inquiry

Small business Ombudsman's procurement report released

Emily Carter — Thu, 16 May 2024 03:02:08 +0000

Small business Ombudsman's procurement report released Emily Carter Thu, 05/16/2024 - 13:02

16 May 2024

The Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, acknowledges the public release and response by the Australian Government of his inquiry into the effectiveness of Commonwealth procurement rules for small businesses.

The Ombudsman described the Government’s response as “underwhelming” and a “missed opportunity to meaningfully improve the opportunity for competitive small and family businesses to be a supplier to the Commonwealth”.

“Winning a government contract can be life-changing for a small business,” Mr Billson said. “As all businesses know, there is no substitute for good customers.”

“But the overwhelming response from our consultations with Australia’s small business community is that too many feel excluded from the chance to tender for government contracts because they are not part of the ‘in-crowd'.

“Repeatedly, small suppliers told us the existing system is just not working as the process involved in bidding is too complicated, not conducive to competition, opaque, inefficient, and incongruent with private-sector processes.

“This is why there has been a bipartisan view and requests from successive Governments for me to independently examine how procurement rules and processes are working for existing and potential small business suppliers and what improvement could be made.

“Given this clear appetite for reform and apparent desire to address failing processes and missed opportunities to embrace Australian small businesses, we took this important tasking seriously.

“And just as small businesses face obstacles selling to government, so too do many officials encounter frustrations and impediments.

“The Government’s initial response to our inquiry is underwhelming and I was surprised that several of the substantive recommendations and proposed reforms that have not been embraced, were rejected without any discussion at all. For the recommendations where the response ‘agrees’ or ‘agrees in part’ we are happy to continue to engage constructively and collaboratively so that some urgent improvements can be made for small suppliers.

“It is a disappointing response and at odds with the evidence, research and reference group input, and the clear view of those who made submissions about their direct experience trying to navigate the existing system.

“The sentiment that it is ‘all sorted” or more of the same with a minor tweak here and there, was not reflected in any of the submissions, research or reference group input.

“There will be great disappointment by those participating in the inquiry process, hopeful for substantial improvement in the way the Commonwealth deals with current and prospective small business suppliers,” Mr Billson said.

The Australian Government procured goods and services worth $75 billion in 2022-23. Despite making up 97% of all businesses, procurement from small business suppliers accounts for only $8 billion (11%) by value.

The Ombudsman’s report makes 11 specific, constructive and practical recommendations.

“Together, these actions can achieve the profound change in incentives and behaviours required to address persistent problems and realise the full benefits of government spending through a genuine embrace of small businesses in the supplier community and procurement processes,” Mr Billson said.

“It’s abundantly clear that the existing system isn’t working as intended for many small businesses and the steps already taken have not shifted the dial to achieve the Government’s own stated objectives.

“We were encouraged to be bold and bring fresh thinking and new ideas to this long-standing area of contention and frustration for small business.

“We consulted extensively with government departments and agencies throughout the inquiry and in developing the recommendations.

“It is encouraging that the Government concurs with our recommendations to better support procurement officials and advance women’s entrepreneurship; and has agreed in part or in principle to many other of our recommendations.

“Those recommendations which the Government has not fully embraced or will consider further, provide new thinking and approaches, based on what is working elsewhere that can help genuinely shift the dial to better realise the Government’s goals.

“It is important that we continue to consider these additional recommendations and the benefit that they can deliver for small business engagement in Commonwealth procurement. More of the same is not going to bring about the change in confidence that prospective small business suppliers are looking for to engage in a complicated, costly and time-consuming process.

“Dismissing considered and evidence-based reforms as potentially expensive, inefficient or duplicative without any meaningful examination to justify retaining current and known-to-be ineffective and perfunctory arrangements, is at odds with the stated ambition of successive governments to improve Commonwealth procurement for small business suppliers.

“We welcome the ideas that have been adopted and will continue to encourage the Parliament and the community to see the merit in the other recommendations and adapt them to benefit small business, the taxpayer and the Commonwealth alike.”

