It can! Many would consider multisignature, Hashed Timelock Contracts (HTLCs) and some other kinds of transactions to be “smart contracts.”
Granted, however, there’s a lot you can’t do on Bitcoin, especially when you compare it to something like Ethereum.
That’s by design, for the most part. Bitcoin doesn’t aim to be a flexible smart contracts platform. The analogy often used is that, if Ethereum is a smartphone (capable of running thousands of apps), Bitcoin is a calculator.
Bitcoin does one thing (serves as money), but it does so reliably and very well. Because its architecture is so basic, there are less attack surfaces. And for a network managing billions and billions of dollars’ worth of value, that makes a lot of sense.