Can a small business realistically win Australian Government contracts?

An SME in Commonwealth procurement is an Australian or New Zealand business with fewer than 200 full time equivalent employees. Note that the test is headcount, not revenue.

Exemption 17 of Appendix A to the Commonwealth Procurement Rules is the provision worth knowing. It allows a Commonwealth entity to engage an SME directly, without an open approach to market, for procurements valued up to $500,000 including GST, as long as value for money can be demonstrated. In practice this means a direct relationship with a buyer can convert into real work without a public tender ever being run.

That changes where you should spend effort. For a small supplier, being known and credible to a specific buyer before they have a requirement is often worth more than responding to more open tenders. Annual procurement plans, published on AusTender by 1 July each year, tell you what an entity expects to buy and are the right moment to make contact.

First Nations businesses have a further route: Exemption 16 allows direct engagement with a majority Indigenous owned SME at any value, and the Indigenous Procurement Policy sets targets and mandatory set-asides.