NSW government changes tender rules to encourage more SMEs

Small businesses operating in New South Wales are set to benefit from changes to the state government’s tender process for government contracts.

Announcing the changes last week, NSW Minister Dominic Perrottet said as of July 1, government agencies are now required to “seek at least one quote from a small-to-medium enterprise for contracts worth up to $1 million”.

“This will mean small businesses will have the potential to compete for in excess of a billion dollars’ worth of government work each year,” Perrottet says in a statement.

The changes are part of an overhaul of the state’s prequalification system and build on previous reforms to the NSW Procurement’s SME policy, which allows government agencies located in non-metropolitan areas to purchase up to $5000 in goods and services directly from local suppliers without having to go through whole-of-government contracts.

The changes also follow moves by the federal government to establish a specialised unit within the Department of Finance to help small businesses gain better access to government contracts. The government announced in May it has allocated $2.8 million over four years for the unit.

“Small businesses are the backbone of a sound and steady economy, and it is essential that governments do all they can to assist and support local enterprise,” Perrottet says.

“These changes will allow SMEs to bid for all sorts of work with government departments, whether it is contracts for building and construction, ICT and other professional services,” he says.

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany the changes in NSW are “a great move in the right direction”.

“Government contracts are often hard to access by small businesses for a number of reasons,” Strong says. “The contracting process is often quite complicated because it is designed by big business for big business.”

Strong says government contracts are also often tendered on short timeframes, and the tender process itself can be an expensive exercise for SMEs. Strict demands and guarantees contained in government contracts can also prohibit SMEs.

“The federal government has been looking very closely at making sure government contracts are more usable for small businesses,” Strong says.

“In the end, it’s not just about giving small businesses a fair go.

“Small businesses are the innovators. We’re the ones who bring different ideas and ways of doing things to these areas and that should be considered valuable.”