Are you a small business? Then we want to hear from you!

Author: 
John Sheridan - AGCTO & PC

As you would be aware from my previous blog posts, the Commonwealth contracting suite (CCS) for low risk procurements under $200,000 will be available from 1 July 2014 and will directly aid small businesses. The CCS has simplified terms and conditions including liability and insurance requirements and will provide a consistent approach for all suppliers in dealing with Commonwealth agencies.

The Department of Finance is seeking to supplement the CCS with other initiatives to support small businesses in tendering for work.

I often hear that small businesses have difficulty accessing Commonwealth contracts but it is unclear what those specific difficulties are and therefore what can be done to make it easier. Given this, if you own or manage a small business, I would like to learn what barriers you might have faced in dealing with the Commonwealth. I am also interested in hearing your thoughts on the types of tools that we could develop to assist you in navigating the tender process.

You can either leave a comment on the blog, or if you’d prefer, reply via email to haveyoursay.procurement@finance.gov.au. Feedback would be appreciated by 16 June.

Comments (15)

I think this is a great initiative from the Commonwealth and we have tendered for Commonwealth Tenders. I think from our perspective the issues may be:
1. A tendency for the persons evaluating Tenders to go with the Organisations they know. These organisations are usually on the current panels. This is understandable, in that there is always a preference to go with what you know.
2. The disadvantage is that the panel is closing itself off to new methodology.
3. Being registered for Tenders helps, however being a subscriber to one or more of the tender link providers becomes expensive.

As a small business owner and working with a wide range of small businesses I am often surprised at the number of them that are not aware of the opportunities that are available for them in the government procurement area. It would be helpful to undertake some study into how this information is made available to them and if this is easily accessed by small business.
Compliance, terminology and expectations of government tendering is also difficult to interpret on occasions and often looks too daunting or complicated for them to attempt.
Access, communication and interpretation are key issues as time frames are limited.
Regards
Gerry Fitzgibbon
Jenard Training and Personnel

Thanks for the comments received so far.  I should note that there is no cost to registering your business on AusTender, the Australian Government procurement information system (www.tenders.gov.au).  AusTender provides registered users with automatic email notification of planned procurements and business opportunities as they are published and where they match the self-defined business profile of goods and/or services.  There are some useful tips in the ‘help’ section found here.

If you need assistance with registering on AusTender or you have any questions you can contact the AusTender team via:
Phone: 1300 651 698
International: +61 2 6215 1558
Email: tenders@finance.gov.au

In addition, the AusTender website provides useful links to other State, Territory and International tender sites here.

As I am doing a small business diploma and my business plan looks it may take off due thing happening with the job
have this and more information on this topic would helpfull

Thanks for the opportunity to comment.
We understand and use the AusTender information and are reasonably competent at writing submissions.

The main barriers for us, and many other SME CEOs that I am acquainted with, are that by the time we get into the loop, the architecture and design considerations are already decided and usually based on the products and services of international vendors. Australian innovation does not get a look in even though (as in our case) we are exporting those very same products.
It would be a great advantage if the engagement started at the business requirements stage and an outline circulated for comment via the AusTender process

I commend the Department of Finance for their work in simplifying the Commonwealth contracting suite (CCS) for low risk procurements and see potential for significant benefit to small businesses.

In regard to other initiatives, I encourage the Department the Finance to:

- extend the principles underpinning the CCS (for example simple language, colour-coding and appropriate dispute resolution clauses) to other Commonwealth procurement and contracting activities and provide targeted education and information for small businesses, and

- give consideration to the introduction of industry specific contracts for Commonwealth projects and to breaking projects into smaller components so as to improve access for small businesses.

I have expanded on these points via email.

I think the PS and Government require positive feedback for ask the question. My small business doesn't trade with the federal government as such. Therefore i could not contribute. However, I do feel, and they may already be in place, a series of video explain how small business can win and contest for these opportunties and relevant templates would be a good initiative. As a broker of businesses I am certain that there are many small business that could offer value to the taxpayers if they could context this work.
Frank - Canberra

We've delivered projects through both service integrators / larger IT suppliers and more often, directly to customers. There are always challenges for an SME to deal with Government but there are some key differences with working through larger IT suppliers.

1. Contracts through larger suppliers tend to be very one sided and require significant negotiation from a legal and a commercial perspective. Larger IT suppliers will try and mitigate all risk and pass this onto a third party. It's like negotiating with a Goliath and it can be both time consuming and expensive in terms of legal resources.
2. Larger suppliers tend to limit the communication with the client. This is the biggest issue as the more separation you have from the client, the further you are away from the 'user need'. Its almost impossible to deliver in an agile way, when there is a layer of abstraction in the communication process. As a small business, we are great at communicating and have had to find innovative ways of communicating with the client when delivering projects through larger IT suppliers.
3. Larger suppliers really need to adapt to working with SME's and this is more of a cultural change - as only a very few large service providers we have worked with have demonstrated an understanding of how small businesses work and do business. This stems from a lack of SME experience as well as legal processes that make working agile or with any flexibility very difficult.

