The Australian Small Business and Family Enterprise Ombudsman has released an issues paper as a result of the inquiry conducted on the impact of reforms to Commonwealth procurement rules on small business.
Among other things, the paper highlighted the sentiment of many small businesses that have said that they feel excluded from the chance to tender for Australian Government procurement contracts because they are not part of the ‘in-crowd’ or find the process too hard to navigate.
It is noted that in 2021-22 the government and its entities awarded 92,303 contracts with a combined value of $80.8 billion, with small and medium-sized enterprises being awarded 55 per cent of the contracts by volume or 31 per cent by value, worth almost $25 billion. Small businesses alone accounted for $8.5 billion worth of the work (or 10.5% of all contracts by value).
“Enabling SMEs to fully compete for government work helps deliver better value, supports innovation and drives stronger Australian-based capability – all worthwhile and important benefits for the taxpayer and our nation,” Australian Small Business and Family Enterprise Ombudsman, Bruce Billson said.
He added, “Since beginning the inquiry in March, many small businesses have told us they feel shut out of the process or they simply find it too hard to navigate. They have low awareness about procurement opportunities unless they are already part of the ‘in-crowd’ through existing relationships with procuring agencies, or previous experience in government procurement.”
Billson stated that he was keen to get more feedback and ideas from those using the procurement system or those who would like to but do not.
“Winning a government contract can be life-changing for a small business. As all businesses know, there is no substitute for good customers,” he said.
“A great frustration that has been highlighted to us relates to the use of government panels for awarding contracts. Panels are a short list of providers that departments can draw from to have work carried out up to a particular value. Yet being on a panel does not guarantee work. Many small businesses have told us how they have been on panels for years and never been approached for a request to quote,” he stated further.
The paper highlighted the high cost and investment of time required to tender and lack of consideration of this opportunity cost by agencies, a sore point for many small businesses. The provision of limited or no feedback when a tender is unsuccessful is another sore point that was noted as well.
Billson also noted a significant barrier imposed on small businesses was the requirement to have certain kinds of expensive insurances just so they have the chance to do the work – with no guarantees.
“We are looking at the Commonwealth Procurement Rules to see how they are being applied, which departments are doing well, and whether there’s further steps that can be taken to improve the system,” he said.
