Rules aim to maximise competition and encourage participation for SMEs © Photo by Mannfred Gottschalk via GettyImages
Rules aim to maximise competition and encourage participation for SMEs © Photo by Mannfred Gottschalk via GettyImages

New Commonwealth Procurement Rules aim to boost spend with SMEs

Will Green is news editor of Supply Management
25 July 2022

New Commonweath Procurement Rules (CPRs) have come into force in Australia with measures to increase spending with SMEs.

The CPRs, which came into force on 1 July, increase the amount the government has committed to spend with SMEs to “at least” 20% of procurement by value.

Buyers should also consider the “disaggregation of large projects into smaller packages” to maximise competition and encourage the participation of SMEs.

A $1m threshold has been removed on a requirement to pay suppliers on time, meaning the rule now applies to all contracts regardless of value.

And suppliers are no longer required to take out insurance until a contract is awarded, while buyers should limit insurance requirements in contracts “by reflecting the actual risk borne by suppliers in contractual liability caps”.

Katy Gallagher, minister for finance, said: “Small business is the backbone of the Australian economy and the government is committed to maximising small business participation in Commonwealth procurement, providing greater opportunities for local businesses to create more jobs for Australians. 

“These Commonwealth Procurement Rules deliver a commitment to help business grow and provides them with more confidence and certainty to plan for the future.”

Buyers at the Department of Defence are allowed to directly engage SMEs for procurements valued up to $500,000, taking into account the Indigenous Procurement Policy.

Under other changes buyers must consider climate change impacts in relevant financial and non-financial considerations of value for money.

“Achieving value for money is the core rule of the Commonwealth Procurement Rules as it is critical in ensuring that public resources are used in the most efficient, effective, ethical and economic manner,” said Gallagher.

“Price is not the only factor when assessing value for money, and these rules require officials to consider a range of other relevant financial and non-financial costs and benefits. 

“Broader economic and social benefits can be realised through normalising consideration of environmental sustainability and climate change impacts, the use of recycled materials in public projects and through more diversity and competition in our supplier base and workforces. 

“This will provide greater opportunities for small, regional and Indigenous owned businesses to contribute to the Australian economy and create more jobs for local communities.”

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