Subcontracting on public-sector contracts

In shortA large share of public money reaches small businesses through supply chains rather than direct awards. The Department for Education says 82% of contract value on its school building programmes is spent indirectly with SMEs through Tier 1 supply chains. Under the Procurement Act 2023, a 30-day payment term is implied into every public sub-contract, and buyers must ask bidders who they plan to subcontract to.

Why the supply chain matters

Every central government department must set a three-year target for direct spend with SMEs and report on it each year. Departments can also choose to set and report targets for indirect spend, meaning money that reaches SMEs through their main contractors (Small and Medium Business Hub, GOV.UK).

The Department for Education's SME action plan for 2025 to 2028 shows how big the indirect route can be:

Its target is 10% of spend direct with SMEs by 2028.
Its school rebuilding and free schools building programmes spend almost £2bn a year on the school estate, with 82% of contract value spent indirectly with SMEs through Tier 1 supply chains.
Its new CF25 construction framework is expected to deliver up to £15.4bn of projects over its lifetime, and its Tier 1 suppliers have a target of up to 90% of contract value spent indirectly with SMEs.

For many specialist contractors, the quickest way into public-sector work is a subcontract with a business that already holds the main contract.

Tier 1, Tier 2 and beyond

Tier 1 (main contractor or prime): holds the contract with the public body and is responsible for delivering all of it.
Tier 2: subcontracted by the Tier 1 supplier for a package of work, such as fire safety, M&E, landscaping, fit-out or supply of materials.
Tier 3 and below: suppliers to Tier 2 businesses, for example a materials supplier to a specialist installer.

The Procurement Act 2023 calls these arrangements public sub-contracts: contracts made substantially to perform, or contribute to performing, all or part of a public contract (section 73).

How to find the main contractors

Award information on Find a Tender. Award notices and contract details on Find a Tender show which supplier won a contract. A new award near you is a live lead for subcontract packages. Our free tender search helps you track contracts in your sector and region.
Pipeline notices. Larger contracting authorities publish pipelines of contracts over £2 million planned for the next 18 months. Use them to see which major projects are coming, then approach the contractors likely to bid. See how to find UK public-sector tenders.
Framework supplier lists. Big construction and FM work is often called off from frameworks. Once a framework is awarded, its suppliers are the Tier 1 contractors who will need supply chains for years. See frameworks and dynamic markets explained.
Supply chain registration and meet-the-buyer events. Many large contractors run their own supplier registration portals and supply chain events. Register with the ones that win work in your region.
Social value commitments. Main contractors often commit to social value outcomes such as opening up subcontracting opportunities to SMEs and local businesses, and they need suppliers to help deliver them. See our social value guide.

What main contractors check before they use you

A main contractor's own bid can fail because of its supply chain, so expect to be vetted:

Exclusions. In a competitive tendering procedure, the buyer must ask whether the bidder intends to subcontract and check whether any intended subcontractor is on the debarment list. If an intended subcontractor is an excluded supplier, the bidder must be treated as excluded too, although it must first be given a reasonable chance to find an alternative (section 28).
Capability you lend to the bid. If the main contractor relies on your business to meet a condition of participation, the buyer can direct it to put a legally binding arrangement in place with you (section 72).
Accreditations and documents. Insurance, health and safety accreditation, policies and recent experience are commonly checked. In construction that usually means an SSIP-recognised scheme such as CHAS, Constructionline or SafeContractor. See our accreditations checklist and documents needed for public-sector tenders.

Have this pack ready before you approach anyone. It is the difference between being added to a bid and being asked to come back later.

Your payment rights as a subcontractor

30-day payment is implied by law. The payment terms in section 68 of the Act, including payment within 30 days of receiving a valid invoice, are implied into every public sub-contract. Any term that tries to restrict or override them has no effect, although the parties can agree to pay sooner (section 73).
Exceptions. This does not apply to sub-contracts under concession contracts, utilities contracts awarded by private utilities, or contracts awarded by schools.
Valid invoices. Unless the contract sets other requirements, an invoice must show the name of the invoicing party, a description of what was supplied, the sum requested and a unique identification number (section 68).
Spot checks. From 1 October 2025, government departments must carry out regular spot checks on contracts worth more than £5 million a year to make sure lower tiers of the supply chain are paid within 30 days, and publish the results (prompt payment policy, GOV.UK; PPN 021).
Main contractors' payment records. Suppliers bidding for central government contracts above £5 million a year must show effective payment systems, including paying at least 95% of supply chain invoices within 60 days. GOV.UK says that from 1 October 2025 the average payment time must also be 45 days or fewer.

Subcontract, bid direct or team up?

Route	Often suits you when	Watch out for
Subcontract to a Tier 1	The contract is large, multi-trade or multi-site, or the buyer wants a single main contractor	Lower margin, and you depend on the main contractor's relationship with the buyer
Bid direct	The contract or lot matches your trade, size and track record	Selection criteria such as turnover, insurance and experience you must meet yourself
Consortium or joint bid	No one business meets every requirement alone	Clear roles, liability and a lead partner agreed before you bid

Many businesses do both: subcontract to build experience and references, then bid direct for smaller lots in the same market. Our bid/no-bid guide helps you decide which opportunities to chase.

How West Gate can help

Find the work: search open UK contracts and recent awards free with our tender search, or set up free tender alerts for your sectors and regions.
Get supply-chain ready: we help you pull together the accreditations, policies and evidence main contractors and buyers ask for.
Bid direct when you are ready: our bid writers handle the research, writing, coordination and deadline pressure, so your team stays focused on delivery. West Gate has a 90%+ win rate† and no competing bids on the same opportunity.
Talk it through: book a free 30-minute call to discuss whether to subcontract, bid direct or team up.

† Figures based on bids West Gate submitted and contracts awarded in 2025.

Frequently asked questions

Do 30-day payment terms apply to subcontractors on public contracts?

Yes, in most cases. Section 73 of the Procurement Act 2023 implies the 30-day payment term into every public sub-contract, and any term that tries to override it has no effect. Sub-contracts under concession contracts, private utilities' contracts and school contracts are excluded.

Can a main contractor name my business in its bid?

Yes, and buyers must ask bidders whether they intend to subcontract. If the main contractor relies on your business to meet a condition of participation, the buyer can direct it to enter a legally binding arrangement with you.

How do I find out who won a public contract?

Award notices and contract details are published on Find a Tender. You can also use the West Gate free tender search to track contracts in your sector and region.

Is subcontracting a good way to start in public-sector work?

Often, yes. It builds experience and references you can use in later direct bids. Check each opportunity's margin, payment terms and risk before you commit.

Sources

General information, not legal advice. Always follow the tender documents and take legal advice where needed.

Subcontracting on UK public-sector contracts: a guide for SMEs