New opportunities for SMEs to secure government contracts

The government is making changes that will open new doors for small and medium enterprises (SMEs) in the lucrative government procurement market.

As announced in its March Federal Budget, the government is strengthening the Commonwealth Procurement Rules (CPRS) to further boost the prospects for SMEs of securing Commonwealth contracts.

It plans to do this by requiring government officials to consider breaking major projects into smaller contract opportunities for businesses – that is if the unbundling allows for greater competition and is appropriate to the type of work being offered.

It is also reducing the value of insurance costs suppliers incur, to a reasonable level, and will ensure that, in most circumstances, insurance is not required until a contract is awarded.

In another move, the government will work to provide businesses with faster cash flow through supply chains, by extending its “pay on time” policy to all suppliers. It will pay e-invoices within five days and other invoices within 20 days or pay interest.

Further to this, the government will allow the Department of Defence to build local sovereign capabilities by directly purchasing from SMEs, or using tenders that are limited to SMEs, for procurements worth up to $500,000.

Defence is the largest federal procurer of goods and services, issuing contracts with a combined value of around $37.4 billion in 2020/21.

Other big spenders during that period included the Department of Health, Services Australia, Department of Home Affairs, Australian Taxation Office and Department of Foreign Affairs and Trade.

In 2020/21, the top categories of goods and services procured included building construction and support and maintenance and repair services, drugs and pharmaceutical products, computer services and disease prevention and control.

“These reforms are game-changers that will remove perceived barriers that may have discouraged some SMEs from participating in particular tenders, particularly where they think the cost of entry is too high,” says Finance Minister Simon Birmingham.

“SMEs have been punching well above their weight in the highly competitive government procurement market in recent years and these reforms will ensure that trend continues.”

Minister for Employment, Workforce, Skills, Small and Family Business Stuart Robert says the changes will deliver a win-win for Australia. “Our small and medium-sized businesses will gain more opportunities to get into government work and the government will benefit from cutting edge services.”

The CPRs govern how government entities buy goods and services and are designed to ensure the government and taxpayers get value for money.

All open business opportunities are published on AusTender by Australian government agencies.

In 2020/21, there were 84,054 contracts published on AusTender with a combined value of $69.8 billion.

The government says the new CPRs will apply to any new procurement undertaken from 1 July 2022 and the changes to the CPRs will not be retrospective.

Further information and guidance on how to apply the CPRs are available on Finance’s procurement policy website.

The changes to make it easier for SMEs to deal in the government procurement market follow previous changes made in December 2020. Those allowed agencies to directly engage SMEs for procurements valued up to $200,000 and came with cuts in red tape, reduced costs as well as some quicker payment times.

If you are gearing up to benefit from a federal government contract, speak to us to see how we can help you.

 

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