NSW introduces rules to prioritise spend with SMEs

posted by Charlie Hart
11 February 2019

The government in New South Wales (NSW) has introduced new rules to boost SME participation in public procurement.

Under a policy that came into force on 1 February, contracts valued at more than $3m are subject to new SME and sustainability criteria and agencies must include a non-price evaluation criteria of 15%, which considers how potential suppliers will support the government’s economic, ethical, environmental and social priorities. A minimum of 10% must be allocated to SME participation.

For contracts valued at less than $3m, if a government agency seeks more than one quote, the government is encouraging them to include similar non-price evaluation criteria that addresses government priorities.

When making direct purchases, including from pre-selected suppliers and panels, up to a value of $250,000, agencies must prioritise SMEs.

Deputy premier of NSW, John Barilaro MP, the minister for skills and small business, said: “This policy also enables government to work directly with SMEs and includes considerations for SMEs to be made a priority when it comes to awarding NSW goods and services contracts.

“The SME and Regional Procurement Policy demonstrates the government’s renewed commitment to make the procurement process simpler and easier to navigate. We also guarantee reliable and fast payment terms for businesses working with the NSW Government.”

As part of an extension of the government’s 2016 innovation policy, procurement-accredited agencies will be able to directly engage an SME on short-term contracts valued up to $1m and to do proof-of-outcome testing or outcomes-based trials.

The policy also allows agencies to purchase goods or services valued up to $50,000 directly from a small business, even where the goods or services are available on a whole-of-government arrangement.

The new policy replaces NSW’s SME Policy Framework and applies to all new government goods and services procurement activity, excluding construction.

The government said it “expects” to see more SMEs on prequalification schemes and more contracts and spend with SMEs by 2021.

NSW is home to 736,000 SMEs, representing 34% of all Australian SMEs. NSW Government spends around $20bn on goods and services each year.

The government said since the introduction of a 30-days-to-pay policy in 2011, 96% of government payments to registered small businesses were made on time.

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