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Small and medium enterprises (SME) and regional procurement policy for NSW – Government, Public Sector


Small and medium enterprises (SME) and regional procurement policy for NSW

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The policy was updated on 29 June 2020 and aims to increase
participation of NSW SMEs and regional businesses in state
government procurement of goods and services through a range of

The policy objective is to increase SME participation in
supplying to government, including:

  • supporting local businesses, start-ups and innovation and
    primary industries

  • building SME capability to supply to government

  • making supplying to government easy for SMEs

  • listening to local businesses and measuring participation.

By 2021, the NSW Government is aiming to see:

  • more SMEs on prequalification schemes

  • more contracts awarded to SMEs

  • increased spend with SMEs, overall and as a proportion of total
    government procurement expenditure

  • improved capability of SMEs and regional businesses by
    providing procurement advisory services and workshops.


A SME is an Australian or New Zealand based enterprise with
fewer than 200 full-time equivalent (FTE)
employees, and a regional supplier is a business of any size in NSW
outside the Newcastle, Sydney and Wollongong metropolitan

The policy applies to all new government goods and services
procurement activity (excluding construction) from 1 February 2019,
except extensions of contract arrangements existing prior to this

Policy Initiatives

The Policy includes the following initiatives to support SMEs
and regional businesses:

  • SME or regional first

    Where a government agency is permitted to directly
    purchase goods and/or services from a supplier, or directly
    negotiate with a supplier to provide goods and/or services, the
    agency must first consider purchasing from a regional supplier for
    procurement in a regional area. If the procurement is not in a
    regional area, then the agency must first consider purchasing from
    an SME. This initiative applies to all direct procurements,
    including from prequalification schemes and panels, up to a maximum
    value of $250,000

  • SME and sustainability criteria

    For all procurements valued above $3 million, agencies
    must include a non- price evaluation criteria of at least 15 per
    cent, which considers how potential suppliers will support the
    government’s economic, ethical, environmental and social
    priorities of which a minimum of 10 per cent must be allocated to
    SME participation consistent with relevant exemptions in
    International Procurement Agreements. For procurements valued at
    less than $3 million, where an agency seeks more than one quote,
    agencies are encouraged to include a non-price evaluation criteria
    that addresses these government priorities

  • Procurement innovation stream

    Startups and innovative businesses are encouraged through
    the Procurement Innovation Stream to directly engage an SME on
    short term contracts valued up to $1 million and to do
    proof-of-concept testing or outcomes-based trials

  • Purchasing exemptions

    The small business exemption allows agencies to purchase
    goods or services valued up to $50,000 directly from a small
    business, even where those goods or services are available on a
    whole-of-government arrangement. A general procurement exemption
    allows agencies to purchase up to a maximum of $10,000 from any
    supplier, including where there is a whole-of-government
    arrangement in place. These exemptions continue our support for
    local business, small business, sole traders and startups, and
    growing SMEs

  • Pre and post tender briefings

    To assist SMEs compete for tenders and improve their
    success in the future, agencies must provide pre and post tender
    briefings when reasonably requested by SMEs and regional suppliers
    to clarify requirements and provide feedback on unsuccessful


The SME and Regional Procurement Policy demonstrates the NSW
Government’s commitment to support SMEs, build capability and
simplify requirements.

A full copy of the Policy can be found

This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader’s
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
individuals listed.

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