Mr Billson said the report outlined a package of reforms that would re-purpose existing funding and resources – not duplicate it – to produce an efficient and easy to navigate procurement framework that would make a significant difference.

“It involves a step-change in approach,” he said.

“Introducing ‘retained economic value’ as the evaluation framework where ‘price’ alone can undermine ‘Future Made in Australia’ objectives, is a crucial recommendation that is too important to dismiss.

“Active stewardship is essential to ensuring that the Australian Government operates as a model customer, secures better value for money for taxpayers, and achieves its ambition to provide more opportunities for Australian small businesses and First Nations businesses.

“The extent of the challenge is revealed by analysis by the e61 Institute, which found that Commonwealth procurement has increasingly favoured large and existing suppliers since 2014.

“What we need is real engagement and commitment to improving procurement outcomes, with support for officials and consistent monitoring of what actually occurs.”

As part of the inquiry, in-depth interviews with 22 senior officials (conducted by the Social Research Centre) revealed that the increasing complexity of procurement priorities and connected policies are adversely affecting officials in line areas who undertake procurements as needed.

Similarly, an online survey of 112 operational staff indicated that their main frustrations are manoeuvring through policies when dealing with complex tender processes (71%) and additional administrative burden (69%).

78% of operational staff cited difficulty of identification as the most common barrier to them approaching or using an SME.

“One of our recommendations was to abolish the Procurement Coordinator function and replace it with a Procurement Commissioner, who would have independent processes for resolving complaints and the ability to synchronise and support procurements," Mr Billson said.

“Why wouldn’t you create a Commissioner like occurs in so many other policy areas with focus, authority, drive and independence? The current Procurement Coordinator complaints function is neither timely nor consequential, with the Coordinator having no authority to compel an outcome. Only three complaints a year on average have been lodged since 2011 and the results of these complaints are not transparent.

“During our inquiry, no small business supplier was prepared to go on record because of fear of retribution.

“Let’s be clear. A small business is not looking for a belated, legal victory through a judicial review. That brings no comfort. They want a fair opportunity to compete to be the supplier,” Mr Billson said.

The Ombudsman’s report also makes recommendations aimed at improving Defence procurement, making AusTender fit for purpose, supporting procuring officials to identify and use small businesses, reforming government panels, boosting women-owned business opportunities and improving payment times.

ASBFEO is encouraged by the Government’s decision to consider the potential for use of a ‘sourcing strategy checklist’ and ‘assessment outcomes checklist’ as part of ongoing resource development.

“Capturing broader value-for-money considerations through these checklists would encourage more consistency in procurement deliberations across departments and more transparent and comparable reporting within government,” the Ombudsman said.

“Further, employing a ‘retained economic benefit’ approach would be a game changer driving ‘Buy Australian’ ambitions and allow the Government to quantify (without prescribing) the contributions of procurements, in terms of value of expenditure on goods and services supplied by domestic firms, labour provided by residents and First Nations Australians, and investment in capital and social infrastructure” Mr Billson added.

The report and recommendations are available at: www.asbfeo.gov.au/procurement

MEDIA CONTACT: 0448 467 178

TRANSCRIPT: Procurement Inquiry

Olivia Pearce — Fri, 31 Mar 2023 00:35:10 +0000

TRANSCRIPT: Procurement Inquiry Olivia Pearce Fri, 03/31/2023 - 11:35

30 March 2023

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Jac underwood.

Radio 2BS Bathurst

Subject: Procurement Inquiry

Jac Underwood

You would have heard in national news today that the Australian �Թ�� and Family Enterprise Ombudsman has launched an inquiry to examine the impact of reforms to Commonwealth procurement rules on small business. What does that all mean? Why don't we just welcome the Australian �Թ�� and Family Enterprise Ombudsman now. His name, Bruce Billson. Good afternoon.

Bruce Billson
Jac, how fab to be with you and your listeners.

Jac Underwood
How fab to have you. I know you were dancing out to that song before, weren't you?

Bruce Billson
Look, there was a little bit of rhythm just working its way out, but I thought I'd better keep a lid on it because this is serious stuff. This is serious money and serious opportunities for small and medium enterprises that we're keen to explore.

