Benefits of working with VCSE suppliers in UK public sector procurement

What is a voluntary, community and social enterprise?

A voluntary, community and social enterprise (VCSE) is a non-governmental organisation that pursues social, environmental or cultural goals. VCSEs reinvest profits back into their own work to help achieve these goals.  

This sector includes, but is not limited to:

• charity organisations
• voluntary and community interest groups
• social enterprises
• most housing associations

The term VCSE is often used interchangeably with other terms such as ‘third sector’ or ‘civil society’ organisations.

It is estimated there are around 250,000 VCSEs currently operating within the UK.

What are the benefits of working with VCSEs?

VCSEs contribute an estimated £60 billion to the UK economy and play a vital role in providing public services. Working with VCSEs allows public sector organisations to leverage their reinvested profits and local expertise into producing responsive, efficient, community-focused services.

VCSE suppliers provide multiple benefits to public sector buyers:

• deep local reach and trust: VCSE suppliers are well-placed to embed social value and create positive community impact beyond basic contract delivery. Examples of this include:
  • investing in local services and facilities
  • creating employment opportunities for citizens
  • reducing the number of young people not in education, employment or training (NEETs)
  • providing training or education services
  • supporting disadvantaged groups

• agile and flexible focus: as smaller, adaptable businesses, VCSEs can often:
  • provide tailored and innovative solutions to complex public procurement challenges
  • respond quickly to changing circumstances and timescales
• niche area focus: specialised knowledge of particular services or products help VCSEs to innovate and operate often in complex or sensitive areas

What barriers do VCSEs face in public procurement?

VCSEs face many barriers that limit their ability to take part in public sector procurements. These include but are not limited to:

• lack of transparency around opportunities to work with the public sector
• limited resources to engage the market or fulfil large, complex contracts
• excessive bureaucracy and complex processes which put them off bidding
• lack of understanding of the VCSE sector and the capability of these organisations
• being indirectly excluded from tenders by eligibility criteria or contract design

What is being done to address the barriers for VCSE suppliers?

There have been significant improvements to help level the playing field and simplify public procurement for VCSEs:

The Procurement Act 2023 

The Procurement Act 2023 (PA23) introduced several changes designed to make it easier for VCSEs to compete for and secure public contracts. These include:

• greater transparency 
• strict payment terms
• the use of the Most Advantageous Tender (MAT) evaluation method

The National Procurement Policy Statement

Published in February 2025, the National Procurement Policy Statement supports the changes introduced by PA23. It sets out a priority for contracting authorities to give VCSEs “a fair chance” at public contracts. This is by maximising spend with these suppliers and adopting a “pro-innovation mindset” that opens doors to VCSEs.

Policy Procurement Note (PPN) 001

PPN 001 now requires government departments to set 2-year targets for direct spend with VCSE suppliers. Government Commercial Agency (GCA) is working with departments across government to help create and measure these targets.

By supporting these measures, government departments and buyers across the public sector can support VCSEs to engage more with public procurement, encourage innovation and achieve greater value for public money. 

What can public sector buyers do to remove barriers for VCSEs?

1. Be transparent around upcoming opportunities.

• PA23’s core aim of improved transparency in public procurement involves publishing required notices about upcoming procurements, giving VCSEs clearer sight of opportunities to bid

2. Review your procurement process for unnecessary barriers.

• PA23 introduces a duty on buyers to consider how to mitigate barriers to VCSE participation, such as removing or reducing obstacles like complex forms, high insurance thresholds or unrealistic turnover requirements

3. Evaluate on more than just price.

• the Most Advantageous Tender (MAT) principle encourages evaluation using factors beyond price, such as social value or environmental measures, helping innovative VCSEs compete on their strengths

4. Adhere to prompt payment requirements.

• PA23 requires buyers to pay suppliers within 30 days as standard, ensuring steady cash flow for VCSEs

5. Consider reserving specific procurements for VCSEs.

• PA23 allows buyers to reserve certain eligible procurements for VCSEs, creating a more level playing field for smaller, mission-driven organisations

Find out more

• learn how buyers can help small businesses across the UK by reading our guide to the benefits of working with small and medium sized enterprises (SMEs)
• start your journey to become a GCA buyer