Time consuming and confusing contract processes are holding back small businesses from taking advantage of the government’s promise to double small business procurement, according to the Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson.

In 2021-22, the Australian Government awarded $80.8 billion in procurement contracts, of which less than a third (30.8 per cent or just under $25 billion) was awarded to small and medium-sized businesses.

In July 2022, the government promised to double down on small business procurement by introducing reforms that would make it simpler for businesses to compete.

Yet despite the reforms, the ASBFEO says small businesses are still falling at the last hurdle.

Procurement inquiry launched

The Ombudsman has launched an Inquiry to examine the impact of reforms to Commonwealth procurement rules on small business, in an effort to understand the impediments to confidently competing for contracts.

“It’s great to see the Australian Government’s commitment to be a bigger customer for small businesses. But for many small and family businesses, identifying and securing Commonwealth procurement contracts can be complex, costly, confusing and time-consuming,” Billson said.

“Supporting the opportunity for small and family businesses to compete for, and fully participate in, supplying the goods and services the Australian Government needs helps to ensure full value for money, vitality in the economy, support for local businesses to scale and can enable innovation.

What’s stopping small business from competing for contracts?

Billson suggests procurement impediments can diminish opportunities to encourage entrepreneurship.

“It is timely to examine how the system is working for small and family businesses, the role procurement rules are playing to support small business participation, and what lessons and improvements can be made.

“We want to identify those departments and agencies who are exemplars in providing procurement opportunities to small businesses, and celebrate this success and help others to emulate it.

“Similarly, we seek to shine a light on those whose dealings with small business are poor.”

Inquiry will review the 2022 changes to procurement

The Ombudsman will review the implementation of the 1 July 2022 changes to Commonwealth procurement, and the impact these changes have had on small businesses that participate in Commonwealth procurement activities.

Billson said the review will seek to identify additional changes to Commonwealth procurement rules and processes to boost small business participation.

The review will also examine the effectiveness of the Commonwealth Contracting Suite, AusTender’s methods for identifying small businesses, and other measures to enable small businesses to join together to bid for larger and multi-faceted contracts, and how accessible rolling short-listed provider ‘panels’ are for smaller businesses.

Billson said many small businesses were unaware of how they could tender for government contracts, or what contracts might be available to tender.

“We want to look at what support is given to small businesses to navigate what can be a complicated procurement process. In some cases, small businesses are deterred by a feeling there is a ‘closed shop’, while in other cases they simply don’t know about the opportunities available, or the size of the contract can be simply too big,” Billson said.

The Ombudsman is calling for written submissions from small businesses and other interested parties on their experiences of the government procurement process. Submissions should be sent through by 1 July 2023. A final report with recommendations will be given to the Australian Government in December.

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