“Lazy” and “discriminatory” government continues to shut SMEs out of government tenders

Small and medium-size businesses say they continue to miss out under the government’s tender processes.

In last year’s budget the federal government allocated $2.8 million in funding for a specialised unit to help small businesses gain better access to government contracts.

The unit within the Department of Finance works with small business and their representatives to develop procurement policy, guidance material, training and education programs.

The problem

However, SMEs say not enough is being done to ensure small business gets a look in on government contracts.

Michelle Melbourne, cofounder of technology business intelledox, told SmartCompany she spent 48 hours last week putting in a tender to a federal government department.

“There was steam blowing out my ears I was so frustrated and angry at how ridiculous the compliance was,” she says.

“There is nothing friendly in there for small business. It was an extremely over the top process heavily weighted in the favour of a very large company”.

Melbourne says the current tender requirements are “outrageous” and “an absolute killer for our aspirations for SMEs and startups and Australian owned industry to grow”.

Melbourne’s concerns are echoed by Claire Carton, co-founder of law firm Griffin Legal.

Carton says Griffin Legal has jumped through all the hoops to qualify for the government’s legal services multi use panel, including maintaining expensive insurance, but has seen no government work as a result.

“The problem is that the departments now select a few firms, not through a tender to ‘parcel’ for their work,” she says.

“It’s the same old process, just it’s all closed off”.

Carton says the government would save money by awarding contracts to more SMEs.

The government’s response

Several SME owners and founders raised their concerns about government contracts with the Small Business Minister Bruce Billson at an event for female entrepreneurs last week.

Billson acknowledged the government needs to fix the procurement process.

“We’ve had a crack at it, I have spent about $2.5 million of your money going into the Department of Finance and saying the only value proposition of procurement is not risk aversion, there are other things that should be taken into account,” he says.

“We’ve got those enormous contracts down to about six or seven pages… for [contracts] under $300,000 and those ridiculous indemnity requirements that can just blow any margin out of the water.”

Billson says it is an area he is still working on because if you can expand the contestability of government contracts you will get better value for money.

“We’ve made some start but this disaggregation has been very hard to push through the government process,” he says.

What can be done

Melbourne says government contracts need to have a provision for agility and value for money that is able to be measured.

“We all understand there needs to be certainty and assurance from industry when they are tendering for work with the government but it also has to be realistic at this time when things are changing so quickly, particularly in technology,” she says.

“They are doing themselves a disservice by continuing to let their agencies have such a heavy-handed approach to contracting and procurement.”

Melbourne says if we can find a way to work between industry and government there will be better outcomes for SMEs, citizens and government.

“For there to be fair contestability of contracts there are a whole lot of big ticket items that find their way into contracts that don’t need to be there,” she says.

Carton says the government needs to actually use small businesses.

“They have targets in there to use women, engage small business and pay small business on time,” she says.

“They have no policy that they enforce that says ‘Give them a go, ask them’.”

Carton says it’s unacceptable for taxpayer money to be wasted by leaving SMEs out in the cold.  

“The government is being lazy and discriminatory by not giving small business a go, they just can’t be bothered,” she says.