The Australian small business ombudsman has called on the federal government to establish a small business procurement panel.
Last week Kate Carnell said such a panel would be “essential” to the critical role small businesses play in Australia’s post-pandemic economic recovery, and posed a “golden opportunity” to support the creation of jobs in the small business sector.
Under the proposal, government contracts with a value of up to $10 million would be required to go through a small business panel as part of the tender process, before being opened to the wider market.
Carnell argued that small businesses often face significant barriers when it comes to government procurement.
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“It can be a costly exercise and small businesses don’t have the resources to complete overly complex tender documentation. The challenges of getting on to a panel in the existing system are onerous,” she said.
“Equally small businesses are often overlooked on the ‘value for money’ criteria. Just because they might not be able to offer the lowest price, doesn’t mean they are not competitive overall. Lowest cost is not always the best value for money. There’s a strong argument that prioritising Australian small businesses pays dividends to the entire economy.”
The idea of a procurement panel was first proposed in the ombudsman’s COVID-19 Recovery Plan. The report recommended that where government contracts under $10 million do not use the panel, procurement officers must justify why — by publishing online and reporting to the small business ombudsman — before the tender is offered to the wider market.
Carnell noted the total number of Commonwealth government contracts awarded to small and medium enterprises in 2018-19 was 26%.
“However, 94% of government contracts are valued under $1 million, with 59% below $80,000. It is clear small businesses could have a larger share of that pie,” she said.
“Unfortunately current government procurement processes preference large businesses. A procurement system that discourages small business participation, won’t necessarily get the best value and also denies small businesses the opportunity to innovate, employ and grow.”
The government has announced it would be involving the small business sector in its economic recovery plan, through its five new industrial relations working groups.
On Thursday, attorney general Christian Porter announced the memberships of each group, with the Council of Small Business Associations of Australia to sit on the team tasked with addressing issues related to casuals and fixed term employees.
This article was first published by The Mandarin.