Government departments spend billions each year purchasing goods and services from private organisations, ranging from toilet paper and office equipment to IT systems and artillery. Rebecca Spicer finds out how to access these huge and lucrative markets.
When you add up the many and varied roles and functions of all local, state, and federal governments in Australia, you get an idea of the huge opportunities available to businesses in the government procurement market.
More than 100 different government departments issued some 186,000 contracts to supply the needs of the Federal government alone last year. And, according to Dr Sharman Stone, parliamentary secretary to the Minster for Finance and Administration, the combined budget of federal government departments (agencies) is around $17 billion each year.
The Australian Procurement Guidelines set out the framework for Australian government procurement, which Stone says hope to meet the government’s main objectives. These objectives include being totally transparent and accountable; with open competition, and as far as possible it should be cost effective for businesses. Through these objectives, the government and the taxpayer achieve value for money.
However, as much as the guidelines attempt to harmonise the procurement process across the 100-odd federal government departments, each department has its own budget and makes its own decisions about what it wants to buy.
To ensure a free trade environment, small businesses are not given special consideration in the procurement process, however Stone believes SMEs have just as much opportunity to secure government contracts as anyone else. "What we do still have is a benchmark where we hope to have at least 10 percent of business from government going to SMEs," says Stone. Right now in fact, she adds, the Federal government is well ahead of its target with SMEs acquiring more than 20 percent of its business. And there are opportunities opening up with international government markets as well. "We also have as part of the US/Australia Free Trade Agreement, an agreement that Australian business can access the $200 billion US government procurement market," says Stone.
And let’s not forget the opportunities from state and local government. In fact, Tony Harrison, managing director of Corporate Communications—a Tasmanian-based consultancy specialising in government relations—believes SMEs have a better chance of winning government contracts at these levels. "I think there’s probably more for SMEs in the state and local area, particularly in Tasmania. But there are the odd ones, however, that have specialist skills that will tender for Commonwealth contracts."
Where To Start
Sifting through the maze of potential government clients, discovering opportunities for your business and how to go about winning those contracts all begins with researching the government market.
Searching through open tenders is perhaps the best way to gauge whether you may have something to offer the market. To do this, the internet will be your best medium and there are some key resources worth checking out.
The Department of Finance and Administration recently published a booklet, Selling to the Australian Government, a Guide for Business. It’s a practical guide for business and describes the purchasing environment, with information on how to discover opportunities offered by the Federal government and advice on how to compete for business. A free copy of the guide can be downloaded from www.finance.gov.au
All open approaches to the market are advertised online at the AusTender website (www.tenders.gov.au). Here you can search for tenders that may be of interest to your business, sign up to be emailed relevant tender opportunities and also find out who’s been successful in winning contracts, so you can check out the competition. Each state government also has its own tender website offering similar features. See contact details for these and a link to a local government directory at the end of this article.
The Industry Capability Network (www.icn.org.au) is another useful resource, and is an Australia-wide network that helps match buyers and suppliers in the government and private sectors. However, winning a contract isn’t as simple as submitting to a tender you’ve seen on a website and winning the contract. Relationships need to be formed and nurtured with the relevant government agencies—sometimes even before the tender is announced.
Kim Moeller, general manager of Patriot Alliance—a Canberra-based recruitment business specialising in supplying trusted and security cleared personnel—gets 80 percent of his business from government contracts. He believes that to work successfully with government, businesses need a long-term strategic commitment to those clients, which begins and ends with relationships. "A lot of people think it’s simply a matter if responding to a tender. But sometimes tenders can be a bit wordy and the only way to understand what they want is to know who put the tender out and have discussions with them to understand what they really do need as a business solution."
Finding the best person to talk to and understanding the individual department’s procurement processes may be quite daunting at first, but the Government Online Directory at www.gold.gov.au is a great place to start. It can help you understand the structure, roles, and function of the various federal government departments, and also provides contact details and information on key staff.
Potential suppliers can also now get information about forthcoming business opportunities and start developing relationships ahead of tender releases with the new Annual Procurement Plans for government buyers, launched on the AusTender website in July. These aim to outline the buying plans of each government department over the forthcoming financial year.
Stone also recommends simply approaching an agency if you think you’ve got something to offer. "Sometimes it’s a case of, if you’ve got an excellent product or service that you think will help a government agency, don’t wait for a tender to be offered for that service, you might cold-call if you like, take yourself to that appropriate official in the government agency and present your wares," she says.
