Small Medium Enterprises (SMEs)

What are SMEs?

As defined in EU Recommendation 2003/361, Small and Medium Enterprises (SMEs) are:

1. ‘’The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million.
2. Within the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.
3. Within the SME category, a microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.’’

SMEs and Public Procurement

Public Procurement is governed by EU legislation, national rules and guidelines to ensure compliance with the principles of transparency, non-discrimination and equal treatment. These are key to demonstrating the State’s attainment of maximum value for money through competitive procedures. The SME market in Ireland offers huge potential to contracting authorities. The Government has an ongoing commitment to support SMEs to fully engage with public procurement. The OGP is committed to encouraging contracting authorities to consider and include a range of measures which provide greater opportunities for SMEs to participate.

Social Enterprises and Public Procurement

According to Trading for Impact National Social Enterprise Policy 2024 – 2027, which was published by the Department of Rural and Community Development and the Gaeltacht:

• ‘A social enterprise is an enterprise whose objective is to achieve a social or environmental impact, rather than maximising profit for its owners or shareholders. The term social enterprise encompasses a broad array of organisations and in Ireland the sector is characterised by its great diversity. It traverses boundaries with other more traditional and well-established sectors including the community and voluntary, and non-profit sectors and also with the (for-profit) enterprise sector.’

Measures that will allow for a more level playing field for SMEs to participate will also assist social enterprises in gaining access to public procurement opportunities. Social enterprises can assist contracting authorities with meeting their own social or environmental goals. Under the 2016 Regulations a contract or elements of may be arranged as a reserved contract which allows only social enterprises/sheltered workshops to apply. This offers an opportunity to contracting authorities achieve their social and procurement aims. Further information on reserved contracts can be found here.

In recognition of the important role played by social enterprises and community-based organisations in advancing Green Public Procurement objectives, Circular 17/2025: Updated Green Public Procurement Instructions for Public Sector Bodies encourages public sector bodies to consider taking steps to promote the participation of such bodies in their procurements, particularly when implementing GPP. Such steps could include, but are not limited to:

• reserving a contract or element thereof under Regulations 20 (Reserved Contracts) or 77 (Reserved Contracts for Certain Services) of the Procurement Regulations,
• promoting a partnership with a social enterprise in the delivery of the contract; and
• seeking quotations from social enterprises for contracts with a value below the national advertising thresholds.

Potential offered by SMEs and Social Enterprises

SMEs and Social Enterprises offer huge value to contacting authorities:

• Increased competition in the market, which will drive quality and value for money
• High-quality products and services
• Skilled and experienced workforce
• Start-ups and SMEs can often offer innovative solutions
• Supporting sustainable development and wider societal benefit
• Assist contracting authorities in meeting their sustainable goals
• Bring about local, regional and national economic benefit
• Diversifying supply chains can boost a contracting authority’s resilience to respond to supply chain disruption

Ways to make procurement more SME Friendly

SMEs offer huge potential to public procurement. Below are some tips for incorporating SME friendly measures throughout the stages of the procurement process. There are general processes that can support SME participation such as:

Pre-Tendering Phase

• Publish your pipeline projects
• Consider holding a “Meet the Buyer” event
• Consider publishing a Prior Information Notice (PIN)
• Use preliminary market consultation (PMC) to build knowledge on markets
• Based on your PMC, devise an SME friendly procurement strategy
• Consider SMEs/social enterprises when getting quotes for lower value contracts
• Consider opportunities for using innovation procurement
• Consider reserving a contract or elements thereof inline with the 2016 Regulations
• Consider your choice of procurement procedure
  • Use Dynamic Purchasing Systems were suitable
  • Use Open Procedure where possible and suitable
• Consider using social considerations, such as promoting a partnership with a social enterprise in the delivery of the contract
• Consider technical ability and not just company track record, which can be unduly narrow for start-ups
• Consider the full life cycle costs when reviewing tender documents
• Divide larger contracts into lots where appropriate to make them more accessible to SMEs
• Include a provision for consortia bidding to encourage partnership with other SMEs
• Set turnover levels that are proportionate to the level of risk
• Allow for variants to specifications to encourage innovative SMEs to participate
• Use proportionate and reasonable insurance levels

Tendering Phase

• Consider hosting a bidder’s briefing
• Answer any queries from tenders fully and in a timely manner
• Provide unsuccessful SME tenderers with useful feedback to assist with their next bid

Post-Tendering Phase

• Publish contract award notices for greater transparency
• Update your contract register with successful bids
• Evaluate if bids were received from SMEs and consider, if necessary, any lessons learned which can be incorporated into the next competition

Please see our SME-Friendly Practices in Public Procurement available below.

Circular 05/2023: Initiatives to assist SMEs in Public Procurement

The 2016 Regulations contain a number of provisions to make it easier for businesses, and in particular SMEs, to tender for above EU threshold public sector procurement contracts. The OGP has also developed a suite of policy measures, through Circular 05/2023, that contracting authorities should consider to assist SMEs access all public procurement opportunities These include:

• Proportionate financial capacity;
• Division of public contracts into lots;
• Provision for “consortia bidding” to assist SMEs where they would not have the relevant capability or scale;
• Proportionate insurance levels; and
• All contracts for goods and services valued above €50,000 (excluding VAT) must be advertised on eTenders.

Further information, including an FAQ document, in relation to Circular 05/2023 can be found here.

Green Public Procurement

When implementing GPP, public sector bodies are encouraged to pay particular consideration to any potential impact on SMEs, as there may be additional costs associated with the inclusion of GPP in public contracts. In line with Circular 17/2025: Updated Green Public Procurement Instructions for Public Sector Bodies, care should be taken to ensure that the addition of GPP criteria and conditions, including reporting and monitoring requirements, is done in a manner that does not discourage SMEs as they may not be in a position to bear the additional costs or administrative burden.

SME Advisory Group

The Minister of State chairs quarterly meetings of the SME Advisory Group. This group consists of the Department of Enterprise, Tourism and Employment (DETE), Enterprise Ireland (EI), InterTrade Ireland (ITI), the Competition and Consumer Protection Commission (CCPC), as well as representatives from the Irish Business and Employers’ Confederation (IBEC), the Small Firms Association (SFA), the Construction Industry Federation (CIF), Chambers Ireland and the Irish Small and Medium Enterprises Association (ISME). The agenda and minutes of these meetings are published here.

Supports for SMEs

SMEs interested in public procurement can find information and resources on the OGP’s Sell to Government page. This includes a Top Tips for Tendering and the ABC’s of Public Procurement.

The establishment of the National Enterprise Hub (NEH) was announced by Government in Budget 2024. The NEH makes it easier to access Government supports on managing the costs of doing business, developing sustainability plans, enhancing productivity and efficiencies, adopting new digital technologies, and entering new export markets.