The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson, has said that small businesses were feeling shut out of government contracts due to their lack of knowledge, experience, and contacts. These businesses felt that the procurement processes were hard to navigate and they lacked the right contacts and experience to take advantage of such opportunities.
A lack of feedback when a bid failed, the requirement for expensive insurance and the high cost of tendering were also identified as challenges faced. The use of government panels for awarding contracts was also criticised as some businesses confirmed having been on the panels for years yet never been requested to provide a quote.
Billson confirmed that since launching an inquiry into Commonwealth procurement in March, it had been established that many small businesses had a low awareness of procurement opportunities unless they were a part of the ‘in crowd’.
Despite Billson having previously stated that the government was determined to become the biggest customer of small businesses, official figures indicate that SMEs won less than a third of contracts in the 2021-22 financial year. This came to just $24.9 billion worth of tenders out of $80.8 billion in contracts that were awarded. The $24.9 billion however made up 55% of all contracts by volume.
A recently released ASBFEO issues paper found that there was some progress made in amending procurement rules. This includes changes such as allowing the Department of Defence to source directly from SMEs on contracts valued at up to half a million, right-sizing insurance requirements, and unbundling of major projects.
The ombudsman has extended the deadline for public submissions until September 15 to gain more feedback from those in the procurement system and identify exemplar agencies and better practices. He is also required to ascertain if the recent changes to procurement rules are truly making it easier for small businesses to compete for major government contracts.
Billson noted that winning a government contract could be life-changing for small businesses. He is thus urging small business owners and other stakeholders to share their views with the inquiry. This will enable the inquiry to assess what measures are working and what is not.
Feedback is also being sought on the Buy Australia Plan that the federal government proposed in the latest budget and is intended to help provide more government work opportunities for SMEs while building domestic industry capability. The plan also includes openings for First Nations-led businesses to access government contracts.
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