Bidhive logo

Empowering Australian SMEs: Government to Revamp Procurement Rules to Level the Playing Field

June 25, 2024

Changes to Commonwealth Procurement Rules to boost SME opportunities

Reform in government procurement practices is being pursued at both the Commonwealth and state levels in Australia, with the aim of elevating the participation of local businesses, particularly small and medium enterprises (SMEs), in government contracts. These initiatives seek to bolster local manufacturing, support economic growth, and ensure ethical and efficient utilisation of public funds.

At the Commonwealth level, Finance Minister Katy Gallagher and Minister for Small Business Julie Collins have announced significant changes to the Commonwealth Procurement Rules (CPRs), scheduled to take effect on 1 July 2024. These changes are designed to facilitate easier access for SMEs to the government’s procurement budget of $70 billion by implementing new measures such as:

1. Establishing concrete targets for SME procurement: at least 25% of contracts below $1 billion and 40% for contracts below $20 million.
2. Increasing the SME exemption threshold to $500,000.
3. Requiring the inclusion of at least one SME in every quote request from the Management Advisory Services (MAS) Panel and the People Panel.
4. Introducing a 5% Flexibility Allowance for sourcing directly from First Nations businesses outside MAS and People Panels.
5. Lowering the economic benefit assessment threshold from $4 million to $1 million.
6. Integrating the Commonwealth Supplier Code of Conduct within the CPRs to enforce high standards of integrity and responsibility among suppliers.

These reforms highlight the government’s intention to capitalise on government procurement as a means to demonstrate support for Australian SMEs and stimulate growth throughout various sectors.

Concurrently, in New South Wales (NSW), concerns about local manufacturing decline have spurred a parliamentary inquiry into procurement practices — an initiative launched by the Standing Committee on Social Issues upon referral from the Finance Minister and Minister for Domestic Manufacturing and Government Procurement, Courtney Houssos. This inquiry aligns with the newly established intentions of the Minns government to rejuvenate domestic manufacturing through solidified support for local production, exemplified by their commitment to a minimum 50% local content in rolling stock contracts by the end of their current term.

The parliamentary committee in NSW, led by Labor MLC Sarah Kaine, will scrutinise procurement practices across various sectors and their impacts on the state, evaluating the effectiveness of government arrangements, contract volume and decision criteria.  The aim is to enforce procurement reforms that drive employment and support local industry, as well as to question the value for money and compliance policies of current procurement strategies.

This is an extension of concerns shown in other studies, such as the 2021 investigation by the McKell Institute, which contrasted the cost savings of outsourcing transport initiatives to foreign companies against the economic and employment benefits that could accrue from awarding these contracts domestically. By scrutinising instances like the Intercity Fleet, ferry services, and Sydney’s new light rail and metro systems, the McKell Institute illuminated a critical tension between immediate fiscal advantages and long-term economic development, noting that 13% of public contracts in Australia are awarded to international corporation

Both the Commonwealth and NSW reforms and inquiries are placed within a similar time frame, demonstrating a nationwide movement to create more equitable opportunities for local businesses in government procurement and to harness such activities for broader economic and social benefits.

 

What’s the difference between a tender, bid and proposal?

In this article we explain the difference between bids, tenders and proposals with a straightforward list of definitions every company needs to know. Why terminology matters The first thing to realise is that terms vary from organisation to organisation and from...

Mastering the art of tendering with Bidhive: Your comprehensive bid management solution

Tendering is becoming more competitive. Small to medium businesses have greater access to opportunities like never before, and generative AI solutions are helping us save time in drafting.  With the playing field being increasingly levelled, having an edge can make...

Major projects in Australia: Where to find the opportunities

Australia continues to be a focal point for numerous major projects across various sectors, offering vast opportunities for domestic and international investors, service providers, and professionals. Here's an overview of key areas where major opportunities are...

International trade agreements and competitive global bidding: What you need to know

For any capture or bid manager who has found themselves in a new role with a multinational or a company that conducts business internationally, understanding international trade agreements is essential.  These agreements have become game-changers for securing...

Competitor analysis reveals ‘billionaire brat pack’ now the biggest threat to space industry

NASA’s decided that instead of owning the delivery systems buying rides to the Moon to investigate and test new technology systems they can do much more, sooner and for less cost if they outsource human space flight to the private sector, allowing rich men to lead...

What’s the difference between public and private sector bids?

As public and private sector bidding becomes the new normal to secure high value enterprise contracts, there are distinctly different objectives and goals to understand.

Why procurement targets won’t fix the SME participation problem

Governments and commercial procurement departments around the world are introducing thresholds and policies to achieve non-discrimination in their supply chain contracting. Many are still are not meeting those targets. There’s a complex set of factors at play to stimulate market participation. Thresholds, while aspirational, must start by practically steering participants towards building procedural knowledge and business process capability first.

Procurement gets proactive, kind of.

There’s a trend rippling across the procurement world that has been touted as being the better process for encouraging innovative ideas for the delivery of public infrastructure and services. With disruption and innovation moving faster than procurement documents can...

Doing business with government – finding the opportunities

The government encourages large and small businesses to take on contracting opportunities. The process of finding opportunities is very straight forward.

Fighting for our limes – E-Scooter wars get juicy

There’s no doubt about it, Lime Scooters took over Brisbane. Since their trial launch in November 2018, more than 131,000 Brisbane riders have taken over 800,000 trips Brisbane City Council extended Lime’s trial permit given the success of the scooters so far. The...
Share This