Small businesses are feeling excluded from the chance to tender for Australian Government procurement contracts, stating they are not part of the ‘in-crowd’ or find the process too hard to navigate, according to a report from the office of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
Ombudsman Bruce Billson said ASBFEO has launched an inquiry to investigate the impact of reforms to Commonwealth procurement rules that were introduced last July and extended the deadline for public submissions.
“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,” 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.”
Between 2021-2022, government figures reveal SMEs won 55 percent of contracts by volume which were worth almost $25 billion in value, despite the combined value of all 92,303 contracts awarded sitting at $80.8 billion.
Mr Billson said he was keen to receive more feedback and ideas from those using the procurement system or those who would like to but do not, acknowledging that “winning a government contract can be life-changing for a small business”.
“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 added that “expensive insurances”, which are required for the chance to tender with no guarantee of work at the end, are also creating a barrier for small businesses.
“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 deadline for submissions to the ASBFEO inquiry has been extended until 15th September.
Mr Billson’s report will be received by the government in December.
