If this was a good fit for SME, and the price paid for the whole thing was 4M pounds, why didn’t any SME win the tender? Seriously, that’s the whole yearly turnover for most SME shops I ever worked at. And all of them could do a better job than this.

That's possibly why: small businesses reliant on contracts that are, to them, disproportionately huge.. well, they die at the end of the contract. HMRC killed off an OpenStack based AWS competitor by replacing them, about ten years ago. Anchor clients can be a real hazard if an SME can't live without them. Sometimes it just isn't worth it.