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The federal government has moved to raise the threshold for SME participation in defence contracts.
Commonwealth Procurement Rules have been updated to enable Defence contracts valued up to $500,000 to be offered exclusively to SME suppliers, either on an individual basis or collectively via a tender process.
The amendment, set to take effect on 1 July 2022, represents a 150 per cent increase to the existing threshold of $200,000.
The amendments follow the completion of the Australian Standard for Defence Contracting and Defence Procurement Review.
Finance Minister Simon Birmingham noted the benefits of the revision for the local industry and in supporting the broader push to bolster sovereign industrial capability.
“We’re backing Australian small and medium businesses to get more work by giving them access to more defence procurement opportunities,” he 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 reflected on the benefits for competition.
“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 procurement projects over the 2021-22 financial year totalled approximately $37.4 billion.
Changes to the procurement rules come amid the ‘In our own backyard’ media advertising campaign launched earlier this month, pushed out across television, radio and social media.
The campaign aims to showcase Australia’s manufacturing prowess throughout history in a bid to kindle interest in a career in the local defence industry.
[Related: Defence issues new RFI in search for optimum T&E partnership]
Charbel Kadib
News Editor – Defence and Security, Momentum Media
Prior to joining the defence and aerospace team in 2020, Charbel was news editor of The Adviser and Mortgage Business, where he covered developments in the banking and financial services sector for three years. Charbel has a keen interest in geopolitics and international relations, graduating from the University of Notre Dame with a double major in politics and journalism. Charbel has also completed internships with The Australian Department of Communications and the Arts and public relations agency Fifty Acres.
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