What does the government buy?
The Australian Government is a large potential market for businesses of all sizes.
From advertising and cleaning services to engineering and office equipment, and from training and project management to research and recruitment—Australian Government organisations purchase a wide variety of goods and services from the private sector.
How does the Government usually buy these things?
The Australian government uses a range of different procurement methods to meet its requirements. These are generically known as an Approach to Market (ATM).
Procedural rules apply to procurements valued above $80,000, unless covered by a specific exemption. You can expect these procedures to be applied on a consistent basis by all organisations.
The procedures are based on an underlying presumption that there will be an open approach to the market, unless certain limited circumstances apply. They allow for the following procurement methods, which are explained in the table below:
- open tender
- limited tender
Range of Procurement Methods
Open to any business that can satisfy the requirements. An Open Tender is advertised on AusTender as an Approach to Market.
Government organisations use an open Approach to Market to publicly invite all potential suppliers to bid for the work:
- interested suppliers may respond by providing the required information
- all responses are evaluated against the stated selection criteria
- the preferred supplier is then selected.
Under a Limited Tender the ATM is open only to those potential suppliers that are invited to submit a response. When applying this procurement method, some of the procedural rules that are relevant to open tendering are not required.
This method is common for procurement below the relevant thresholds, or from existing arrangements such as a Standing Offer.
When contracting over the threshold amounts, Government organisations can only use the Limited Tender approach when their circumstances are permitted under a Limited Tender Condition, or by an Exemption. A list of these is set out in the Commonwealth Procurement Rules (paragraph 10.3 and Appendix A respectively).
Is every government purchase advertised and can any business respond?
Generally speaking, all Government requirements valued above $80,000 are advertised publicly via AusTender and are open to any business that wants to respond. This approach encourages fair competition and helps achieve the best value for money. There are some exemptions from this rule.
Low value purchases do not have to be advertised publicly.
What is AusTender?
AusTender is a free procurement information system operated by the Australian Government. It provides centralised publication of Australian Government business opportunities, annual procurement plans and contracts awarded.
If you have registered as a user on AusTender, AusTender can automatically match business opportunities with the areas of interest that are specified in the profile for your business when you registered. You will be sent an email summarising ATMs that match your profile along with links to download the ATM documents and details about who to contact if you have any questions about the opportunity.
You will find all open approaches to the market advertised online through AusTender (www.tenders.gov.au).
There are a number of basic categories of information listed on AusTender:
- Pre-release Notices
- Closed and Current Approaches to Market
- Contract Notices
- Standing Offer Notices
- Closed Multi-Use Lists
- Annual Procurement Plans.
Search functions on AusTender help you identify individual tenders or contracts which may be of interest. For example, you can search for relevant business opportunities based on a variety of indicators including the organisation name, category of goods or services, or the closing date for submissions.
There are also links to many related Government organisation sites, procurement policy information, business.gov.au, and State and Territory Government sites.
How can I get information from AusTender?
One of AusTender’s most useful features for any potential supplier to government is the subscription service that allows you to register your area of business interest. You can then receive free automatic email notifications of the latest opportunities as they are advertised. Depending on the organisation involved, you may also be able to:
- view and download tender documentation
- lodge submissions in response to market approaches in a secure electronic environment.
- When you register with AusTender, it is important to specify the widest range of relevant product categories to make sure you are notified of all possible opportunities.
You can register for AusTender at https://www.tenders.gov.au/. Registration is free.
Make sure to include a wide range of relevant key words in your registration profile so that the system can send you email alerts containing links to ATMs that may be suitable for your business.
Can I find out when the government wants to buy something?
All open ATMs are published on AusTender which is free to join and use.
If you are invited to participate in a limited tender, you will be contacted by the Government organisation with the details. These procurement processes only happen in specific circumstances.
Government organisations may publish advanced notice of their longer term procurement plans or via an Annual Procurement Plan which is published on AusTender or on their web sites.
You may also decide to subscribe to a paid tender search service.
It may be useful to cultivate sound professional working relationships with potential Government users of your goods and services so that they are aware of the capabilities of your business. For example, many government organisations with standing offers may invite their suppliers to provide information about their goods and services for distribution to other government organisations or they may conduct supplier expos.
Can anyone put in a response to an ATM?
Yes, if the ATM is classed as ‘open.’ Any business that considers it can meet the requirements is able to respond.
For a procurement valued below $80,000, the Government organisation may invite only a limited number of potential suppliers to respond to the ATM.
