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The government is missing an opportunity to meaningfully improve the chances that small and family businesses have to win bids for government contracts, the ombudsman says.
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ASBFEO ‘disappointed’ by government response to procurement inquiry
17 May 2024
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Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, said the government’s response to his inquiry into the effectiveness of Commonwealth procurement rules for small business was underwhelming and a missed opportunity.
The Labor government finally released its response to the inquiry earlier this month.
Billson said he was surprised that several of the substantive recommendations and proposed reforms were rejected without any discussion at all.
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“For the recommendations where the response ‘agrees’ or ‘agrees in part’ we are happy to continue to engage constructively and collaboratively so that some urgent improvements can be made for small suppliers,” he said.
“It is a disappointing response and at odds with the evidence, research and reference group input, and the clear view of those who made submissions about their direct experience trying to navigate the existing system.”
Billson said that winning a government contract can be life-changing for a small business but the overwhelming response from the small business community is that too many feel excluded from the chance to tender for government contracts.
“Repeatedly, small suppliers told us the existing system is just not working as the process involved in bidding is too complicated, not conducive to competition, opaque, inefficient, and incongruent with private-sector processes,” said Billson.
“This is why there has been a bipartisan view and requests from successive governments for me to independently examine how procurement rules and processes are working for existing and potential small business suppliers and what improvement could be made.
The ASBFEO said there will be great disappointment among those who participated in the inquiry process and were hoping for substantial improvement in the way the Commonwealth deals with current and prospective small business suppliers.
He noted that the Australian government procured goods and services worth $75 billion in 2022–23.
“Despite making up 97 per cent of all businesses, procurement from small business suppliers accounts for only $8 billion (11 per cent) by value,” he said.
The Ombudsman’s report made 11 specific, constructive and practical recommendations.
“Together, these actions can achieve the profound change in incentives and behaviours required to address persistent problems and realise the full benefits of government spending through a genuine embrace of small businesses in the supplier community and procurement processes,” said Billson.
Billson said it was abundantly clear that the existing system isn’t working as intended for many small businesses and the steps already taken have not shifted the dial to achieve the government’s own stated objectives.
“It is encouraging that the government concurs with our recommendations to better support procurement officials and advance women’s entrepreneurship; and has agreed in part or in principle to many other of our recommendations,” he said.
“Those recommendations which the government has not fully embraced or will consider further, provide new thinking and approaches, based on what is working elsewhere that can help genuinely shift the dial to better realise the Government’s goals.
Billson urged the government to consider these additional recommendations and the benefit they can deliver for small business engagement in Commonwealth procurement.
“More of the same is not going to bring about the change in confidence that prospective small business suppliers are looking for to engage in a complicated, costly and time-consuming process,” he said.
“Dismissing considered and evidence-based reforms as potentially expensive, inefficient or duplicative without any meaningful examination to justify retaining current and known-to-be ineffective and perfunctory arrangements, is at odds with the stated ambition of successive governments to improve Commonwealth procurement for small business suppliers.”
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