The Commonwealth Department of Finance has issued updated guidance for small and medium enterprises (SMEs) competing for government work. The rules matter. They define how much of the $200B+ procurement market must go to SMEs and what barriers are being removed.

Key Points from the New Guidance

• SMEs are defined as Australian or New Zealand firms with fewer than 200 full-time equivalent employees.
• The government has set clear participation targets:
  • At least 25% of contracts by value from SMEs for contracts up to $1 billion.
  • At least 40% of contracts by value from SMEs for contracts up to $20 million.
• Buyers can now directly engage SMEs for contracts up to $500,000 (provided Indigenous procurement requirements are first considered).
• At least one SME must be invited to quote when buyers use major government panels, such as the Management Advisory Services Panel and the People Panel.

‍

What This Means for SMEs

• More opportunities: Large contracts may be broken down into smaller work packages.
• Faster access: Direct engagement rules mean SMEs don’t always need to compete in open tenders.
• A level playing field: Buyers are required to consider barriers that make bidding harder for SMEs, such as costly tender preparation.
• Timely payment: Agencies must pay on time or pay interest if invoices are delayed.

Why It Matters

Government procurement rules aren’t just policy documents. They shape the real opportunities available to SMEs. These changes are designed to increase SME participation, but success still depends on putting forward competitive, compliant bids.

"The government has put real targets in place. Up to 40% of certain contracts must go to SMEs. That’s billions in opportunity. But the rules alone won’t win you work. SMEs still need to submit strong, compliant tenders. That’s where TenderPilot comes in, helping small business translate policy into wins."

‍Tim Chopping, CEO & Co-founder, TenderPilot

‍

These changes are a step in the right direction. They give SMEs more opportunities, faster access, and a stronger mandate for inclusion. But the competition will only get tougher as more businesses look to take advantage.

If you’re serious about winning your fair share, now is the time to get tender-ready.

Join our founding 200, today!

The Founding 200 is our early access group. Members get:

• Locked-in best pricing for life.
• Priority onboarding and support.
• A direct role in shaping TenderPilot’s roadmap.
• Access to exclusive resources and training before public launch.

‍