More generally, if $X\to S$ is flat and finitely presented, and if $T$ is a closed subscheme of $X$ which is a relative local complete intersection over $S$, then the blow-up $Y$ of $T$ in $X$ is flat over $S$ and commutes with every base chabge change $S'\to S$. This is just because the powers of the defining ideal $I$ of $T$ are all flat and commute with base change, and $Y$ is by definition Proj($\bigoplus_{n\geq0}I^n$).
This applies in particular if $X$ and $T$ are both smooth over $S$. In this case, compatibility with base change implies that the geometric fibers of $Y\to S$ are blow-ups of smooth subvarieties in smooth varieties, hence smooth. Since $Y$ is flat over $S$, it is smooth.
