I never thought I would end up writing an article about NHS procurement—which, on the face of it, sounds like a terribly dry subject. But having recently navigated the system on behalf of an SME, I have seen first hand how its failings contribute to waste, inefficiency, and the exclusion of innovative and agile suppliers.

Due to a conflict of interest and confidentiality concerns, I am posting this anonymously to avoid disadvantageing my client in an ongoing tender.

The SME I work with has decades of experience supplying medical equipment to international governments, NGOs, and global health organisations; in the past 12 months we’ve delivered over 150 tonnes of medical kit to various humanitarian organisations internationally. Yet despite successfully delivering to healthcare systems worldwide, they remain locked out of the UK market due to the NHS’s absurd, Kafkaesque procurement process. It is easier for UK companies to sell to the United Nations than the NHS.

Reforming NHS procurement won’t make for a catchy campaign leaflet. A Focus Leaflet titled “Better NHS Procurement” would likely be left unread by most voters, nor do I imagine the next Lib Dem Battle bus to be emblazoned with “Making NHS Procurement Fairer” (almost as bad as Stronger Economy, Fairer Society).

But if we are serious about NHS reform, we cannot afford to focus only on treatment and waiting times. Procurement is the foundation of how NHS services are resourced and delivered. If the system is flawed, patient care suffers.

The rationale for NHS Procurement’s complexity—and why it still fails SMEs

Some argue that NHS procurement’s complexity is necessary to ensure quality, compliance, and supply chain security. And after the PPE scandals of the Covid period, that is understandable. However, the system confuses necessary oversight with unnecessary red tape, creating a bureaucratic obstacle course that disproportionately disadvantages SMEs, and actually costs the NHS more. 

A bureaucratic obstacle course

SMEs entering the NHS procurement system face an administrative onslaught. Instead of a streamlined, user-friendly platform, they encounter excessive duplication of compliance paperwork—the same details must be submitted across multiple forms rather than being stored centrally for easy reference.

Ironically, the NHS has centralised its procurement but still requires suppliers to manually provide the same information in different places, often in slightly different formats. This isn’t just duplication—it’s decuplification (doing everything times 10).

Take, for example, Information Security. Despite not handling patient data, the SME had to justify compliance with 200+ security questions and create 20+ new policies to meet NHS data standards for patient data collection.

Even financial and insurance compliance becomes an exercise in bureaucracy. The same insurance documents had to be uploaded in four different places, simply because different sections of the tender required them separately. This highlights a fundamental flaw in NHS procurement: centralisation has not simplified the process—it has only increased the volume of paperwork.

NHS Supply Chain also mandates significant discounts from suppliers without providing any volume guarantees, meaning SMEs risk making a loss unless the NHS orders enough products to break even. Additionally, all delivery charges must be included in the quoted price—meaning that for low-cost items like a 50p scalpel handle, an SME must absorb shipping costs until orders reach a viable quantity.

SMEs are required to provide extensive documentation on social value contributions, despite having fewer resources than large corporations. The level of evidence required (impact assessments, reports, case studies) can be an additional bureaucratic burden, rather than a proportionate measure of social value.

While sustainability goals are important, SMEs are expected to provide carbon reduction plans at the same level as large multinational corporations, without proportional adjustments. 

The process forces SMEs to adhere to reporting standards that are disproportionately burdensome for smaller suppliers. While large corporations have entire sustainability teams dedicated to completing these reports, SMEs are expected to meet the same extensive standards, despite having significantly fewer resources.

The framework contract structure places heavy financial burdens on suppliers. SMEs must commit to pricing for extended periods, yet payment terms and ordering patterns remain uncertain. The NHS often takes months to pay invoices, creating cash flow problems for suppliers.

Despite the NHS’s stated commitment to SME participation, the tender process does not offer streamlined or proportional requirements tailored for smaller businesses. SMEs must navigate the same extensive documentation, cybersecurity, and compliance hurdles as multi-billion-pound corporations.

Suppliers must repeatedly submit the same financial and product data across different spreadsheets and compliance portals, with no guarantees of orders to justify long-term framework pricing.

This echoes Kafka’s The Trial, where the protagonist is forced to defend himself against an opaque legal system without clear justification for the charges against him—a perfect parallel to the NHS procurement process.

The hidden cost of excluding SMEs

Perhaps the most frustrating aspect of NHS procurement is that it ultimately drives up costs. The logic behind centralised frameworks is to secure the best price through economies of scale, yet by making participation inaccessible to SMEs, the system creates an artificial monopoly where the biggest suppliers dictate pricing.

In reality, SMEs are 10-30% more cost-effective (UK Gov SME Spend Report, 2020) and return £3 to the economy for every £1 spent, compared to £0.64 from large firms. Research shows that SMEs also drive 66% of all UK innovation, yet rigid procurement processes prevent many from bringing new solutions into the NHS.

The hidden cost of all this? SMEs must invest vast amounts of time and resources simply for the chance to be considered for NHS contracts—before even winning a single penny of business.

Recognising the complexities of the tendering process, various companies offer bid writing services to assist SMEs. While technical expertise is invaluable, engaging these services can be a significant financial gamble. For instance, professional bid writing services often charge fees ranging from £450 to £5,000 or more per day, depending on the tender’s complexity and length.

Additionally, large corporations bidding for NHS contracts often have dedicated in-house bid writing teams, allowing them to streamline the process and absorb the administrative burden. In contrast, SMEs are forced to divert key personnel away from their core business operations to compile extensive submissions, putting them at a fundamental disadvantage before the tendering process even begins. As a result, smaller companies may spend tens of thousands of pounds and dedicate weeks or even months preparing bids—with no guarantee of securing the contract. This financial and operational burden can be a significant barrier to entry, stifling competition and innovation within NHS procurement.

We must demand real reform

The NHS publishes an SME Action Plan,  but the reality is far removed from the waffle in this document. The NHS talks the talk, but tendering practices are still failing to walk the walk.

We believe in devolving power, not centralising it into an inaccessible system that stifles competition and innovation. NHS procurement should be about delivering the best value and quality care—not about which suppliers have the biggest compliance teams.

If we are serious about increasing SME participation in public sector contracts, NHS procurement needs urgent reform. We should champion:

1. Proportional Compliance Requirements – SMEs should not be burdened with the same administrative demands as multinational corporations.
2. Automation & Data Sharing – Supplier information should be stored centrally to prevent needless repetition across tenders.
3. SME-Focused Procurement Frameworks – The NHS should introduce SME-specific opportunities within larger framework agreements.
4. Fairer Payment Terms – NHS Supply Chain requires SMEs to publish their payment commitment data—the NHS should be held to the same standard, ensuring timely payments for smaller suppliers.
5. Procurement Transparency & Accountability – The system should prioritise cost-effectiveness and patient care, rather than forcing suppliers into bureaucratic gymnastics that add no value.
6. An NHS SME Procurement Watchdog – A dedicated team should actively monitor and report on NHS procurement practices, ensuring SMEs are not unfairly disadvantaged.

It’s time for real reform—not just more warm words.

* The author works with SMEs and is known to the Lib Dem Voice team. For obvious reasons, their identity is not being revealed.