For a procurement from a standing offer, the Government organisation may choose to invite one or more businesses that are appointed to that standing offer to respond to the ATM.
Do I have to have an ABN to respond to an ATM?
Although you can run a business without an ABN, it is highly recommended you have one. Getting an ABN is free, and can make running your business easier in the future. For example, if you need to register for Goods and Services Tax (GST) now or in the future, you'll need an ABN first.
Without an ABN, anyone who pays you, including other businesses or a Government organisation, must withhold 49% from payments they make to you for tax purposes.
Do I have to be registered for GST to respond to an ATM?
It is compulsory under the taxation legislation for your business to register for GST if it has a current or expected GST turnover of $75,000 pa or more ($150, 000 pa or more for non-profit organisations).
The Australian Government buys from micro and small businesses that are not registered for the GST because they are below the required registration threshold.
Do I have to be a company to respond to an ATM?
No you do not have to be a company to sell to the Australian Government.
Do I have to be Australian to respond to an ATM?
No you do not have to be Australian to sell to the Australian Government.
In extremely limited situations relating to procurements with national security implications, you may be required to hold a security clearance in order to provide goods and services to a security organisation.
Do I have to have insurance to respond to an ATM?
That depends on the type of insurance, the value of the procurement and the risk assessment of the Government organisation that is doing the procurement. It is an increasing practice within the Australian Government to ask for proof of coverage of a specific risk if it is identified, but not to require broad insurance cover.
It is your decision, as the business owner or manager whether you want to have insurance and if so, the type and amount of insurance that you think is suitable for your business. Some common types of insurance that potential suppliers may like to consider include public liability insurance, product liability insurance, professional indemnity insurance and general business insurance.
If your business holds appropriate insurances, this may reduce risks to the Australian Government in dealing with your business, and thus represent better value for money.
Workers Compensation Insurance
Workers compensation insurance is compulsory by law in all states and territories of Australia. Most ATMs have a requirement for the supplier to comply with Australian laws, and this would include your business having the necessary workers compensation insurance.
A Government organisation may require evidence that your business has appropriate workers compensation insurance in place as part of the ATM process or once your business has won a contract.
You can find out more about workers compensation insurance at the following links
- ACT: www.worksafe.act.gov.au
- NSW: www.workcover.nsw.gov.au
- NT: www.worksafe.nt.gov.au
- QLD: www.worksafeqld.qld.gov.au
- SA: www.safework.sa.gov.au
- TAS: www.workcover.tas.gov.au
- VIC: www.worksafe.vic.gov.au
- WA: www.workcover.wa.gov.au
For high value contracts, the Government organisation may require a specific type or amount of insurance, usually as a way of mitigating and managing risks in the contract. If this is the case, the amount and type of insurance required will be clearly stated in the ATM documentation.
If you feel that the amount or type of insurance being required is excessive, you may choose to query this with the contact officer for the ATM to see if there is any flexibility in the requirements.
I’m a small business. Can I compete successfully for Government work?
Most definitely. Many small businesses supply goods and services to the Australian Government. The Australian Government encourages small businesses to compete for Government work and is committed to sourcing at least 10 per cent of procurement by value from small and medium enterprises (SMEs).
Under the Commonwealth Procurement Rules (CPRs), which govern procurement decisions in Government organisations, all potential suppliers to government must be treated equitably based on their commercial, legal, technical and financial abilities to perform required. A Government organisation must not discriminate against a potential supplier due to their size, degree of foreign affiliation or ownership, location, or the origin of their goods and services.
To ensure that SMEs can engage in fair competition for Australian Government business, the Australian Government requires public sector officials to apply procurement practices that do not unfairly discriminate against SMEs and provide appropriate opportunities for SMEs to compete. The Australian Government requires officials to consider, in the context of value for money:
- the benefits of doing business with competitive SMEs when specifying requirements and evaluating value for money
- barriers to entry, such as costly preparation of submissions, that may prevent SMEs from competing for Government contracts
- SMEs’ capabilities and their commitment to local or regional markets
- the potential benefits of having a larger, more competitive supplier base by including SMEs
How can I make sure that the government buyers know my business is here?
Across the Australian Government, there are different areas responsible for buying goods and services from the private sector. This means that for most goods and services there is no single ‘government market’.
It is worth investing the time to get to know the particular business requirements of different Government organisations so you can target the most relevant markets for your business.
There are many steps you can take to understand the needs of Government organisations and market your business as providing attractive, value for money solutions. You may need to invest time and resources to enter the government market with success.
