Many small businesses say 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, says the Australian Small Business and Family Enterprise Ombudsman Bruce Billson.
Mr Billson has launched an Inquiry to examine the impact of reforms to Commonwealth procurement rules on small business and released an issues paper and extended the deadline for public submissions.
In 2021-22 the government and its entities awarded 92,303 contracts with a combined value of $80.8 billion.
It is estimated small and medium-sized enterprises were awarded 55% of the contracts by volume or 31% 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,” Mr Billson said.
“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.
“These are among the barriers we’ve heard about and our issues paper seeks to draw out more experiences and insights as we hear what small businesses and individuals say about the challenges or difficulties they faced when approaching government for procurement and where things might be improved.
“Equally, we’re keen to hear examples of exemplar agencies or effective processes or approaches, and how we might extend these ‘better practices’ more widely across government.”
Mr Billson said 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,” Mr Billson 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.
“Small businesses also point to the high cost and investment of time required to tender, and lack of consideration of this opportunity cost by agencies.
“The provision of limited or no feedback when a tender is unsuccessful is also a source of bewilderment and vexation.”
Mr 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.
The issues paper and the terms of reference for the inquiry are available on the ASBFEO website at asbfeo.gov.au/procurement where submissions can also be made. The deadline for submissions has been extended until 15 September.
Mr Billson’s report will be handed to the government in December.