Jac Underwood
Okay. So, looking at 2021-22, the Australian Government awarded $80.8 billion in procurement contracts. What are you keen to find out with this inquiry? Why launch it?

Bruce Billson
Well, that's a big number. That's 81 thousand millions of dollars’ worth of works and services that are contracted out by the government. And the government recognises that small and medium and family businesses are an important component of our economy, and they try through what are called the procurement rules - that's the way in which it goes about tendering - to give small and medium enterprises a chance for a piece of that action.

Now, pleasingly in that last financial year, about $25 billion worth of those government contracts for works and services were won by small and medium enterprises. But what's been observed is that some departments do that well. Some make it extremely complicated. Some, it's so confusing you need to pay a consultant to navigate your way through the arrangements. And what the government's asked of me is to have a look under the hood, just to see how those rules are going, which departments are doing well, and whether there's some further steps that can be taken to make sure small and family and medium sized businesses have a chance to compete for that work, win that work based on value, and then the nation and the government benefits from that.

Jac Underwood
It seems strange that there would be a different experience for which department they're applying to.

Bruce Billson
And this is something that's a little bit confusing for small and medium sized businesses that want to offer their services or present some goods to those departments. They may have different ways of going about assessing them. There's a broad set of rules called the Commonwealth Procurement Rules. They're supposed to apply consistently across all of the Australian Government and its agencies. But they're updated from time to time and what can happen is those procurement professionals managing those projects may not be fully embracing ways of implementing them that could be really helpful.

There’re also things called panels. Now, panels are effectively a short list of providers that you can draw from to have work carried out up to a particular value. Otherwise, if it's over certain amounts, you have to go out to a tender, get multiple quotes. All those things represent the rules. Now, for a small business, putting the time and the energy and the resources into getting onto those panels or to even bidding for that work or in some cases being asked to have certain kinds of insurances and other things just so they have the chance to do the work - when work might not come - those are the sorts of things that we're having a look at.

Jac Underwood
What's the process as it stands with the tender process? Do you see that work is awarded to, I don't know, Joe's contracting because they've used them before, they've done the job before?

Bruce Billson
Familiarity is a bit of an element. There's a few things that are often said, and your listeners might not pick up how humorous this is, a lot of people say no public servant’s ever been fired by engaging one of the big advisory firms, you know KPMG, PwC, they’re names that just roll off the tongue. So that might be the safe way to go because no one's going to criticise you.

But the best way to go might be to get a consultancy that has deep and specific expertise but isn't one of those household names. How do they get that strength of their bid and their capacity to be considered in a risk-adverse environment were going with a big firm is probably the easiest and safest way to go? So that's part of it.

In other areas people are used to certain providers that have delivered good value and know the process and find comfort in that familiarity. But how does a new provider get into that space if the opportunity is not there for them?

And then in other examples, let's use Defence for instance, a big firm often referred to as a prime or a tier one - that's part of the jargon - might win that work to manage a military base, for instance. But in the contract, it actually says look, you've won the overarching contract but we're expecting you to use local contractors to fulfill a certain percentage of it. So those rules are all part of what's there. And for the average business who's not familiar with it, my goodness, it's bewildering. And so that's why we're having a look to see how we are refreshing and inviting small and medium enterprise that have something to contribute. And frankly, the benefits of having the Australian Government as a customer are quite significant. How do we make sure that opportunity and the benefits that arise from that can be made more broadly available?

Jac Underwood
You raise a good point though. Governments do employ consultancy firms an awful lot to do work, right? That's normal practice. But don't we pay government officials and bureaucrats to sit in departments and do this work? Why is there so much outsourcing?

Bruce Billson
Yeah, look, it's an interesting point. And to the credit of the current government, they've actually said, why do we use so many consultants? Surely a certain level of expertise should be within the public service. What can happen over time where there's a close focus on budgets of government departments and agencies, and in some cases a hard cap on the number of people that can be employed, if you're needing new capacity and there's not the flex in the budget to be able to employ someone directly, well you go out and grab a consultant.

