SMEs make up 99% of all businesses in the European Union and account for two thirds of private sector employment. Yet their share in the value of public contracts was long disproportionately low. The European Commission recognises that public procurement is a lever for economic growth — and that this lever only works if SMEs can participate fully. This insight has led to a broad package of measures, from concrete directive provisions to digital infrastructure and financial policy.
The problem: structural barriers
SMEs face four structural barriers in public procurement that large companies barely experience.
Administrative burden. Collecting, translating and legalising dozens of pages of supporting documents — for every procedure again. The cost of this weighs relatively heavier on a company with 15 employees than on a multinational with a permanent tender desk.
Disproportionate selection requirements. Turnover requirements, references and financial ratios that are not proportionate to the contract systematically exclude SMEs.
Large contract volumes. Contracts awarded as a single whole that can only be executed by large companies.
Payment problems. Long payment terms and the absence of advance payments disproportionately affect SME cash flow.
The European approach: five pillars
1. Directive 2014/24/EU: the legal foundation
The 2014 European procurement directive contains several provisions specifically designed to promote SME participation.
Divide-or-explain (Article 46). Contracting authorities must consider whether a contract can be divided into lots. If they decide not to do so, they must justify this in the procurement documents. Member States may tighten this into an actual obligation — France, for example, has done so with the “allotissement” principle, where division into lots is the starting point and non-division the exception.
The ESPD (Article 59). The European Single Procurement Document replaces the mountain of certificates and attestations with a simple self-declaration at submission. Only the winner needs to provide the full supporting documents afterwards. For SMEs, this saves dozens of hours per procedure and dramatically lowers the barrier for cross-border participation.
Turnover cap (Article 58). The minimum annual turnover that may be required as a selection criterion may not exceed twice the estimated contract value, unless special risks justify it. This provision prevents authorities from squeezing SMEs out of the market with a multi-million turnover requirement for contracts where their financial capacity is more than adequate.
Subcontracting transparency (Article 71). Insight into the subcontracting chain gives SMEs acting as subcontractors more visibility and protection. The contracting authority may require subcontractors to be checked against the same exclusion grounds.
2. The SME Strategy 2020
In March 2020, the European Commission published the “SME Strategy for a Sustainable and Digital Europe” (COM(2020) 103). Public procurement plays a prominent role as a growth lever.
The strategy introduces, among other things:
The SME-friendly procurement label. A voluntary certification allowing contracting authorities to demonstrate that they apply SME-friendly practices: realistic selection requirements, division into lots, fast payments.
The Big Buyers initiative. A network of large public buyers who jointly purchase innovative products and services, with explicit room for SMEs and start-ups in the supply chain.
Training and capacity building. The Commission funds programmes to promote buyer professionalisation, with emphasis on effectively involving SMEs.
3. Digital infrastructure
The digital transformation of public procurement is one of the most powerful levers for SME access.
eCertis. A European database indicating per Member State which supporting documents (attestations, certificates, extracts) can be used to meet selection requirements. For a Belgian SME wanting to bid in Germany or France, eCertis is indispensable for understanding which documents are equivalent.
TED and eForms. Tenders Electronic Daily has fully transitioned to eForms — standardised digital forms that significantly improve the readability and searchability of notices. SMEs can search more precisely by CPV codes, region and contract type.
The Public Procurement Data Space (PPDS). Launched in September 2024, the PPDS is an analytical platform bringing together all available procurement data. Policymakers, buyers and companies can analyse trends, research competitors and identify market opportunities. Currently Austria, Finland, Germany and Norway are connected alongside TED data. Further expansion follows. For SMEs, the PPDS opens a world of insights previously only available to large consultancy firms.
4. Payments and cash flow
The Late Payment Directive reform. In September 2023, the Commission published a proposal (COM(2023) 533) to replace the existing directive with a regulation with stricter rules: a maximum payment term of 30 days for all commercial transactions, automatic interest calculation on late payments, and a European Observatory for Late Payment. While the final text is still being processed, the direction is clear: faster payments, less cash flow risk for SMEs.
Belgian frontrunner: advance payments. Belgium went further than what Europe requires with the Act of 22 December 2023, introducing mandatory advance payments for SMEs (5% to 20% depending on company size, up to a maximum of €225,000).
5. Revision of the directives
In December 2024, the European Commission launched a formal evaluation of Directive 2014/24/EU and Directive 2014/25/EU. The European Parliament had already adopted a resolution in September 2024 with concrete recommendations, including:
- Better accessibility for smaller businesses and start-ups.
- A digital SME passport reducing administrative burden through a one-time registration valid in all Member States.
- Harmonisation between Member States to eliminate the large differences in implementation that discourage cross-border participation.
- Simplification of the current regulatory framework (476 articles across 907 pages).
The expectation is that the new directives will further sharpen the SME provisions from 2014, including strengthening the “divide-or-explain” principle and making digital tools mandatory.
Figures: where do we stand?
The trend is positive but not yet where it needs to be:
| Indicator | ±2014 | 2024 |
|---|---|---|
| SME share (contracts by number) | 55-60% | 71% |
| SME share (contract value) | <30% | 55% |
| Cross-border SME participation | <5% | still low |
The gap between the share in numbers (71%) and value (55%) shows that SMEs mainly win smaller contracts. Large contracts are still dominated by major players. This is precisely why the lots regulation is so crucial: it makes large contracts reachable by cutting them into smaller pieces.
What other Member States do
France: allotissement as obligation. In the French Code de la Commande Publique, division into lots is the starting point. Non-division is only allowed if the contract is technically indivisible, if coordination would be unfeasible, or if division would restrict competition. This goes a step further than the European “divide-or-explain”.
Italy: SME participation as selection condition. The Italian procurement code (Decreto Legislativo 36/2023) stipulates that selection criteria may not exclude micro, small and medium-sized enterprises. Contracts should in principle be divided into lots.
Belgium: advance payments and bid fees. The Act of 22 December 2023 goes further than any other EU country with mandatory advance payments linked to company size and mandatory bid fees for physical submission requirements.
What this means for you as an SME
European policy translates into concrete advantages:
Less paperwork. Thanks to the ESPD, the administrative barrier at submission is structurally lower than ten years ago.
More suitable contracts. Through the lots regulation and the obligation to justify, you more often find contracts at your scale.
Better cash flow. Mandatory advance payments (in Belgium) and stricter payment terms (European) reduce financial risk.
More transparency. Via TED, the PPDS and national e-Procurement platforms, you as an SME have access to the same information as the major players.
Use TenderWolf as your lever. Set up your search profile based on CPV codes and recognition categories, filter by lots and receive daily the contracts that match your profile. The European efforts create the opportunities — TenderWolf helps you find them.
Sources
- Directive 2014/24/EU — Articles 46, 58, 59, 71 — EUR-Lex
- SME Strategy 2020 — European Commission (COM(2020) 103)
- Public Procurement Data Space (PPDS)
- Late Payment Regulation proposal — COM(2023) 533
- eCertis — European Commission
- Act of 22 December 2023 — SME access — BOSA
- European Parliament — procurement resolution (September 2024)
- Single Market Scoreboard — Public Procurement