Senator the Hon Simon Birmingham

The Morrison Government is opening new doors for small and medium businesses to win defence procurement work, as part of our plan to further strengthen sovereign defence capabilities.

Updates to the Commonwealth Procurement Rules, to come into effect on 1 July 2022, will increase the threshold that SMEs can be directly engaged for defence procurements from $200,000 to $500,000.

This will mean that Defence contracts valued up to $500,000 can be offered exclusively to SME suppliers, or they can be subject of a tender process only between only SME suppliers.

Finance Minister Simon Birmingham said the increase of this threshold would put more small and medium businesses in the mix for work within our booming defence industry.

“We’re backing Australian small and medium businesses to get more work by giving them access to more defence procurement opportunities,” Minister Birmingham said.

“We have already seen small and medium business participation in defence projects reach record levels through other changes to procurement rules that have cut red tape and reduced costs for small businesses within the market.

“This significant change will allow small and medium businesses to be directly engaged in more defence procurement, and that will help them grow their own operations and create more jobs.”

Minister for Defence Industry Melissa Price said the increased threshold was a major win for small and medium businesses and significant in supporting a competitive Australian defence industry.

“This is a great initiative for small and medium defence industry businesses because it will give them more opportunities to tender for Defence contracts,” Minister Price said.

“This supports a competitive Australian defence industry that will deliver Defence capability and value for money outcomes for Australian taxpayers.

“Defence will continue to engage with industry to ensure these businesses are able to maximise their participation in Defence procurements.”

Defence is the largest Australian Government procurer of goods and services, reporting contracts with a combined value of approximately $37.4 billion in 2020-21.

The changes supplement the significant initiatives introduced to strengthen Defence procurement following the completion of the Australian Standard for Defence Contracting and Defence Procurement Review.

The updated Commonwealth Procurement Rules can be found here: https://www.finance.gov.au/government/procurement/commonwealth-procurement-rules