So, the current government said, well, let's have a rethink about that. Are we thinning out the knowledge, the horsepower, and the policy skills within the permanent public service team by going out to consultancies too much? Or can we bring some of that back in house that bolsters the capability of the Australian Public Service and in some cases may represent a better value for money proposition as well.

Jac Underwood
Now, this was referred to you by the Minister for Finance, Katy Gallagher. When will you have some answers? What are the terms of the scope of the inquiry?

Bruce Billson
We've announced the inquiry, which I'm obliged to do under our legislation. We are looking to have a report to the Finance Minister by early to mid-December. So, there's a little way to go. What we're planning to do - and really this is a good chat, Jac, I really appreciate the time with you and your audience - we are planning to put out a discussion paper to actually unpick and describe some of these policy moving parts around procurement rules and all that, just so people have a good handle on what's there now, how it's working and what might be better for the future. So, your questions reveal that that'll be a good, worthwhile piece of work and that's our next step.

Jac Underwood
Can't wait to keep talking about it. Thank you, as always, for your time.

Bruce Billson
Always great to be with you and keep that rhythm going.

Jac Underwood
You too. See you, Bruce.

Bruce Billson
Bye, Jac.

Jac Underwood
The Australian �Թ�� and Family Enterprise Ombudsman there, Bruce Bilson, having a talk about the inquiry into Commonwealth procurement.

Ombudsman launches Inquiry into Commonwealth Procurement

Olivia Pearce — Wed, 29 Mar 2023 22:41:33 +0000

Ombudsman launches Inquiry into Commonwealth Procurement Olivia Pearce Thu, 03/30/2023 - 09:41

30 March 2023

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson has launched an Inquiry to examine the impact of reforms to Commonwealth procurement rules on small business.

The Inquiry was referred to the Ombudsman by the Minister for Finance, Katy Gallagher.

In 2021-22, the Australian Government awarded $80.8 billion in procurement contracts, of which 30.8% or just under $25 billion by value, was awarded to small and medium sized enterprises.

“It’s great to see the Australian Government’s commitment to be a bigger customer for small businesses,” Mr Billson said.

“But for many small and family businesses, identifying and securing Commonwealth procurement contracts can be complex, costly, confusing and time-consuming.

“Supporting the opportunity for small and family businesses to compete for and fully participate in supplying the goods and services the Australian Government needs helps to ensure full value for money, vitality in the economy, support for local businesses to scale and can enable innovation.

“Where there are procurement impediments, it can diminish opportunities to encourage entrepreneurship and competition and means the taxpayer and the nation may not be getting the most value for money.

“It is timely to examine how the system is working for small and family businesses, the role procurement rules are playing to support small business participation and what lessons and improvements can be made.

“We want to identify those departments and agencies who are exemplars in providing procurement opportunities to small businesses and celebrate this success and help others to emulate it.

“Similarly, we seek to shine a light on those whose dealings with small business are poor.”

The Ombudsman will review the implementation of the 1 July 2022 changes to Commonwealth procurement, and the impact these changes have had on small businesses that participate in Commonwealth procurement activities.

The Ombudsman intends to release an issues paper and invites written submissions from small businesses and other interested parties which should be sent to inquiries@asbfeo.gov.au by 1 July 2023.

A final report with recommendations will be given to the Australian Government in December.

Mr Billson said the review will seek to identify additional changes to Commonwealth procurement rules and processes to boost small business participation.

The review will also examine the effectiveness of AusTender, the Commonwealth Contracting Suite, methods for identifying small businesses, and other measures to enable small businesses to join together to bid for larger and multi-faceted contracts and how accessible rolling short-listed provider ‘panels’ are for smaller businesses.

Mr Billson said a particular concern frequently raised by small businesses was how to know about, and tender for, government contracts.

“We want to look at what support is given to small businesses to navigate what can be a complicated procurement process,” he said.

“In some cases, small businesses are deterred by a feeling there is a ‘closed shop’ while in other cases they simply don’t know about the opportunities available, or the size of the contract can be simply too big.

Mr Billson said he particularly wanted to determine whether capacity-building contracts were being offered that would enable smaller businesses to really benefit from the contracts to grow their business.

Terms of Reference.

