How small businesses can apply for government contracts

The federal government is giving small businesses a better shot at winning potentially lucrative contracts with a significant revision of the commonwealth procurement rules (CPRs).

Each year the government spends about $70 billion on contracts, and now 20% of this business must be made available to SMEs, an increase on the previous 10%.

Anne Nalder, founder and CEO of the Small Business Association of Australia, says the increase is timely, but it won't necessarily create rivers of gold for SMEs.

"Businesses will still need to reach a certain requirement level to win government work, and being on preferred supplier panels will help procure more work.

"However, each government department has different procurement divisions and requirements, and SMEs will need to meet these conditions.

"Whether you're in a multinational or an SME, you might have prohibitive compliance costs that don't make the procurement exercise worthwhile."

Compliance obligations might include having the correct insurance, such as professional indemnity and public liability, especially if the project involves engineering and construction work. With these caveats in mind, whether the commercial opportunity lies with a commonwealth, state or territory agency,  several standard steps can help your SME catch the government business gravy train.

Read on for tips for winning government tenders.

Understand the jargon 

The Australian government publishes business opportunities and notices of successful contracts and standing offers valued at or above $10,000 on the tenders.gov.au website. You can use it to register to be notified of opportunities matching your business profile and to find details about successful tenderers and existing contracts.

Tender processes use a standard set of terms, and making sense of the jargon will help reduce errors and increase your chances of success.

For example, some tenders will provide a request for tender (RFT) or a request for proposal (RFP).

An RFT is the most common format and usually provides a set of questions and requirements that the tender response must address. An RFP is generally less formal and might contain a set of guidance statements about the information the government agency would like to receive.

The RFP should also summarise the tenderer's experience and capability.

Every tender is a competition, so you must analyse your chances of winning the bid before you invest too much time. This analysis will include factors such as the evaluation criteria, the submission requirements, the due dates, whether the work is a strategic fit for your business, the cost of bidding and the potential profit for your SME from winning the tender.

When weighing up the opportunities and costs, there are bid management specialists who, for a fee, can give advice. Alternatively, other consultants can assist by providing a well-written bid document that ticks every box outlined in the RFT or RFP.

Nalder says you should be able to talk to a project officer from a government department about the tender.

"You should ensure you're on the right track. You might be selling lobsters, and they want crustaceans. If you don't match their criteria, you might waste your time submitting a bid."

Support your case 

Nalder says owners must show their SME is viable and operational and has a good track record in delivery and performance.

"Strong client and project references that apply to the contract you're bidding for, especially if you're new to government tenders, will help your cause. If you're tendering for the first time, you need to be able to show private sector experience relevant to the government tender at hand."

The experience of your key people will also be evaluated, as well as the methodology you intend to use as part of your service.

Along with a competitive price, Nalder suggests identifying your company's differentiators to show how you will deliver value or benefit to the government client to help meet its objectives.

"It is becoming increasingly crucial that value for money includes the social, environmental and other community benefits you can deliver for the government client."

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