Source: https://tendernation.io/glossary/sme-vcse

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Glossary

# SME and VCSE

SMEs are small and medium-sized enterprises; VCSEs are voluntary, community and social enterprises. Both get specific attention in UK procurement policy.

Updated 14 Oct 2026

SME stands for small and medium-sized enterprise. VCSE stands for voluntary, community and social enterprise, which covers charities, community groups, social enterprises and similar organisations. UK procurement law and policy give both groups specific attention.

## What it means

[Section 123 of the Procurement Act 2023](https://www.legislation.gov.uk/ukpga/2023/54/section/123) defines small and medium-sized enterprises as suppliers that:

- have fewer than 250 staff, and
- have a turnover of £44 million or less, or a balance sheet total of £38 million or less

The Act then uses that definition in several duties. [Section 12(4)](https://www.legislation.gov.uk/ukpga/2023/54/section/12) requires buyers to have regard to the particular barriers SMEs may face and consider whether they can be removed or reduced. [Section 86](https://www.legislation.gov.uk/ukpga/2023/54/section/86) applies a similar duty to regulated below-threshold contracts.

VCSE is not defined in the Act but appears in government policy. [PPN 001: SME and VCSE procurement spend targets](https://www.gov.uk/government/publications/ppn-001-sme-and-vcse-procurement-spend-targets/procurement-policy-note-001-sme-and-vcse-procurement-spend-targets-html) requires central government departments, their executive agencies and non-departmental public bodies to set a three-year target for direct spend with SMEs from 1 April 2025, and a two-year target for spend with VCSEs from 1 April 2026, and to report results each year.

## Why it matters for SMEs

These targets and duties give buyers real reasons to want SME and VCSE bidders, and the Act's definition is generous: a business with 200 staff can count. [Reserved contracts](/glossary/reserved-contracts) under PPN 005 can also limit some below-threshold competitions to SMEs and VCSEs.

## Practical tip

Make sure buyers can tell you are an SME or VCSE. Record it accurately in your [Central Digital Platform](/glossary/central-digital-platform) profile and say it plainly in tenders where relevant. Then use the buyer's own duties in your favour: when an opportunity looks designed for big suppliers, point out the barriers during market engagement and suggest [lots](/glossary/lots) or proportionate requirements.

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## Nearby terms

- [RRe-tenderA new procurement run for work that is already being delivered under a contract that is ending or being replaced.](https://tendernation.io/glossary/re-tender)
- [RReserved contracts (PPN 005)Competitions a buyer limits to certain kinds of supplier, such as local SMEs and VCSEs below threshold, or supported employment providers.](https://tendernation.io/glossary/reserved-contracts)
- [SSelection questionnaire (SQ)A standard set of questions buyers use to check a supplier's eligibility, finances and capability before assessing its tender.](https://tendernation.io/glossary/selection-questionnaire)
- [SSocial value (PPN 002)The wider economic, social and environmental benefits a supplier commits to deliver through a contract, scored as part of the tender.](https://tendernation.io/glossary/social-value)
- [SStandstill periodA pause of at least eight working days after a contract award notice, during which the buyer cannot sign the contract and bidders can challenge.](https://tendernation.io/glossary/standstill-period)
- [TTender noticeThe formal notice a buyer publishes to start a competitive procurement, inviting suppliers to tender or to ask to take part.](https://tendernation.io/glossary/tender-notice)

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