MEDIA CONTACT: 0448 467 178

Ombudsman to host feedback sessions in natural disaster-hit areas

Donna Acioli — Wed, 09 Feb 2022 23:23:04 +0000

Ombudsman to host feedback sessions in natural disaster-hit areas Donna Acioli Thu, 02/10/2022 - 10:23

10 February 2022

MEDIA STATEMENT

Ombudsman to host feedback sessions in natural disaster-hit areas

The Australian �Թ�� and Family Enterprise Ombudsman (ASBFEO) Bruce Billson is set to visit natural disaster-hit areas across the country seeking vital on-the-ground feedback from impacted small businesses.

Throughout the sessions, the Ombudsman will gather insights from small business operators all the way from Northern Queensland to Kangaroo Island and Tasmania, to help inform the �Թ�� Natural Disaster Preparedness and Resilience Inquiry.

Mr Billson says small businesses are encouraged to take part in the ASBFEO-hosted feedback sessions, which kick off in Townsville and Rockhampton on Monday (14 February 2022).

“We want to hear from small and family business owners who have lived experience of a natural disaster and have ideas about how best the government can support them to prepare and remain resilient in the case of an unavoidable event,” Mr Billson says.

“What we learn from small businesses on this tour, will help inform our recommendations to improve education and engagement programs to best target and assist small businesses in preparing for natural disasters such as fires, floods and drought.

“We know the impacts of natural disasters on small businesses can be devastating. It can mean damaged and destroyed assets, reduced production and revenue streams, and sadly, a business-ending event in some cases that can have devastating personal impacts.

“Recovery can be lengthy - taking a heavy toll on small business owners, their staff and the broader community, but can be greatly assisted by good preparedness.

“The cost of natural disasters and the time it takes for small businesses to get back on their feet could be reduced by being better prepared, taking sensible risk and impact mitigation action and bolstering resilience.

“Over the coming weeks, we will be visiting more than 20 areas across six states and territories that have been impacted by fires, floods and cyclones. I encourage small and family business owners to take part in this important discussion.”

Small business operators who are unable to make a feedback session can contribute their insights here.

Ombudsman launches small business natural disaster preparedness inquiry

Donna Acioli — Thu, 20 Jan 2022 22:13:24 +0000

Ombudsman launches small business natural disaster preparedness inquiry Donna Acioli Fri, 01/21/2022 - 09:13

21 January 2022

MEDIA STATEMENT

Ombudsman launches small business natural disaster preparedness inquiry

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson has launched an inquiry into small business natural disaster preparedness and resilience.

The inquiry, referred to the Ombudsman by Minister for Employment, Workforce, Skills, Small and Family Business, the Hon Stuart Robert MP, will examine and make recommendations to improve education and engagement programs to best target and assist small businesses in preparing for natural disasters such as fires, floods and drought.

“The impacts of natural disasters on small businesses can be devastating,” Mr Billson says.

“It can mean damaged and destroyed assets, reduced production and revenue streams, and sadly, a business-ending event in some cases that can have devastating personal impacts.

“Recovery can be lengthy - taking a heavy toll on small business owners, their staff and the broader community, but can be greatly assisted by good preparedness.

“Governments at all levels have a key role to play in ensuring people have the information they need to make informed decisions about how to manage the risks they face from natural disasters and how to be best placed to recover after an unavoidable event.”

The inquiry follows a recommendation in the 2020 Royal Commission into Natural Disaster Arrangements that “State and territory governments should continue to deliver, evaluate and improve education and engagement programs aimed at promoting disaster resilience for individuals and communities”.

A recent Deloitte Access Economics report found that 97% of government disaster-related expenditure was used for repairs and recovery and just 3% on disaster-preparation and mitigation.

“Our inquiry will make recommendations about the types of supports that could be targeted to small business and how to achieve the best outcomes from those resources,” Mr Billson says.

“We will also make recommendations around the development of targeted resources that could be used by small business and government agencies to better support small business preparedness and resilience.”

Read the full terms of reference at /policy-advocacy/policy-insights/small-business-natural-disaster-preparedness-and-resilience