Government can create discrete work packages that flow directly to SMEs, set SOW-level KPIs that reflect the work being delivered, use commercial models that reduce cost layering, and align contract incentives around shared outcomes. Collaboration should not simply be encouraged; it should be commercially viable.

From targets to transformation

SME targets remain an important catalyst for change. But the real opportunity lies in creating the conditions for Government, primes and SMEs to work together more effectively.

Ultimately, SME spend is not the goal; better public outcomes are. Those outcomes will be delivered through effective collaboration across the entire supplier ecosystem.

Central Government Programme activities

The techUK Central Government Programme provides a forum for government to engage with tech suppliers. We advocate for the govtech sector, evangelise tech as a solution to public sector challenges, facilitate market engagement, and help make the public sector an easier market to operate in. Visit the programme page here.