Small business to get 20pc of annual $70b government tenders

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New procurement rules to encourage federal agencies to bid for an annual $70 billion of Commonwealth contracts came into effect July 1.

Federal departments and their agencies will be required to source a fifth of the value of their annual procurement from small to medium enterprises and to ensure they are paid within 30 days under new contracting rules that came into effect July 1.

The previous government also had a target of non-corporate Commonwealth entities procuring 35 per cent of contracts, by value, with a value of up to $20 million, from SMEs. This rule continues. Officials are also advised to approach multiple potential suppliers from a panel, to maximise competition. Vendors often complain agencies tend to use the same vendor for repeated business activities such as security, cleaning and maintenance.

SME’s must be paid within 30 days. However, if a business uses a compliant eInvoice system, the public agency must pay the vendor within five days on contracts of all value, or risk paying interest.The previous government had also introduced rules to favour small business. This saw the level of SME spend lift from $13.6 billion in 2019-20 to $18.7 billion in 2020-21. This is equal to 27 per cent of the value of all contracts tendered across the Commonwealth.

The Australian Retailers Association said the changes will provide more opportunities for small- and medium-sized businesses to apply for government contracts.

 

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