Government Procurement

Small business headwinds

Olivia Pearce — Fri, 07 Jun 2024 01:52:47 +0000

Small business headwinds Olivia Pearce Fri, 06/07/2024 - 11:52

06 June 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

2CC Radio Canberra

Subjects: Small business headwinds and need for right-sized regulation, payment times, Commonwealth procurement.

Leon Delaney

The Albanese Labor Government is today trumpeting the passage of its legal measures, its legislation to improve small business payment times. Now, getting small businesses paid on time has been quite a considerable challenge for those businesses for a long period of time. In fact, that is one of the issues that the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, has been addressing for quite some time now, including this week in the Senate Estimates. Bruce joins me now. Good afternoon.

Bruce Billson

Leon, great to be with you and your listeners.

Leon Delaney

What was your message to Senate Estimates this week?

Bruce Billson

It was actually a message saying not all small businesses are okay right now. It's a challenging time. You and I have spoken about this before, that what we know in households, the cost-of-living pressures are actually cost-of-doing-business pressures for small and family businesses. But as household budgets are tightened, expenditure, particularly discretionary expenditure, is really contracting. That's really hard for some small businesses at a time they're contending with higher costs for those inputs, energy costs, rents are up, insurance is up, staggering amounts.

It's a pretty challenging time. That was my message to the Senate, along with a plea, I would suggest, to not simply address those headwinds and hopefully take some of the strength of those headwinds out, but to actually put wind in the sales of small business. Think deeply about what could be done to advantage those job-creating, opportunity creating, enterprises that are right throughout our communities.

Leon Delaney

Now, you've addressed a number of issues when you faced the Senate Estimates committee hearing, but amongst them were your concerns about a flurry of new workplace rules and obligations. I'm constantly hearing from organisations such as the Council �Թ�� Organisations of Australia about their concerns about the red tape tangle faced by many businesses. Of course, we hear from governments repeatedly, Yes, we're cutting red tape, but it seems like they don't ever really manage to cut it very far because it's still a problem, isn't it?

Bruce Billson

Well, we're really trying to get governments, lawmakers, regulators, to think about these regulatory impositions in terms of something that's right-sized for a small and family business. What we've seen is some of Australia's largest corporations and even government departments themselves that write the rules, struggle to implement them effectively. There's now stronger penalties for those that intentionally do the wrong thing, yet we're saying it's hard for some small businesses to often know what the right thing is and that we should be thinking about the regulatory imposition in terms of time poor, cash-constrained, small businesses that aren't shrink-wrapped versions of major corporates. There are people trying to create opportunities and forge out some livelihoods, and they do a lot of their compliance work at 10 o’clock at night. Think about these people. Think about this experience and those challenges when we're coming up with what are increasingly complex and sophisticated regulatory requirements that even well-resourced organisations struggle to navigate. Think about how challenging and confronting that is for a smaller business.

Leon Delaney

You also went on to address the issue of timely payments for small businesses. Of course, Julie Collins, the Minister for �Թ��, has today distributed a media release, Passage of reforms to improve �Թ�� Payment Times. What has the government actually passed, and will it be enough to actually improve that situation?

Bruce Billson

Well, it's got partway through the Parliament. I think what the Minister's press release was welcoming was its passage through the House of Representatives. There's still the Senate to deal with the matter, and they sit again around the 24th of this month. What that aims to do is improve the way what's called the Payment Register operates. The Payment Times Reporting Framework, it's about 7,000 of the biggest companies in Australia who are obliged to report on the terms that they offer small and family business suppliers, and then talk about the performance that they actually have in making those timely payments.

What you and I have spoken about before is that that performance is best characterised as woeful. There's still one in 10 businesses waiting over 120 days to be paid. There's about a third that get paid within 30 days. Cash flow, Leon, it's vital for business. It's the oxygen that they trade on. It's no good having a paper profit if you're not getting paid. What the minister's welcomed, and we think this is a step in the right direction, is improvements to that register to make it easier to get data in, but also to get data out, so that you and I might be able to talk about who's doing the right thing and paying their small and family business suppliers well and why others in that industry are really letting the side down.

