26 September 2023

Small business big winner in contract deals

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Latest Department of Finance statistics have revealed that 53 per cent of Government contracts were awarded to Small and Medium Business Enterprise (SMEs) in the last year, with a total value of $16.7 billion – up $3.8 billion on the previous year.

Minister for Finance, Senator Mathias Cormann said the new data from the Department of Finance Procurement Statistics report showed a 29.1 per cent increase in the value of Federal Government contracts won by Small and Medium Enterprises in 2018-19.

“Small and Medium Enterprises (SMEs) are supplying a greater share of goods and services to Government,” Senator Cormann said.

“The data shows that the Government has significantly exceeded its targets when it comes to the proportion of Federal Government contracts going to SMEs.”

“Our published targets provide that at least 10 per cent of all contracts by value should be sourced from SMEs and 35 per cent of all contracts with a value up to $20 million,” Senator Cormann said.

Department of Finance policy states that an SME is defined by Commonwealth Procurement Rules as an Australian or New Zealand firm with fewer than 200 full-time equivalent employees. A small business is defined as one with few than 20 full-time equivalent employees.

The Minister said the data showed that 25.9 per cent of all contracts ‘by value’ were awarded to SMEs – up from 18.2 per cent the previous year – and 41.9 per cent valued up to $20 million – up from 39.8 per cent the previous year.

Commonwealth agencies awarded 78,150 contracts in total, he said.

The procurement report also showed most contracts awarded had stayed onshore, with 95.7 per cent ‘by volume’ and 91.6 ‘by value’ of contracts going to businesses with an Australian address.

The most competitive contract categories for SMEs recorded were education and training services, engineering and research technology-based services, business and administrative management, vehicles and accessories, and information technology broadcasting and telecommunications.

Senator Cormann said data for Small Business Engagement (a subset of SMEs) showed that the value of small business contracts had increased by 47 per cent from $3.3 billion in 2016-17 to $6.3 billion in 2018-19.

“We will continue to improve our dealings with suppliers, including by adopting a five day ‘pay on time or pay interest’ standard for e-invoices in 2020,” Senator Cormann said.

Further information can be accessed from the Department of Finance website at this PS News link.

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