The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says small businesses will play a critical role in the post COVID economic recovery, calling on the federal government to establish a small business procurement panel.

The panel, proposed in ASBFEO’s COVID-19 Recovery Plan, would require government contracts with a value of up to $10 million, to be offered through the small business panel as part of the tender process, before being opened to the wider market.

“The government has a golden opportunity to improve its procurement process to support the creation of jobs in the small business sector,” Carnell said.

“The total number of Commonwealth government contracts awarded to SMEs in 2018/19 was 26 per cent. However 94 per cent 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.

“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.

“Small businesses still face significant barriers when participating in government procurement. 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.

“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.”

Last month the ombudsman outlined a range of reforms to support small businesses in the post-coronavirus recovery phase.

The recommendations, which include the introduction of a Small Business Award, are part of a wider business recovery strategy, the ASBFEO’s COVID-19 Recovery Plan, which details a number of changes to improve the legal, regulatory and compliance environment for small businesses.

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