It's also making sure the data that goes into that register actually means something, and it's not just a whole bunch of fog and confusion. It also gives the regulators some new powers, including to call out those people that are doing well in payment times and those that really need to pull their socks up.

Leon Delaney

On the question of timely payments, when you're at the Senate committee at the Estimates hearing, you pointed out that in many cases, the party that is slow to pay is either a big business or a government department. Now, yes, we understand that big businesses might be tempted to take advantage of their market power and beat up on the little guys. We shouldn't condone it, but we understand why they might be tempted to do that. But a government department is meant to be held to a higher standard of accountability and honourability, isn't it?

Bruce Billson

That’s why we've been urging these considerations to be part of the government being a good customer to the people that are its suppliers. You and I have talked about procurement improvements that we think are necessary. There's a lot asked of businesses that supply to the Commonwealth. We think Commonwealth departments paying in a timely way is not too much to ask in return. In fact, there are mechanisms where late payments are supposed to be recognised with interest to the person that's been paid late. But again, people are concerned about flagging this as maybe having them identified as a problem child, and they don't want to compromise that relationship.

This is an area where hopeful things can improve. But I should also say, Leon, most of the disputes that come to my agency to help to resolve, where they involve payment disputes - and that's 40% of the matters that come through my agency - often it's one small business to another small business as well. We need to just realise that a delay in paying a business may cascade through to that business then delaying its payment to someone else. You and I have talked about how that's caused such mayhem in the construction sector, and we just need to stay on this.

Good business pays. They pay their bills on time, they pay the tax that they owe, and they pay their people correctly, and we should make that a cultural expectation of all those involved in commerce, including where government's dealing with business.

Leon Delaney

The other thing that you raised with the Senate Estimates committee was your recent inquiry into the impact of reforms to Commonwealth Procurement Rules. You said that the response from the government to your recommendations was, well, you described it as a missed opportunity. What has the government got wrong?

Bruce Billson

Well, basically, it would have been nice for them to pick up our recommendations. Government procurement, particularly in this town, Leon, is a very hot topic, and it doesn't take long if you're talking around in Canberra and greater region to have a business that's had a poor experience dealing with government.

It's good if you're part of the in-crowd, if you know how the system works, you know where to look for opportunities. But if you and I were a small IT firm with some really good capacity we wanted to see if we could supply to the government, how would you know where those opportunities were? Are what's asked of us reasonable expectations? Do the officials handling those procurement processes actually know how the rules work? Are we actually bringing meaning to slogans like Future Made in Australia and the Buy Australian Plan? All very worthwhile objectives. But are we actually backing that up with procurement processes that actually give small and family businesses half a chance to win that work. Or are people going to always play safe and go to the big end of town? That's what we were addressing. We put forward a number of recommendations. The response from government was tepid at best, shall we say, and basically saying, look, we think we've got all this sorted. A little tweak there, a little tweak here. It'll be right. It'll be great. No, it won't. We were looking for a more decisive response from government. We didn't get.

Leon Delaney

Bruce, as always, a great pleasure. Thanks very much for chatting today.

Bruce Billson

Thanks, Leon.

Too many small businesses are hurt by not being in the 'in-crowd'

Emily Carter — Thu, 30 May 2024 01:54:10 +0000

Too many small businesses are hurt by not being in the 'in-crowd' Emily Carter Thu, 05/30/2024 - 11:54

27 May 2024

Originally published in the Canberra Times on Monday, 27 May 2024.

Bruce Billson

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

The Australian government procured goods and services worth $75 billion in 2022-23. Despite making up 97 per cent of all businesses, small business suppliers accounted for only $8 billion, or 11 per cent, by value.

My agency was asked by successive Coalition and Labor governments to independently examine how procurement rules and processes are working for existing and potential small business suppliers and what improvement could be made.

We were encouraged to be bold and bring fresh thinking to this long-standing area of contention and frustration for small business because actions already taken have not shifted the dial.

The overwhelming response from our consultations with Australia's small business community was 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.

If you run a small business that hasn't previously been a supplier to the government, this is a bewildering space. It is really hard to understand how to get involved.

