Small Businesses Voice Exclusion from Australian Government Procurement Contracts

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A recent report by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has shed light on small businesses’ challenges in accessing government procurement contracts. 

The report underscores issues of limited awareness and difficulties in navigating the procurement process, which has left many small businesses feeling excluded from opportunities.

“Enabling SMEs to compete for government work fully helps deliver better value, supports innovation, and drives stronger Australian-based capability – all worthwhile and important benefits for the taxpayer and our nation,” said Ombudsman Bruce Billson.

ASBFEO’s findings, as outlined in their issued paper, indicate that small businesses often perceive themselves as outside the ‘in-crowd’ of successful bidders, leading to a sense of exclusion. 

Moreover, a lack of awareness about available procurement opportunities compounds this problem. Many small businesses reported feeling shut out of the process or finding it overly complex.

The government awarded a staggering 92,303 contracts worth $80.8 billion during 2021-2022. Small and Medium Enterprises (SMEs) secured a significant portion of these contracts, representing 55% by volume and 31% by value. Small businesses earned contracts valued at $8.5 billion, accounting for approximately 10.5% of the total contract value.

Recognising the importance of inclusive procurement practices, ASBFEO is actively seeking feedback from users of the procurement system to address these issues and enhance access for small businesses

Challenges highlighted in the report include:

  • Frustrations with using government panels for contract awards.
  • Lack of feedback on unsuccessful tenders.
  • The high cost associated with tendering processes.

Expensive insurance requirements also emerge as a significant barrier, particularly when small businesses are compelled to invest substantial time and resources without guarantees of securing contracts. ASBFEO’s examination of the Commonwealth Procurement Rules aims to refine their application and find ways to improve the system for greater inclusivity.

As the report surfaces these challenges, it underscores the critical need to streamline procurement processes, provide clearer communication, and reduce barriers for small businesses aiming to contribute to government projects.

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