New procurement rules to deliver more for small business

Australian Treasury

The Albanese Government is making changes to the Commonwealth Procurement Rules (CPRs), further reinforcing the Government’s commitment to sourcing from Small and Medium Enterprises (SMEs) and opening the door to more opportunities for businesses that contribute to Australia’s economy.

From July, a new, higher target will be introduced to source 25 per cent of procurements below $1 billion, and 40 per cent of procurements below $20 million, from SMEs. In addition, the Government is making it easier for entities to procure from small and medium businesses by raising the SME exemption threshold to $500,000.

In response to feedback about the operation of government procurement panels, the Albanese Government will require that at least one SME must be approached for every request for quote from the mandated Management Advisory Services (MAS) Panel and the People Panel.

Five per cent of agencies’ spending on services through the MAS and People Panels can also now be sourced directly to First Nations businesses who are not on those panels through a new Flexibility Allowance, further enhancing the opportunities for First Nations businesses.

The Minister for Finance, Senator Katy Gallagher said Commonwealth procurement is a significant economic lever.

“The Albanese Government has listened to industry and small and medium businesses and is taking action to improve their participation and competitiveness in Government procurement.

“When used effectively, government procurement supports Australian businesses, and can stimulate growth in small and regional businesses and across industry sectors.”

Minister for Small Business Julie Collins said she knew Australia’s small businesses are eager to make the most of government procurement opportunities.

“The changes we are introducing from 1 July will help to ensure Australia’s small businesses get a bigger slice of government procurement opportunities.

“This is just one way our Government is delivering a better deal for small businesses, with more than $640 million in targeted support outlined in our Budget’s Small Business Statement.”

The Government is reducing the threshold for procurements that require an economic benefit assessment from $4 million to $1 million, meaning more procurements will be subject to an assessment of the benefit to Australian economy in the context of determining value for money. This will be supported by comprehensive new guidance to support officials to effectively undertake economic benefit assessments that the Department of Finance is currently consulting on.

The Albanese Government is committed to the highest standards of ethics, probity and integrity and seeks to work with businesses that strive for the same high standards. To support this, the Commonwealth Supplier Code of Conduct will be a core component of the CPRs. The Code outlines the Commonwealth’s minimum expectations of suppliers and their personnel while under contract with the Commonwealth. The code outlines a range of expectations regarding suppliers’ ethical behaviour, governance and business practices and welfare of employees.

The updated Commonwealth Procurement Rules will come into effect on 1 July 2024.

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