And even rules designed to boost opportunities for First Nations enterprises and small businesses are tricky for procuring officials to navigate.

As part of our inquiry, a survey of government officials (who undertake procurements as needed) found many were frustrated by the increasing complexity of procurement priorities and connected policies and difficulty identifying SMEs was a common barrier to them being selected.

Analysis by the e61 Institute agreed, showing 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.

We consulted extensively with government departments and agencies throughout the inquiry and in developing 11 specific, constructive and practical recommendations in our report handed to the government last December.

These included targeted steps to:

Remove complications in procurement;
Maximise opportunities for small businesses to compete;
Enable impartial, timely and consequential reviews of decisions;
Build the confidence of officials through increasing competence and improved support; and
Consistently measure outcomes to achieve policy objectives.

Earlier this month our report was publicly released with a response by the Australian government that was quite frankly disappointing and at odds with the evidence, research and clear view of those who made submissions about their direct experience trying to navigate the existing system.

It was a missed opportunity to meaningfully improve the ability for competitive small and family businesses to be a supplier to the Commonwealth.

I was surprised several of the substantive recommendations and proposed reforms that have not been embraced, were rejected without any discussion at all.

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.

More of the same is not going to bring about the change in confidence 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.

Our package would repurpose existing funding and resources - not duplicate it - to produce an efficient and easy-to-navigate procurement framework that would make a significant difference.

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 encouraging the government concurs with our recommendations to better support procurement officials and advance women's entrepreneurship.

The 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.

We recommended abolishing the procurement coordinator function and replacing it with a procurement commissioner, who would have independent processes for resolving complaints and the ability to synchronise and support procurements.

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's 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 for 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.

Our report also outlined recommendations to improve defence procurement, make AusTender fit for purpose, support procuring officials to identify and use small businesses, reform government panels, boost women-owned business opportunities and improve payment times.

We found active stewardship is essential to ensuring 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.

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

In fact, 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.

We will continue to encourage the Parliament and the community to see the merit in our recommendations and adopt them to benefit small business, the taxpayer and the Commonwealth alike.

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

Bruce Billson is the Australian �Թ�� and Family Enterprise Ombudsman.

TRANSCRIPT: 2024-25 federal budget, small business mental health in Bathurst, small business procurement

Emily Carter — Thu, 16 May 2024 07:07:42 +0000

TRANSCRIPT: 2024-25 federal budget, small business mental health in Bathurst, small business procurement Emily Carter Thu, 05/16/2024 - 17:07

16 May 2024

TRANSCRIPT

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Dusty Fitzpatrick.

Radio 2BS Bathurst

Subjects: 2024-25 federal budget, small business mental health in Bathurst, small business procurement

Dusty Fitzpatrick

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson says the federal budget offers targeted measures to help small and family businesses deal with current pain points and headwinds. I'm pleased to say he joins us now. Bruce, good afternoon.

Bruce Billson

Dusty, good to be with you and your listeners.

Dusty Fitzpatrick

It's lovely to have your company this afternoon, Bruce. The federal budget offers a $325 energy bill relief for small businesses. How significant is this relief for businesses facing high input costs at the moment?

Bruce Billson

Look, any help is welcome. Small businesses have got higher input costs squeezing their margins. You've got the budget forecasting a tapering, you know, pretty sluggish growth. It's tough to make a dollar out there Dusty and there’s no sloppy margins for any small business that I've been speaking with or that I've heard about. So, these assistances are important.

It's worth noting that not every small business will be eligible. So, it's largely those operating out of someone else's premises away from, say, a home-based business or something like that. And that's being worked through by the government. So, you need to be on those business tariffs, I think is a good rule of thumb. So that's about a million of the two and a half million small businesses in Australia.

And the other thing to be alert to is last budget a similar announcement was made at a Commonwealth level and in most cases states and territories also matched to that amount. That's not the case this time around. So, whilst that relief will be there, people might wonder why it's not as impactful on the bill that they get, and that may explain that change.

Dusty Fitzpatrick

The budget also extends the instant asset write-off for another year. How critical is this extension?

