The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, has examined the impact of the implementation of the 1 July 2022 changes to the Commonwealth Procurement Rules on small and family businesses. The inquiry was referred to the Ombudsman by the Federal Finance Minister, Katy Gallagher.

During the course of the inquiry, small business told the Ombudsman that the Commonwealth procurement framework is too hard to navigate and often not worth the investment of their time and resources.

Small businesses must first understand the complicated processes, compete on the paperwork with much larger businesses that have dedicated procurement teams, and then work with officials, many of whom themselves find the process confusing and burdensome because they infrequently engage in procurement.

Requests for tender sometimes occur within tight timeframes and in the context of 286 pages (100,000 words) of procedural and policy guidance, in addition to tender documentation and specific departmental requirements.

Government panels (fixed lists of suppliers) often impede small business involvement because they are generally static, can be hard to get onto and infrequently refreshed. Even when on a panel, small business suppliers are not always identifiable, while the very size of some panels discourages small business selection. Being on a panel is no guarantee of work.

The Ombudsman has identified three critical gaps between intent and outcomes in Commonwealth procurement requiring urgent attention to change behaviour:

1. Responsibility for interpreting Commonwealth Procurement Rules (CPRs) falls on individual entities, creating different approaches between entities that tends to lead to risk-aversion and a bias towards use of familiar and large suppliers.
2. CPR exemptions for SMEs and First Nations businesses are not well understood and are not widely applied, while the exemptions inexplicably do not extend to mandatory Whole-of-Australian-Government (WoAG) panels.
3. CPR emphasis on not discriminating against potential suppliers by size, location or ownership blunts the policy ambitions and the effectiveness of the Buy Australian Plan, including for SMEs, First Nations businesses, and businesses in sovereign capability and priority industries.