The newly updated Small and Medium Enterprises and Regional Procurement Policy (Policy) places Small and Medium Enterprises (SMEs) and regional businesses front of mind for Government procurement.


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

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 areas.

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 time.

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% 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 bids.


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 here.

By Holding Redlich partner Scott Alden and associate Victoria Gordon


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