Bruce Billson

It's really important for a number of reasons. Right now, we need to be energising enterprise. We need to be giving more encouragement for people to turn an idea into an investment. For business owners to make that big decision to turn scarce resources into new capability, new equipment, new technology to help with the success of that enterprise and the livelihoods that depend upon it.

So having that encouragement to invest in new kit, new plant and equipment, new technology is really an important signal. It's one that was made in last year's budget, although we are just a handful of weeks away from the end of the financial year and everyone's hoping that the legislation authorising that is around, but at least it is continuing into the coming year.

But it also underlines why greater predictability about those sorts of incentives for business owners would be really useful so people can plan for and count on some sort of encouragement to invest in innovation, to invest in improve productivity, to invest in improved business capacity so that they can factor that into these forward times that are pretty challenging right now.

Dusty Fitzpatrick

So, you're hoping that the asset write-off might become, I suppose, a permanent feature?

Bruce Billson

I certainly think it needs to be. And it's a view that's expressed by many small business representative organisations. For that simple reason, Dusty, in the absence of a one-off year-by-year announcement, things go back to the normal state of affairs, which is basically a $1,000 deduction and then you have to run a depreciation arrangement either separately or through what's called an asset pooling vehicle to get that that kind of assistance through your profit and loss. That's not ideal. That is far from giving predictability and certainty where a business can plan in a sure-footed way for important investments that uplift the capacity, the productivity and drive innovation in that business.

So, having it sort of locked in as an ongoing feature and even expanding its reach. At the moment it's $20,000. A lot of your listeners will think, well, that'll get you about a third of a SUV four-door pickup truck for a tradie. It might not buy that new machine that you need in your factory. You could well extend the $20,000 out and even look at whether the $10 million turnover cap is something that could be extended as well.

Dusty Fitzpatrick

Bruce, we also saw some funding allocated for mental health support. We know the cost-of-living pressure is really affecting everyone at the moment, but particularly having an impact on small businesses.

Bruce Billson

It's really important these two measures. Now, sadly, they are a sign of the times that the economy is more challenging. And we know owning and leading a business is a big responsibility Dusty, and it's one that brings a lot of heavy decision making, a lot of reflection. And also for the business owner, often their personality, their sense of being, is interwoven into the business and its success. And then they know the people that are in the business, their livelihoods depend on it.

And we've even seen through looking at some research that about a third of small business owners operating in the greater Bathurst area have been told by a clinician that they have not only a long term health condition, but about a quarter have had been identified as having a health condition related to their emotional and mental wellness.

So that's really significant. And we look at the types of industries where that can impact, you know, in hairdressing and beauty services, automotive repairs, construction. That's what the statistics are telling us about the Bathurst small business community, which is actually a little bit older than is the case across the country. More than half are aged over 50, with only 6% under the age of 30. Now it's about 8% nationally.

But this tells us that there's pressure points and challenges and that's why extending the funding for the New Access for �Թ�� Owners coaching support line, which is designed to help business owners understand their own mental wellness, identify when they're starting to feel pressure or overwhelmed, and how to get back into a space where they can make good decisions given the big responsibility that they carry.

And then the other part of that program, Dusty, sadly, is where it all gets a lot in financial terms. And there's a �Թ�� Debt Helpline that's been extended for another year to help businesses navigate when debt is really crippling the business and there's an important discussion about how do address that debt for the business owner.

Dusty Fitzpatrick

It is an important change there, Bruce, there is so much to get through this afternoon, but we'll move on now to the procurement report. The Government's response has been released.

Bruce Billson

We were we were underwhelmed by the government's response. I mean, it's an enormous missed opportunity to meaningfully improve the opportunity for competitive small businesses and family businesses to become a supplier to the government. At a time when growth in the economy is really, really slowing, the budget foreshadowed quite an expansion in the types of things government was involving itself in and therefore opportunities for people to supply to government.

We were asked by successive governments - so this was a bipartisan request that spanned the previous government and the new government - to have a look at how those procurement rules, those purchasing rules, were operating in terms of support for small business, whether certain provisions within them are achieving their objectives and what improvements could be made.

And what we found overwhelmingly is small businesses they felt supplying to the Commonwealth was very much an ‘in crowd’ game.

