Small and medium enterprises (SMEs) won one in five NSW government procurement contracts in 2024-25, totalling $8.3 billion, with this figure remaining steady despite a reduction in overall procurement expenditure.
According to fresh data from the NSW Government, regional and Aboriginal businesses also fared well, claiming a growing portion of the state’s annual $40 billion spend.
Spending with regional businesses increased from 16 percent to 18 percent (up $25 million) between 2022-23 and 2024-25, while Aboriginal businesses saw an increase from 2.2 percent to 3.3 percent (up $72 million) over the same period.
The Government has reduced its annual expenditure across a number of sectors as part of its ‘strategy of fiscal discipline’, recording a $300 million drop in spend on consultants, contractors and contingent labour.
This, it reports, has allowed the state to prioritise the delivery of essential public services and focus on using its purchasing power to strengthen local supply chains.
Minister for Domestic Manufacturing and Government Procurement Courtney Houssos said small businesses are the backbone of the economy, delivering clever solutions, supporting families and households, and helping drive economic growth across NSW.
“Our reforms are helping local small and medium businesses win a greater share of the Government’s $40 billion spend – supporting local jobs, strong communities and economic development right across the state,” she said.
“We will continue working to create even more opportunities for small businesses to grow and succeed.”
The NSW Government has implemented a number of recent reforms to assist small businesses in pursuing government contracts, including allowing agencies to negotiate directly with SMEs for goods and services valued at up to $250,000 – up from $150,000.
This saw 50 percent of all goods and services contracts between $150,000 and $250,000 awarded to SMEs in 2024-25, which is up from 47 percent in 2022-23 and 48 percent in 2023-24.
The Government has also reduced red tape by allowing small businesses to provide insurance details after a contract is awarded, and will establish the Jobs First Commission, a new Local Procurement Policy and a replacement program for Business Connect in 2026.
Minister for Small Business Janelle Saffin said it’s rewarding to see more regional and Aboriginal businesses winning government contracts.
“This isn’t just about procurement; it’s about ensuring the wealth of our $40 billion spend reaches every corner of the state,” she said.
“Local small businesses are the experts on their own communities. When the government buys local, we aren’t just getting a service; we are supporting local jobs and families. When a small business wins a contract, the entire local economy thrives.
“By slashing red tape and modernising our Business Connect program, we are ensuring small firms have the best possible chance to partner with government.
“We are backing the backbone of our economy by making it simpler and faster for local businesses to grow and succeed.”
