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Government Initiatives to Improve Small Business Access to $70 Billion in Commonwealth Contracts
The federal government is taking steps to improve small business access to $70 billion in Commonwealth contracts after a review found SMEs are struggling with complex and costly application processes. The report, prepared by Australian Small Business and Family Enterprise Ombudsman Bruce Billson, highlighted barriers that SMEs face when tendering for government contracts, including interpreting complex guidelines and facing competition from larger companies with dedicated teams.
Minister for Finance Katy Gallagher and Minister for Small Business Julie Collins released the government’s response to the report, acknowledging the challenges faced by SMEs. The government is exceeding its target for procurements from small and medium enterprises, but only $8 billion of government contracts go to SMEs, representing 11% of total procurements by dollar value.
The report found that SMEs often struggle to engage with government departments, with officials lacking knowledge about how to work with smaller businesses. A risk-averse culture within departments also hinders the use of new suppliers. Complaints from SMEs about their treatment in the procurement process are often discouraged, creating reputational risks for businesses.
The government has agreed to most of the recommendations put forth by the ASBFEO, including the creation of a new, independent procurement commissioner and increased training for departmental officials. Plans are already in motion to simplify and expand small business procurement through the Buy Australia Plan, with increased transparency and streamlined processes for SMEs engaging with the government’s procurement platform, AusTender.
Small businesses will have greater visibility of contracts awarded through AusTender from July 1, with a fully upgraded panel procurement system expected by mid-2025. The Department of Finance is also developing resources, such as short videos for the Selling to Government website, to assist SMEs and Indigenous-owned businesses in navigating the procurement process.
While the government rejected the recommendation to remove the Procurement Coordinator function, it acknowledged the need to improve the complaints process for small businesses. The full ASBFEO report and government response are available for further review.