Working direct with a government department has distinct benefits. Recently, we delivered a project for the Ministry of Justice (in the UK), where we worked with a number of large IT suppliers, who were all critical in delivering the project. Because we were contracted directly by the Government Department, we were on an equal footing with all suppliers. We had a voice and were able to represent ourselves. This meant that we could control the key aspects of delivery and focus on the important user needs, the communication and ensuring the project was delivered on time and in this instance under budget.

This was a massive undertaking; a project delivered in a very tight timescale (18 weeks) with a huge amount of complexity. To add to the technical challenges, we had to work with four large IT suppliers (in partnership) to deliver the service. Being able to drive the project meant that we could set out priorities and use the flexibility we have as an SME to deliver rapidly. The significant senior level sponsorship really helped us in this case - and if there is anything to be learned from the process - it's the change in cultural behaviour that needs to take place in Government (at senior and ministerial level) to ensure that small companies are heard, given a voice and as well as accountability, the responsibility, escalation and empowerment necessary to get things done in an agile way.

Trust is probably the most important factor in a relationship with an SME. That, and an investment in understanding how SME's work. We made substantial and permanent changes to our business processes and policies to deliver a highly secure and scalable solution for the Government Department. This process has been both expensive and resource intensive - the result though, is that we are more ready to do business with Government and help deliver Digital by Default services, than ever before.
There are sometimes dizzying levels of bureaucracy during delivery that an SME may struggle to resource in addition to actual delivery. Some of this overhead for SME's can be removed from the procurement process, and for Government to realise the full value of working with SME's in terms of their flexibility and adaptability, post-procurement red-tape also needs to be stripped back to enable SME's to simply get on and deliver.

What Government needs to do here is embrace the Agile methodology and let go of some waterfall controls so it can be more ready to do business with SME's.

This isn't something that can happen overnight, but it can start by ensuring that all projects being delivered by SME's aren't treated the same as if they were delivered by large suppliers. As an SME we have an imperative to deliver value, quickly and to a very high standard.

From a price and value for money perspective, everything an SME charges will be marked-up by a larger service provider and charged onto the client. That is fine as long as the larger provider actually adds value. We've worked with some that really do add value - but there are those that add very little, other than obstacles in the communication process. Successful projects are all about communication.

This time and resource could be much better spent understanding user need, focusing on design and delivering agile and iterative projects. The government has a great opportunity to support SME's and generate rapid growth in the technology sector as well as get real value for money and importantly, richer and more relevant digital services; this does mean that Government departments need to take on much more accountability and responsibility - particularly in product ownership.

It is important to note that SME's doing business with government is not the only measure of government IT transformation success. It's one of them. Using Agile is another. After all, any IT project can fail if it does not have the right kind of support.
It's still very hard for a small company to win Government contracts, but life is changing. Through frameworks such as the Commonwealth Contracting Suite we hope to be dealing directly with Government departments a lot more - if not as default.

A key to this success will be support from senior management and a willingness to be involved in projects is only from a visibility and review process in order to measure progress and success against more traditional systems integrator led projects.

We think the differences, ability to overcome challenges and the capability to deliver real value and deliver it quickly will shine a light on just how capable SMEs are in their capacity to deliver truly transformational ICT and digital projects for Government.

James Robinson
Jadu Software Pty. Ltd.

Auraya Systems is the developer and supplier of ArmorVox, an Australian developed core voice biometric technology which we license worldwide... Typically, we license our technologies to partners as part of a much larger projects.. For example, we have licensed our technology to Salmat NZ who in turn develop a solution for the New Zealand Government to authenticate the identity of its citizens accessing Government services which is the world's largest Government services deployment..

We have been successful in New Zealand and Canada, where partners there have created solutions based on ArmorVox for these Governments for secure citizen services and national security applications... We have signed agreement with contractors to the UK, Mexican and Guatemalan Governments - but we have yet to supply ArmorVox to the Australian Government, despite being aware that the Australian Government has procured three voice biometric solutions over the past 12 months... In not one of those cases was Australian developed ArmorVox even considered... I specifically refer here to the ATO's procurement of voice biometrics licenses from our US competitor because they were listed on a contract they signed in 2009, almost 5 years ago not!

By far our biggest issue is Australian Government Agencies ensuring that their selected suppliers, which are usually large multinationals, stick to their undertaking... We have signed numerous teaming agreements with the "usual suspects" and we are "paraded" in front of Government buyers during the sales cycle (as evidence of their "good corporate citizenship") and once they have the deal, we do not even get our telephone call answered... In the case of the ATO, I am sure there is a clause in their contract with their managed services provider to keep them up to date with new developments and innovations... But clearly this did not happen and clearly the ATO did not insist on keeping their supplier to their contract...

The only group that can change this behavior is the Government buyer...

