Supporting SMEs and regional businesses

Buyers must make small and medium enterprises and regional businesses their first priority.
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What you need to know
  1. You should make it easy for SMEs to participate in government contracts by simplifying the tender process and reducing red tape.
  2. You must first consider buying from an SME or regional business for many contracts valued up to $250,000.
  3. You can often buy direct from small business for contracts up to $50,000.
  4. You must evaluate suppliers’ commitment to working with SMEs as part of tender criteria for procurements over $3 million.
  5. You should also encourage SME innovation through the Procurement Innovation Scheme.

SME or Regional First

As a government, we want to increase competition, encourage innovation and create a sustainable NSW economy. We understand this is only possible when SMEs and regional businesses participate fully in our state economy.

Consistent with these objectives, you must first consider buying from a small- to medium-sized enterprise (SME) or regional business whenever:

  • you’re permitted to buy goods or service directly from a supplier based on one quote
  • the contract value is under $250,000.

This includes when you’re using a whole of government contract or prequalification scheme.

Where you’re based outside of regional NSW, your first priority in these circumstances should be to buy from an SME. Otherwise, you should prioritise regional businesses.

SMEs are Australian or New Zealand-based enterprises employing up to 200 people (full time equivalent). Regional businesses are those outside the metropolitan areas of Sydney, Newcastle and Wollongong.

These requirements don’t apply to construction contracts.

Read the SME and regional procurement policy

SME and sustainability criteria

You must try to make sure SMEs and regional businesses take part in procurements over $3 million. Larger businesses are often selected to deliver higher value contracts, so we want suppliers who win these contracts to tell use how they’ll use SMEs to help deliver the goods or services.

You must include non-price evaluation criteria of at least 15%, which takes into account how suppliers will support government objectives. You must allocate a minimum of 10% (or 2/3 of 15%)  to evaluating how the supplier will support SMEs.

You’re exempt from this requirement where you’re establishing a prequalification scheme or panel. The exception is where you expect each supplier to provide goods or services worth more than $3 million over the panel term.

Make it easy to do business

One way you can encourage SMEs and regional businesses to participate is to make it easy to do business with you. These businesses often don’t have the same capacity for administrative work as many larger organisations.

You must set a limit on the length of tender responses whenever you’re seeking more than one quote. You must also minimise any tender and contractual requirements, such as insurance and technical requirements.

You should make sure any contracts, tender documents and other documents are written in plain English and aren’t unnecessarily complex.

Encourage innovation

You can give startups and innovative businesses a kickstart through the Procurement Innovation Stream. If you’re accredited, you can engage SMEs directly on short-term contracts up to $1 million to do proof-of-concept testing or outcomes-based trials.

The trial should be designed to test or demonstrate the feasibility of a good or service to solve a particular problem. You can use the innovations tream for goods, services and construction contracts.

After a successful test or trial ends, you can use any procurement method - including direct negotiation - to award a contract, subject to procurement rules.

Read more about the Procurement Innovation Stream in PBD 2019-03.

Buy direct from small and regional businesses

You can buy goods and services under $50,000 directly from a small business (up to 20 employees). This includes goods and services covered by a whole-of-government arrangement. You can also buy goods or services under $10,000 directly from any supplier.

Read more about buying low value contracts

Related content

  • Select suppliers: Get an overview of your obligations when it comes to selecting suppliers.
  • Evaluation criteria: Discover the criteria you must use to evaluate suppliers’ bids and proposals.
  • Probity and fairness: Get an understanding of your obligations when it comes to probity and fairness.
  • Low-value contracts: Read about the special rules that apply when selecting suppliers for low-value contracts.
  • Australian Disability Enterprises: Find out about the special rules that apply if you select an Australian Disability Enterprise to carry out a procurement.
  • Aboriginal businesses: Read about the special rules concerning Aboriginal businesses.