New procurement rules to back small and medium businesses

The Morrison Government has strengthened the Commonwealth Procurement Rules to further increase the prospects of small and medium enterprises (SMEs) securing Commonwealth contracts.

Finance Minister Simon Birmingham said these changes would open new doors for SMEs in in the government procurement market.

“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,” Minister Birmingham said.

“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.

“Small and medium businesses are the workhorses of our economy and these reforms as well as other measures to be announced in tonight’s Budget are all about backing them to grow their operations and employee more Australians.

“This is all about enhancing the commercial opportunities for SMEs and allow more suppliers to offer their services for the benefit of taxpayers.

“We are also determined to give Australian contractors the maximum opportunity to win significant work by unbundling major projects in ways that maximise efficiency for taxpayers, local job opportunities and the potential growth of Aussie businesses.”

Minister for Employment, Workforce, Skills, Small and Family Business Stuart Robert said the changes would help government tap into Australia’s dynamic and innovative SMEs.

“This will deliver a win-win for Australia, our small and medium sized businesses will gain more opportunities to get into government work and government will benefit from cutting edge services,”

“Whether it is delivering the lowest small business tax rate in 50 years, our tough measures to make sure SME’s get paid in full and on time or ensuring government buys from Australian SME’s, the Morrison Government is backing small businesses to grow and get ahead.”

The new Commonwealth Procurement Rules enhance opportunities for SMEs to participate in major projects by:

• requiring officials to consider disaggregating major projects into smaller contract opportunities, where unbundling would allow greater competition and is appropriate to the type of work on offer;
• reducing the value of insurance costs that suppliers incur, to a reasonable level, and making it clear that, in most circumstances, insurance is not required until a contract is awarded;
• providing faster cash flows through supply chains, by extending our ‘pay on time’ policy to all suppliers (we will pay eInvoices within 5 days and other invoices within 20 days or pay interest); and
• allowing 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.

Today’s changes build on previous significant reforms by our Government that made it easier for SMEs to win Commonwealth contracts, including by:

• allowing direct procurement from SMEs for contracts up to $200,000;
• making greater use of whole‑of‑government panels to reduce the costs of tendering; and
• assessing the domestic economic benefits offered by suppliers competing for high value contracts.

The updated Commonwealth Procurement Rules can be found here: https://www.finance.gov.au/government/procurement/commonwealth-procurement-rules