Encouraging Competition

5.1 Competition is a key element of the Australian Government’s procurement framework. Effective competition requires non-discrimination and the use of competitive procurement processes.

5.2 Participation in procurement imposes costs on relevant entities and potential suppliers. Those costs should be considered when designing a process that is commensurate with the scale, scope and risk of the proposed procurement.

Non-discrimination

5.3 The Australian Government’s procurement framework is non-discriminatory.

5.4 All potential suppliers to government must, subject to these CPRs, be treated equitably based on their commercial, legal, technical and financial abilities and not be discriminated against due to their size, degree of foreign affiliation or ownership, location, or the origin of their goods and services.

Small and Medium Enterprises

5.5 To ensure that Small and Medium Enterprises (SMEs) can engage in fair competition for Australian Government business, officials should apply procurement practices that do not unfairly discriminate against SMEs and provide appropriate opportunities for SMEs to compete. Officials should consider, in the context of value for money:

1. the benefits of doing business with competitive SMEs when specifying requirements and evaluating value for money;
2. barriers to entry, such as costly preparation of submissions, that may prevent SMEs from competing;
3. SMEs’ capabilities and their commitment to local or regional markets; and
4. the potential benefits of having a larger, more competitive supplier base, including the disaggregation of large projects into smaller packages, where appropriate, that maximise competition.

5.6 The Australian Government is committed to non-corporate Commonwealth entities procuring at least 25 per cent of contracts by value from SMEs, for contracts with a value of up to $1 billion.

5.7 In addition, the Government has a target of non-corporate Commonwealth entities procuring 40 per cent of contracts, by value from SMEs, for contracts with a value of up to $20 million.

5.8 The Australian Government recognises the importance of paying suppliers on time, particularly SMEs. Non-corporate Commonwealth entities must make all payments to suppliers within the maximum payment terms, following the acknowledgement of the satisfactory delivery of goods or services and the receipt of a correctly rendered invoice.⁸