Commissioner urges further changes to procurement rules to boost opportunities for SMEs

There have been some important changes to government procurement in NSW that have been designed to increase engagement of small and medium enterprises (SMEs), the Small Business Commissioner has noted in a submission to a parliamentary inquiry on government procurement practices.  

As recommended by the Commission, insurance requirements have also been relaxed, ensuring small businesses don’t have to pay for insurance as a condition of tendering for NSW Government work. 

Another notable change is the increase in the direct procurement threshold from $150,000 to $250,000. This measure will cut down on paperwork and should make it easier for small business to secure more substantial business opportunities and boost efficiency for both the public and private sector. However, small businesses still face significant challenges when it comes to competing for contracts, as highlighted by the Small Business Selling to the NSW Government Survey conducted by the Commission. 

Recent announcements and commitments are welcomed but there are opportunities to provide greater support and assistance to ensure small businesses have more opportunities.  

“The complexity and inconsistency in current arrangements erode the confidence of small and medium enterprises in government procurement processes,” NSW Small Business Commissioner Chris Lamont said. 

In his submission to the NSW Parliament the Commissioner identified areas that would provide practical improvements to current practices and arrangements. 

He said complex, costly, and time-consuming prequalification scheme registration processes hindered small business’s ability to tender. A number of NSW Government procurement practices are inconsistent across agencies and the need to apply separately for each scheme adds to the confusion, limiting awareness and opportunities. 

The Commissioner has proposed standardised procurement requirements, thresholds, policies and clear definitions of ‘small business’ and ‘regional business’ to increase understanding and compliance, as well as prevent exploitation. 

The Commission has also highlighted a need to ensure NSW government agencies pay small businesses within 5 business days for purchases of up to $5 million, in accordance with the Faster Payments Terms Policy. “There is a need for government training and improved awareness among project and finance officers to improve policy implementation,” Mr Lamont said. 

Advance notice and increased awareness of procurement opportunities, including available SME exemptions and support services such as training resources is also recommended. The Commission's survey highlights low awareness levels of government policies supporting small businesses, with only 28% of small businesses aware of regional and SME preferencing in procurement.  

“Lack of information and difficulty navigating procurement systems often hinders SMEs from capitalising on opportunities, emphasising the need for agencies to promote existing support services like the Procurement Specialist Advisory Service, which provides valuable resources and advice to SMEs,” Mr Lamont said. 

Read the Commission’s full submission on the Government’s procurement practices.