For people that knew the rules, knew the way the Commonwealth operated, knew where to look to find where opportunities might be advertised, knew who to talk to when there’s specifications being developed. They were pretty okay with how they interacted with the Commonwealth.

But if you were a business that hadn't previously been a supplier to the government, this is a bewildering space. Really hard to understand how to get involved. And then under those procurement rules, Dusty, there's certain exemptions and encourage meant for Commonwealth public servants to consider Indigenous business supplies and small business supplies as part of that work. And those exemptions are really hard to navigate. Hard for the procuring officials, hard for the businesses to know how to do it.

And we thought there was an enormous opportunity to improve that small business supply possibility into the Commonwealth, particularly when governments are talking about a Future Made in Australia and there's programs like the Buy Australian Plan. We thought there was some really sensible steps that could be taken to help bring those ambitions to life. But sadly, they weren't picked up by the government and we think there's plenty of work still to be done there.

Dusty Fitzpatrick

Bruce, there’s so much to get through this afternoon, really appreciate your company on the program this afternoon.

Bruce Billson

Dusty, great to be with you and your listeners.

Dusty Fitzpatrick

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson joining us on live and local.

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

OMBUDSMAN RELEASES PROCUREMENT INQUIRY ISSUES PAPER

Olivia Pearce — Tue, 01 Aug 2023 23:49:49 +0000

OMBUDSMAN RELEASES PROCUREMENT INQUIRY ISSUES PAPER Olivia Pearce Wed, 08/02/2023 - 09:49

02 August 2023

Many small businesses say they feel excluded from the chance to tender for Australian Government procurement contracts because they are not part of the ‘in-crowd’ or find the process too hard to navigate, says the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson.

Mr Billson has launched an Inquiry to examine the impact of reforms to Commonwealth procurement rules on small business and today released an issues paper and extended the deadline for public submissions.

In 2021-22 the government and its entities awarded 92,303 contracts with a combined value of $80.8 billion.

It is estimated small and medium-sized enterprises were awarded 55% of the contracts by volume or 31% by value, worth almost $25 billion. Small businesses alone accounted for $8.5 billion worth of the work (or 10.5% of all contracts by value).

“Enabling SMEs to fully compete for government work helps deliver better value, supports innovation and drives stronger Australian-based capability – all worthwhile and important benefits for the taxpayer and our nation,” Mr Billson said.

“Since beginning the inquiry in March, many small businesses have told us they feel shut out of the process or they simply find it too hard to navigate.

“They have low awareness about procurement opportunities unless they are already part of the ‘in-crowd’ through existing relationships with procuring agencies, or previous experience in government procurement.

“These are among the barriers we've heard about and our issues paper seeks to draw out more experiences and insights as we hear what small businesses and individuals say about the challenges or difficulties they faced when approaching government for procurement and where things might be improved.

“Equally, we’re keen to hear examples of exemplar agencies or effective processes or approaches, and how we might extend these ‘better practices’ more widely across government.”

Mr Billson said he was keen to get more feedback and ideas from those using the procurement system or those who would like to but do not.

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

“A great frustration that has been highlighted to us relates to the use of government panels for awarding contracts. Panels are a short list of providers that departments can draw from to have work carried out up to a particular value.

“Yet being on a panel does not guarantee work. Many small businesses have told us how they have been on panels for years and never been approached for a request to quote.

“Small businesses also point to the high cost and investment of time required to tender, and lack of consideration of this opportunity cost by agencies.

“The provision of limited or no feedback when a tender is unsuccessful is also a source of bewilderment and vexation.”

Mr Billson also noted a significant barrier imposed on small businesses was the requirement to have certain kinds of expensive insurances just so they have the chance to do the work – with no guarantees.

“We are looking at the Commonwealth Procurement Rules to see how they are being applied, which departments are doing well, and whether there's further steps that can be taken to improve the system,” he said.

The issues paper and the terms of reference for the inquiry are available on the ASBFEO website at www.asbfeo.gov.au/procurement where submissions can also be made. The deadline for submissions has been extended until 15 September.

Mr Billson’s report will be handed to the government in December.

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