Like in the US, the Australian Government agencies must insist that in any large contract that a significant proportion of the supply is delivered by SMEs... The US has been very successful in using Government procurement to bootstrap SME's and help them commercialize their technology and provide reference to enable those SME's to export their technology and expertise... If the Australian Government won't buy Australian developed technology - then how on earth are we going to convince any other Government to buy it... To see a discussion on our experience selling to the Australian Government - see http://www.egovernmentcluster.org.au/inaction/newsletters/Oct2013/featur...

I'd personally like to see a class of "low risk" tenders that are only available to "true" Australian SMEs - small business that have (say) 50 employees or less.

There are many tenders that come up that we think we'd be very competitive for, but are often beaten out by larger companies who can dedicated entire teams to doing nothing but filling out tender documentation.

The procurement process is extremely time consuming and I suspect many small companies - like us - often cannot justify the time and effort required.

I look forward to seeing how the CCS works, but my experience so far just makes me think that larger companies with greater flexibility will simply leverage their resources in ways designed to take advantage of it to snap up the bulk of this work with as little effort as possible.

Whether or not the chances of Australian small businesses improve as a result is something that only time will tell.

--
David Harrison
Mammoth

Thank you to the many people who have contributed well reasoned and experience based suggestions for this blog. SME's are often reluctant to make public or private representations to such requests based on a perception that it may hinder their chances of obtaining business. Perhaps there is a hint of a biting the hand that feeds you here. The Department is commended for initiatives they are conducting in this area. If a broad range of responses is not received perhaps the Department could consider engaging a third party to conduct further research and allow for the anonymising of responses to encourage more specific examples being provided.

As for specific recommendations.

The department could review the Value for Money considerations in the procurement rules. Surely true Australian wealth retention, development of Australian capability and local customer support capability are as important as value for money considerations as environmental sustainability for much of Government procurement.

Experience and performance history are important considerations in Government procurement but are they more appropriately considered in a risk assessment framework than as value for money considerations?

A significant number of procurements occur below the Free Trade Agreement threshold. Is it possible for the Departments of Finance and Industry to consider how this level of procurement could be used to develop Australian Industry?

Procuring agencies should be encouraged to consistently consider whether aggregation of requirements to reduce the potential number of contracts to be managed delivers the best value for money solutions.

If it does not do so already the Department of Finance could monitor procurements to ensure that unnecessary aggregation does not occur, that appropriate retention of IP by vendors is actively encouraged and that Insurance requirements do remain appropriate to the risk.

There is considerable anecdotal advice that payment terms to SME's are not managed as effectively as they could be. SME's report that quite minor, immaterial errors in invoices are often reported late in the payment cycle and extend the payment window. The Department could also implement as a matter of policy that payment terms negotiated between a prime contractor and the client are mirrored in sub contracting agreements. Cash flow is a major business asset and potential risk for SME's.

Responses to approaches to market often require a business to repeat, in slightly altered formats, common information. Often this information is provided to be part of a panel arrangement. The Department could establish a single bank of common information for a business. This might include company ownership details, ABN’s, insurance certificates, accreditations and certifications. A single identity point could be established to allow pre-population of ATM requirements or a reference point for procuring agencies.

The Department should actively monitor the time taken for approaches to market to lead to contract engagement to ensure that procurement timeframes are not unnecessarily elongated.

Hello Rob, thank you for the substantial feedback.The team are currently considering it and will post a response soon.

I have been travelling intermittently from South Africa to Australia for some 20 years to visit family.My wife and I bought an apartment a few years ago and now spend more time here.Before the advent of the GPS it was intimidating to travel in the country districts.,so we only went to places like Bowral from Sydney.However the GPS now takes you anywhere you want to go,off the high ways,along sand roads,if you are willing,down to beaches researched by you but which you would not have gone to without the back up of the GPS.
To encourage Tourists to visit country towns and areas,the Australian Tourism Board should present each tourist with a GpS on their arrival in the Country.,and maybe a Map of Australia as well>if you do this you will see a huge increase in visits to outlying areas with a similar increase in toyrist revenues in those areas.
This

Remember the old Australian Government Endorsed Supplier Scheme.
At one time this was awarded to company's with high Australian content either in manufacturing or technology. This recognition was weighted in the RFT evaluation.
Bring back the days when Australian SME's could compete for Government work with Australian made product.

In the Commonwealth context, the previous Endorsed Supplier Arrangement for ICT and other categories of goods and services was discontinued because it was resource intensive to administer, imposed considerable red tape on suppliers and included mandatory elements that were not consistent with the government’s devolved procurement framework.  Additionally, I understand that it did not have a review mechanism and the majority of suppliers included in the arrangement did not supply goods or services to the Government.

In terms of Australian vs Overseas suppliers, in 2012-13 Australian suppliers were contracted to supply 82% of goods and services by value. This equates to $32 billion of the overall $39.3 billion spent by government on procurement.

If interested further stats on Australian Government procurement contracts can be found here.

Regards

John

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Last updated: 06 January 2015