Government tendering processes must be reformed so smaller companies can secure government contracts after they successfully develop products, says ACT senator David Pocock.
Pocock said businesses that secure government grants to develop useful products were often obstructed from gaining access to departments that could potentially use the new technology.
“One company said the government officials responsible for administering the grant they had received to help build a world-leading AI-based capability then refused to put them in contact with the government officials responsible for implementing precisely that capability. This makes no sense,” Pocock wrote in an article published by InnovationAus.
“Of course, we need integrity in procurement processes and having received a grant is no guarantee of a company’s suitability for a government contract thereafter. But shouldn’t governments at least consider using the products they have helped to fund?”
Pocock said that there was a history of larger companies structuring operations so that they could win the work and then subcontract elements of the project to other entities that were smaller.
He said there are examples of companies dependent on securing government work through a larger entity before they grew large enough to be able to win work themselves.
“One local firm said when they were starting out, 75% of their work for the government was delivered via larger companies that took a 25-45% margin,” Pocock said.
“Eventually, they grew to where they could win contracts themselves and now 100% of their contracts are direct with the government.
“This company was always offering the same capability, but now there isn’t another bigger, more established company charging a surcharge of up to 45% of the value of the contract to function as an intermediary between them and the government.
Pocock wrote of a “pattern of behaviour” where large companies set up SME arms and majority Indigenous-owned subsidiaries to make themselves eligible for procurement opportunities targeted at SMEs and Indigenous-owned companies.
“PwC Indigenous Consulting, for instance, has won $51.81 million in AusTender-listed government contracts since the Indigenous Procurement Policy was introduced in 2015,” Pocock wrote.
“We have government-wide procurement targets for Australian SMEs in our Commonwealth Procurement Rules (CPRs). But we don’t have a process in place to guarantee that the public servants making the procurement decisions actually know whether or not they are dealing with an Australian SME when inviting a company to bid on — or when awarding — a government contract.”
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