Federal government agencies to ‘directly engage’ with SMEs in shake-up to procurement rules

Commonwealth agencies will be allowed to tender directly from small-to-medium businesses under an exemption to procurement rules designed to cut red tape.

Updates to Commonwealth Procurement Rules (CPRs) unveiled by Finance minister Simon Birmingham on Monday will allow agencies to ‘directly engage’ with SMEs on tendering contracts valued up to $200,000.

The changes will allow agencies to approach SMEs directly where an eligible contract could not be delivered by an indigenous-owned SME, consistent with the federal government’s Indigenous Procurement Policy.

Businesses with fewer than 200 full-time equivalent employees are defined as SMEs under procurement rules.

Contracts will still be considered on a value for money basis, but Birmingham said the red tape cuts will enable a higher proportion of small businesses to take up government contracts.

“Small businesses are the engine room of our economy, and this change will cut red tape and reduce costs for small businesses within the government procurement market,” Birmingham said in a statement.

“We expect these changes will put more small businesses in the mix for government procurement work, and that will help them grow their own operations and create more jobs for Australians.”

The changes are being made in conjunction with ongoing efforts to improve government payment times for SMEs and the introduction of e-invoicing, which is set to reduce invoice times to five days.

The updated rules will take effect from December 14, 2020.

This article was first published by The Mandarin.