Why You Should Start Tendering

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Have you considered tendering for government work but still need some convincing? Here are 5 reasons why you should start tendering today:

1. Governments use tendering to buy goods and services

In Australia, governments are responsible for providing a range of goods and services for their citizens. These goods and services vary greatly according to the level of government (be it Commonwealth, state or local government) and can include spending on health, infrastructure, welfare, education, training, defence, justice, transport, waste and a myriad of other areas where government has responsibilities.

With the exception of instances where governments spend very small amounts of money, some exceptions for local government entities and emergency situations, all governments in Australia use some form of tendering to spend public funds and obtain access to the goods and services they require. Each tendering process follows a specific set of rules which are developed with the aim of obtaining favourable outcomes from each contract and the best value for money for the public money that is spent. As a result, if you would like to do business with government, it is necessary that you follow each government entity’s procurement processes to sell your goods or services.

2. Government spend on procurement is considerable

Governments across Australia spend a significant amount of money on purchasing goods and services. According to the Australian Government’s Department of Finance, in 2019/20 the Australian Government published 81,174 contracts with a combined value of $53.9 billion. Procurement spend is also substantial for state and local government. For example, NSW Government agencies spend approximately $30 billion on goods, services and construction each year (buy.nsw, 2020) and the combined expenditure of NSW councils is estimated to be in excess of $10 billion annually (Australian Bureau of Statistics, 2016).

3. Preference for local suppliers

Governments increasingly understand that government expenditure can support local jobs and businesses. As a result, there is a growing push to ensure that local suppliers get a slice of the procurement spend pie. In fact, many local councils have introduced local supplier weightings in their tender evaluation criteria and some state governments have commenced similar policies. For instance, optimising opportunities for local suppliers is part of the Queensland Government’s strategic procurement strategy. Even at the Australian Government level, spend with local suppliers is high. In 2019/20, approximately 96% of the total number of contracts on AusTender were awarded to businesses with an Australian address (Department of Finance, 2021).

4. Small business do win tenders

More than 90% of Australian businesses are small businesses (Australian Small Business and Family Enterprise Ombudsman, 2016). Given the size of this sector, there has been a major shift in government procurement strategy in recent years to ensure that small businesses find it easier to participate in tendering and get a fair share of procurement spending. The Australian Government is committed to sourcing at least 10% of all procurement by value from small to medium enterprises. In 2019/20 approximately 85% of Federal Government suppliers were estimated to be small to medium enterprises and the percentage of contract values awarded to small to medium enterprises was higher than the 10% target – it was actually just over 25% (Department of Finance, 2021). Interestingly, nearly 58% of all Australian Government contracts awarded in 2019/20 were less than $80,000 (Department of Finance, 2021). This dispels any misconceptions about the size and scope of government contracts. The fact as there are contracts of various sizes on offer that can suit every type of business.

5. Government is an attractive customer to have

As part of supporting small business, governments across Australia have adopted policies to make it easier and more attractive to engage in public sector procurement. For some government entities this has included the establishment of payment policies to ensure that small businesses get paid within 30 days after receipt of an invoice for contracts of a certain value, and in some jurisdictions, the payment of penalty interest if the invoice is not paid within this timeframe. Another benefit of having a government client is that unlike the private sector, government entities in Australia generally don’t experience the ups and downs that can happen in business. The fact that they continue to spend, even in periods of economic downturn, make them an appealing customer to have.

Next steps...

Need any more convincing? To take the next steps towards tendering for government projects, register today and start searching with the inventors of electronic tendering, Tenders.net, to find out about the government opportunities that best suit your business.

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