Getting the government to come to you is also a good way to spark relationships. One way of achieving this is by becoming a Government Endorsed Supplier. There aren’t categories for every type of business, but Moeller says it’s helped his business be recognised among government buyers, and becoming endorsed is almost mandatory to be able to deal with government in those industries. For example, it’s mandatory for federal government agencies to use businesses under the Endorsed Supplier Arrangement (see www.esa.finance.gov.au) when purchasing IT and major office machine products and services.
Maintaining relationships and networking within your own industry is also important. Not only to learn how other people are dealing with government agencies, but to nurture potential partnerships or sub-contract arrangements, which are other options for SMEs to tap into government contracts. Moeller admits that for big projects, the government prefers to have big organisations do the job, but he says SMEs can still take advantage of this. "One of the quickest ways to get runs on the board is to work with a partner who understands government," Moeller says.
Harrison agrees. "It’s a good idea if SMEs can form consortia and perhaps strengthen their own credential and go in with other organisations to get a diverse spread of work. It’s definitely an advantage if they can do that."
Cost Considerations
A big consideration for businesses looking to acquire government contracts is the potential cost. A lot of this cost is taken up by time–time away from your core business while puttin
g tender applications together, time taken to network and build relationships, and the time it will take to agree on a contract and actually deliver the job. "It can be expensive because of the timeframe," Moeller says. "If you can win business in a month and get runs on the board that’s great, but if you’re waiting three months for the business to turn up and you’re still employing people, then it can be more costly."
He says start-ups will have extra considerations when trying to deal with government. "Expect a long sales process if you’re a start-up. Don’t expect instant wins and to eat from your government contracts immediately."
Having insurance in place is also important according to Moeller, particularly if you’re working with Defence because their insurance requirements are almost double that of other government agencies.
If breaking through the jargon, preparing tender applications, and building relationships all seems too much for your small business, it may be worth enlisting the help of a government relations consultant who can assist with putting proposals together and can help represent your case to government outside the tender process.
Moeller admits Patriot Alliance has lost "buckets" of tenders—and this can be quite common—but he encourages businesses to turn this into a positive and take advantage of the government agencies’ obligation to provide a debriefing session for unsuccessful tenderers. "My best advice if you don’t win a tender, is to go and talk to them and work out why you didn’t win. A lot of people fail to do that and it’s a very important part of the process."
But he also has a warning for those who do win them. "Don’t think of winning a tender as the end of the process, it’s really the beginning because you then need to agree on the contract and deliver."
In all, Moeller’s advice for cracking those government contracts: "Don’t stand still, keep moving. It’s important to get out there and talk to your clients. It’s a big monolith and it’s easy just to stand back and feel totally overwhelmed, but don’t. The government wants to buy your services but they have to know about them—it’s just about breaking through that big monolithic facade."
Contacts for Contracts
Below is a list of federal, state, and local government links to access more information on dealing with government.
Links to the various government procurement bodies will give you information on how that government body goes about its buying, and the links to actual tender information will provide you with the most up-to-date information on government business opportunities.
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Government Procurement Body |
Tender Information |
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Commonwealth |
Department of Finance & Administration |
Commonwealth Electronic Tendering System, AusTender |
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ACT |
ACT Department of Treasury |
Buyers and Sellers Information Service |
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NSW |
NSW Department of Commerce—Office of Government Business & Government Procurement |
NSW eTendering tenders.nsw.gov.au |
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NT |
NT Government Contract & Procurement Services |
NT Government Tenders Online notes.nt.gov.au/Tender.nsf |
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Queensland |
Queensland Government Marketplace |
Queensland Government Marketplace eTender System |
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SA |
State Supply Board |
SA Tender & Contracts |
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Tasmania |
Department of Treasury & Finance |
Tasmanian Government Tenders |
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Victoria |
Victorian Government Purchasing Board |
eTenders—Victorian Government Tendering System |
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WA |
WA Department of Treasury & Finance |
Gem Tendering—WA Government Contracting Information Bulletin Board agate.gem.wa.gov.au/prod/wa/bb/home.do |
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Local Government |
Australian Local Government Association (ALGA) To access a comprehensive list of links to most local councils Australia-wide visit www.alga.asn.au/links/obc.php |
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