Responding to organisation approaches to the market is not the only way for you to sell to government.
When seeking quotes for smaller purchases, Government organisations may choose to approach suppliers they know. In many respects, you should treat the Government as you would any other client. An active, attractive and easy to find and navigate web site is typically the best marketing tool you can have. If appropriate, you may want to have your business listed in the Yellow Pages or other relevant directory of services. You might want to participate in “meet the buyer” functions or other professional networking opportunities. All of these things make it easier for Government buyers to find your business when they are carrying out their market research.
Just like business development in the private sector, it is important to build relationships and ensure your potential government customers are aware of your capabilities and have confidence in your ability to deliver. A good reputation is an effective way of promoting your services within the government sector. When an organisation is pleased with your goods or services, ask if you can use them as a referee for future opportunities.
To help get you started, here are some basic tips on marketing to and doing business with Australian Government organisations:
- try to identify the organisations likely to need your goods or services, and within those organisations, identify the specific areas that are most likely to make purchasing decisions
- develop your relationships by meeting with the relevant officials, and provide useful information. Information could include your corporate profile, track record, testimonials, website address, pricing schedules and contact details (but don’t flood organisations with advertising material or constant phone calls - cold-calling is not an efficient marketing method)
- make sure organisation buyers know what sets you apart from your competitors
- maintain contact with organisations to ensure you are aware of future prospects
- be aware of any regulatory requirements, conditions, pre-qualifications, licenses etc that you might need to supply to the organisation
- consider whether you can partner with other businesses that sell to government organisations
- build a reputation for providing value for money - bid competitively and wherever possible add extra value within the scope of the requirement. An innovative solution is often welcomed.
Tip: Use the web
A good place to start your research is online. All public tender opportunities to supply to Australian government organisations are listed on a central website, AusTender (www.tenders.gov.au).
Entities also have their own websites that provide information about what they do, and strategic business opportunities are included in their Annual Procurement Plan which can usually be found on the organisation web site and also on AusTender.
There is an A-Z listing of government sites at www.australia.gov.au.
I just received a number of questions about my products and services. Does this mean the government is planning to buy something from my business?
Government organisations sometimes need to gather information from potential suppliers to enable them to make out a business case to buy something, and if the business case indicates a positive return, to get a budget allocation to make the purchase. Unless you were specifically advised that the Government organisation wanted to place an order with you, they were only conducting market research, like any other client would do, before committing to buy something.
If a Government organisation intends to buy something from your business, you are likely to be asked to provide a formal quotation or tender and you should receive a written contract of some type. For lower value, less complex goods and services, the contract may take the form of a purchase order. For non-ICT goods and services up to $200,000, the contract may be the standard contract from the Commonwealth Contracting Suite (CCS). For larger value procurements, the contract may also be a standard contract from the CCS, or may be one that is specific to the Government organisation.
The only exception to this is for very low value procurements, often those made using a corporate purchasing card. In this case, you may be asked to provide a verbal quotation, and will be given the relevant purchasing card number if the Government organisation intends to make a purchase.
If you are not sure whether the Government organisation is merely making enquiries or is actually placing an order with you, be sure to ask.
What is a Standing Offer?
A standing offer (also known as a panel if it involves more than one supplier) is a procurement arrangement with a Government organisation (or group of Government organisations)which specifies a range of goods or services that it expects to purchase over a defined period. Potential suppliers indicate their willingness and ability to supply those goods and services over the defined period at a particular rate/cost, via a response to an ATM (to enter into a Deed of Standing Offer).
A standing offer is usually established for at least three years, and may contain options to extend. Once the standing offer is established, additional suppliers can only be added to the standing offer if it is established as a refreshable panel.
Once a standing offer is established, the Government organisation can contact businesses that are appointed to the standing offer whenever they want to buy goods or services covered by the standing offer. As the open procurement process has already been conducted to establish the standing offer, specific procurements can then be undertaken directly with any supplier on the standing offer.
Should my business respond to an ATM for a Standing Offer?
Being appointed to the standing offer is not a guarantee that the Government will actually want to buy anything from your business or indeed any business appointed to the standing offer. It is important that you conduct your own cost-benefit analysis before pursuing a Standing Offer and include in your considerations, the cost of responding to the ATM, being on the panel for a number of years, and the cost of quoting and remaining job-ready for the duration.
An alternative may be to seek to subcontract to a supplier on the Standing Offer, if appropriate.
How can my business get on a standing offer?
