Global technology companies are listing themselves as small to medium enterprises (SMEs) on the NSW government’s tech procurement platform, raising concerns they may be able to take advantage of new procurement policies designed to support smaller local firms.
The global giants appear as SMEs by registering with their local entities and self-reporting their business information. It is currently up to government buyers to understand the difference, even when the firms are labeled as an SME on the platform.
“We are aware of the problem identified by InnovationAus regarding self-declaration of multi-national companies as SMEs according to the definition of having less 200 employees in NSW,” Minister for Digital and Customer Service Victor Dominello said.
“We are working on a solution to ensure the spirit and intent of our recently announced SME procurement policy is upheld.”
The agency responsible for the procurement platform, Digital.NSW, confirmed SMEs with large global parents will not count towards the state’s new targets to buy from local firms and it is working with buyers to understand the rules.
In 2020, the NSW Government assembled a taskforce to review its Information and Communications Technology (ICT) procurement strategy, hoping to create more retained economic benefit from the $2.5 billion it spends each year on ICT products and services.
Following the taskforce’s recommendations, the state government announced a new policy in February that at least 30 per cent of the NSW government’s addressable tech spend must go to SMEs.
The policy came into effect in April and defines SMEs as Australian or New Zealand based enterprise with fewer than 200 full-time equivalent employees.
However, the NSW Government’s online procurement tool, buy.NSW appears to be incorrectly listing several global technology firms as SMEs.
Hardware giant Lenovo and enterprise storage manufacturer Pure Storage are both classified as ‘SMEs’ on the site, for example, leading to concerns that legitimate SMEs may be missing out on the new procurement policy.
When suppliers register on buy.NSW, they must include details about their business including an ABN, contact details, annual turnover, number of employees, and several legal disclosures before applying for contracts.
A spokesperson for Digital.NSW declined to answer detailed questions on how the new procurement policy would be monitored or if Lenovo and Pure Storage were correctly listed.
However, the spokesperson did confirm global companies’ local entities should not be included in reporting progress on the procurement policy.
“Digital.NSW is working with buyers across the NSW government to help them understand their supplier base and spend,” the spokesperson told InnovationAus.
“This includes highlighting suppliers who have self-identified as SMEs based on their understanding of the SME definition in the relevant NSW Government procurement policies included on Buy.NSW.
The spokesperson said the new policy’s intent is to increase ICT spend with Australian and New Zealand-based small to medium businesses with fewer than 200 FTE.
“We will not be including local entities of multinational companies in reporting progress on the NSW Government ICT SME spend targets.”