Inquiry seeks fairness in government contracts for SMEs

Many small businesses feel left out when trying to win government contracts in Australia. They say the process is tough to understand, and they often miss out on opportunities.

To look into this issue, Australian Small Business and Family Enterprise Ombudsman Bruce Billson has started an inquiry. He wants to see how changes to the rules for government contracts affect small businesses. He has asked for feedback from people and businesses until September 15.

Last year, the government gave out many contracts worth a lot of money. Small businesses got a share of these contracts, but many still feel they could do better if given a fair chance. Mr Billson believes that when small businesses can compete for government work, it benefits everyone. It gives better value for money, encourages innovation, and supports local businesses.

Mr Billson emphasised the significance of enabling SMEs to compete fully for government contracts, as it contributes to enhanced value, promotes innovation, and bolsters Australian-based capabilities, ultimately benefiting the taxpayers and the nation.

Mr. Billson expressed his eagerness to receive feedback and ideas from those who are currently using the procurement system or those who aspire to do so. Winning a government contract can be transformative for small businesses, given the value of good customers in the business world.

One particular concern raised by small businesses is the use of government panels for contract awarding, where being on a panel does not guarantee work.

“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.” 

Mr Billson said he was keen to get more feedback and ideas from those using the procurement system or those who would like to but do not.  

“Winning a government contract can be life-changing for a small business.  As all businesses know, there is no substitute for good customers,” Mr Billson said. 

“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. 

Nevertheless, since the inquiry began in March, numerous small businesses have voiced their struggles with feeling marginalized or facing complexities while engaging with the procurement process. Many of them lack awareness about available procurement opportunities unless they already have connections with procuring agencies or prior experience in government procurement.

To gain a more comprehensive understanding of these issues, the issues paper aims to solicit more experiences and insights from small businesses and individuals who have faced challenges when approaching the government for procurement. Furthermore, it seeks to identify exemplary agencies or effective practices that could be adopted more widely across the government.

“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 also noted a significant barrier imposed on small businesses was the requirement to have certain kinds of expensive insurances just so they have the chance to do the work – with no guarantees. 

“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 issues paper and the terms of reference for the inquiry are available on the ASBFEO website, and interested parties can submit their feedback until the extended deadline of 15 September. Mr Billson plans to submit his comprehensive report to the government in December, aiming to drive positive changes that will create a more inclusive and beneficial environment for small businesses seeking government contracts.

ASBFEO_Procurement Inquiry Issues Paper.pdf

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