Standing offers are usually established by an open tender ATM. Open tender ATMs are advertised on AusTender and are open for anyone to apply.
Your response to the ATM will be evaluated according to the CPRs, and if your response is considered to represent value for money, your business may be appointed to the standing offer.
You will find more information about how to respond to an ATM in the section “getting selected”
I’ve never sold to government before - can I still win a contract?
There is no requirement to have previous experience supplying to Government in order to win a Government contract.
When assessing the suitability of your business to meet their requirements, Government organisations will naturally take into account the risks associated with dealing with your business. If you do not have previous experience selling to Government, it will be in your best interests to clearly demonstrate the capability and capacity of your business to perform the requirements. You can do this by:
- showing that you have other clients for similar requirements who are satisfied with your business
- identifying the risks that the Government might be taking in dealing with your business and explaining how you will manage and reduce those risks
- applying for smaller Government contracts first to get some runs on the board before applying for larger contracts
- partnering with other businesses that have more experience in supplying to Government until you build experience and reputation, and then subsequently responding to ATMs in your own right
Why would I want to partner with another business?
These strategic business relationships can take a number of forms and can offer substantial benefits. For example, by forming a consortium to pool resources and capabilities and submit a joint bid, you can reduce your tender costs and participate in projects you could not bid for individually.
Probably more common than joint bids are prime/sub-contractor arrangements. Under these arrangements, suppliers who are awarded prime contractor status use sub-contractors to perform some or all of the services required by the Government organisation. Developing relationships with these prime contractors can be a relatively simple and attractive way to access the government market.
The key is to build relationships with other businesses in your industry and related industries, and make full use of your business networks. Networking can be the best way to find other suppliers to work with, but industry associations and business consultants can also act as brokers on your behalf. It is important to plan ahead—it is much easier to develop your relationships before a tender is announced than during the bidding process.
Partnering has risks as well as rewards. You need to understand all aspects of your strategic partnerships to make sure they work for you. It is worthwhile investigating your partner’s record of supplying to government, their capabilities and key staff. Be sure to address issues such as payment arrangements, risk sharing and intellectual property before you enter into contractual arrangements that bind you to your partner.
One of the difficulties associated with marketing directly to government buyers can be how to identify which agencies might use your goods or services, and then finding the appropriate people within those agencies.
AusTender is a useful source of information about who is buying, what they are buying, what they are paying, who is winning contracts and who to contact. AusTender can be accessed at www.tenders.gov.au.
The Government Online Directory
The Government Online Directory is another useful tool to help you understand the structure, roles and functions of the agencies that comprise the Australian Government. It provides functional descriptions of all agencies, including contact details and information on key senior staff.
The Government Online Directory can be accessed at www.directory.gov.au.
Business Entry Point (business.gov.au)
The Business Entry Point provides a wide range of information for businesses, particularly in relation to interactions between business and government. Information includes details about setting up and registering a business, licences and permits, and getting your business online.
Importantly, the website provides links to business opportunities and related information at the Commonwealth, State, Territory and local government levels.
The Business Entry Point also supports a government and business directory, providing contact details for a large number of government and business organisations.
The Business Entry Point can be accessed at www.business.gov.au.
Defence Unsolicited Proposals Gateway
The Department of Defence receives many ‘unsolicited proposals’ from industry due to its unique business requirements. These proposals may range from small, off-the-shelf supply items to more complex capability solutions. Defence has therefore established an Unsolicited Proposals Gateway to provide a single entry point for businesses and individuals to submit their proposals to Defence.
More information, including the types of proposals accepted and processes for lodgement, is available at http://www.defence.gov.au/dmo/DoingBusiness/ProcurementDefence/
Industry Capability Network
The Industry Capability Network is an independently managed non-profit national organisation that introduces local buyers and sellers for the development of effective supply chains using Australian and New Zealand companies. Registering with Industry Capability Network can introduce your products and services to buyers seeking competitive and capable local suppliers.
While there is no obligation for Australian Government procurement officers to use the Industry Capability Network, registering through the network may help you access business opportunities in both the public and private sectors, in Australia and internationally.
The Industry Capability Network has 24 offices located around Australia and New Zealand and all its core services are free of charge. For further information, or to contact your local Industry Capability Network office, go to www.icn.org.au.
The Australian Trade Commission (Austrade) provides practical advice and support, including financial support, to Australian business looking to develop international markets, and can assist in accessing business opportunities in international government procurement markets. For more information, go to www.austrade.gov.au.