Government sets procurement criteria for Australian businesses

The federal government has announced that Australian businesses seeking to win Commonwealth procurement contracts will now need to meet a definition of an official ‘Australian business’.

To qualify as an Australian business, companies will have to have local tax residency, be principally operated in Australia and have more than 50% local ownership. There is also updated guidance on considering broader economic benefits through government tender processes.

Defining an Australian business for the purposes of procurement has long been advocated for by the business sector and will ensure greater transparency, provide better insight into who is winning Commonwealth tenders, and assist in making businesses more competitive in tendering.

“Procurement is one of the most important economic levers government has — helping to grow our economy, support small and medium businesses, and benefit Australian workers and consumers,” said Minister for Finance Katy Gallagher. “Being able to easily identify Australian businesses in tender processes will help make them more competitive, and guide future initiatives to better support them.”

In addition, the government is also issuing ‘Broader economic benefits in ICT sector procurement’ planning and engagement guidance to assist ICT businesses navigating Commonwealth procurement, acknowledging the importance that the ICT sector plays in procurement — making up approximately 15% of Commonwealth procurement commitments.

The government says this plan builds on improvements already made to the Commonwealth Procurement Framework to support Australian businesses and SMEs to win government work, including:

• increasing the SME exemption from $200,000 to $500,000 to give SMEs more access to a greater number of contracts;
• raising the target for procuring from SMEs to 25% of contracts by value for contracts up to $1 billion and 40% of those below $20 million; and
• ensuring at least one SME must be included in every approach to market through the whole-of-government Management Advisory Services and People panels.
   

Commonwealth Government procurement is a major economic lever, with on average around $70 billion and 80,000 contracts committed to each year.

From 2025–26, businesses on the Whole of Australian Government Panel arrangements will be able to report their Australian business status in line with the definition on the Australian Government’s Supplier Portal, with this opportunity expanded to all AusTender-registered businesses in the future.

For detailed information on the Australian business definition, click here.

Image credit: iStock.com/NeilStanners