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Changes to Commonwealth Procurement Rules aim to boost opportunities for SMEs

Commonwealth Procurement Rules

Minister for Finance Katy Gallagher has announced a number of updates to the Commonwealth Procurement Rules (CPRs) as the new financial year approaches, in a bid to make it easier for small businesses to compete with major suppliers for a bigger slice of the government’s annual $70 billion spend.

The changes will come into effect from 1st July and will boost the small business sourcing target to 25 percent of procurement contracts below $1 billion (up from 20 percent) and 40 percent of procurement contracts below $20 million (up from 35 percent). 

The federal government will also raise the SME exemption threshold from $200,000, allowing all relevant entities to directly engage an SME for procurements valued up to $500,000.

Engaged SMEs must be an independent entity according to an amended definition, rather than a small or medium sized business supported by the resources of a larger entity.

Senator Gallagher said Commonwealth procurement is a significant economic lever.

“The Albanese Government has listened to industry and small and medium businesses and is taking action to improve their participation and competitiveness in government procurement.

“When used effectively, government procurement supports Australian businesses, and can stimulate growth in small and regional businesses and across industry sectors.”

Additionally, the threshold for procurement contracts that require an economic benefit assessment will be reduced from $4 million to $1 million, meaning more procurements will be subject to an assessment in the context of determining value for money.

A core component of the CPRs is the inclusion of the new Commonwealth Supplier Code of Conduct, which states that suppliers are expected to conduct themselves with high standards of ethics and consistently act with integrity and accountability.

It encompasses a range of expectations surrounding ethical behaviour, governance and business practices and welfare of employees.

Suppliers are also encouraged to consider using First Nations businesses when subcontracting to “help stimulate First Nations entrepreneurship, business and economic development.”

Minister for Small Business Julie Collins said she knew Australia’s small businesses are eager to make the most of government procurement opportunities.

“The changes we are introducing from 1st July will help to ensure Australia’s small businesses get a bigger slice of government procurement opportunities.

“This is just one way our government is delivering a better deal for small businesses, with more than $640 million in targeted support outlined in our budget’s Small Business Statement.”

Want to know more?

Catch Gareth Sebar, assistant secretary of procurement policy and systems for the Australian Government Department of Finance at the PASA Big Breakfast in Canberra, as he discusses how Finance is supporting more responsible procurement through new PCPs and enhanced CPRs.

All changes to the CPRs can be viewed here.

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