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Small business procurement panel key to economic recovery

The small business ombudsman has called for a small business procurement panel to support the creation of jobs in the sector.

Small business procurement panel key to economic recovery
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  • Maja Garaca Djurdjevic
  • June 15, 2020
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The Australian Small Business and Family Enterprise Ombudsman Kate Carnell is calling on the federal government to establish a small business procurement panel.

The panel, proposed in ASBFEO’s COVID-19 Recovery Plan, would require government contracts with a value of up to $10 million, to be offered through the small business panel as part of the tender process, before being opened to the wider market.

“The government has a golden opportunity to improve its procurement process to support the creation of jobs in the small business sector,” Ms Carnell said.

According to the ASBFEO's findings, the total number of federal government contracts awarded to SMEs in 2018-19 was 26 per cent. However, 94 per cent of government contracts are valued under $1 million, with 59 per cent below $80,000.

"It is clear small businesses could have a larger share of that pie," said Ms Carnell.

“Unfortunately current government procurement processes preference large businesses.

“A procurement system that discourages small business participation won’t necessarily get the best value and also denies small businesses the opportunity to innovate, employ and grow." 

She commended the federal Industry Minister Karen Andrews on vowing to speak with the Prime Minister about the importance of using government procurement as a lever to build Australian capability and bolster supply chains in the tech sector.

“Minister Andrews is absolutely correct. In fact, we believe this should be extended beyond the tech sector to small businesses more broadly, including manufacturing," Ms Carnell said.

The ASBFEO explained that small businesses still face significant barriers when participating in government procurement. Not only is it a costly exercise, but most don't have the resources to complete the complex tender documentation.

"The challenges of getting on to a panel in the existing system are onerous," said Ms Carnell.

“Equally, small businesses are often overlooked on the ‘value for money’ criteria. Just because they might not be able to offer the lowest price, doesn’t mean they are not competitive overall.

“Lowest cost is not always the best value for money. There’s a strong argument that prioritising Australian small businesses pays dividends to the entire economy.”

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