Finance minister Katy Gallagher has ordered an inquiry into the changes she made to the procurement rules guiding an $80 billion annual spend. The minister last year tweaked the rules to improve access for small businesses and encourage genuine competition, rules that will now be reviewed.
Ms Gallagher asked Australian Small Business and Family Enterprise Ombudsman Bruce Billson to examine the changes which doubled the previous commitment of entities sourcing at least 10 per cent of their procurement by value to 20 per cent.
The changes also include a new requirement to approach multiple suppliers on a standing offer arrangement to encourage genuine competition in the panel arrangements.
Only about $25 billion of the government’s $80.8 billion in procurement contracts awarded last year went to small and medium enterprises.
“Where there are procurement impediments, it can diminish opportunities to encourage entrepreneurship and competition and means the taxpayer and the nation may not be getting the most value for money,” Mr Billson said.
“It is timely to examine how the system is working for small and family businesses, the role procurement rules are playing to support small business participation and what lessons and improvements can be made.
“We want to identify those departments and agencies who are exemplars in providing procurement opportunities to small businesses and celebrate this success and help others to emulate it.
“Similarly, we seek to shine a light on those whose dealings with small business are poor.”
The Ombudsman’s inquiry will look specifically at last year’s changes toi Commonwealth Procurement Rules and their impact on small businesses.
But it also has scope for the effectiveness of AusTender, the Commonwealth Contracting Suite, methods for identifying small businesses, and other measures to enable small businesses to join together to bid for larger and multi-faceted contracts and how accessible rolling short-listed provider ‘panels’ are for smaller businesses.
An issues paper will be released with a call for stakeholder submissions. A final report will be handed to Ms Gallagher by the end of the year.
Mr Billson said he’ll look at barriers like the complex procurement processes and what critics say is often a favouring of large incumbent suppliers.
“In some cases, small businesses are deterred by a feeling there is a ‘closed shop’ while in other cases they simply don’t know about the opportunities available, or the size of the contract can be simply too big.
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