The Australian Government is the largest ICT buyer in Australia, spending an estimated $3.5 billion on ICT through 35,000 contracts each year.

Government contracts are crucial to the growth of many local ICT companies, providing the opportunity to enter new markets, work on innovative solutions and obtain internationally recognisable reference sites.

And yet, navigating the government procurement maze can be a daunting challenge for many small-to-medium businesses (SMEs).

It can be an expensive punt for companies deciding to invest in the required levels of professional indemnity and public liability insurance, develop a costly and time-consuming bid, and after waiting sometimes six months or more for a decision, fail.

So, how can SMEs take a bigger bite of the government spending pie?

According to Rick Bushell, Director of Four Streams Consulting, a Canberra based company focused on helping organisations succeed in the federal government market, there’s no ‘get rich quick approach' for SMEs wanting to win government business.

“Building relationships is the key to obtaining government work and creating successful projects,” he says. “If the first you’ve heard about a tender is when it’s released, it’s probably too late for your company to win the business.”

Judy Hurditch, Executive Director of Intermedium, government ICT market researchers and sales strategy consultants, agrees. “If a supplier learns of an opportunity only when it is put to tender, it is typically already too late. By this time, a supplier has had no opportunity to gain mindshare with the agency, while they can be almost certain that some of their competitors will have.”

The best path to success is to do your homework.

While many SMEs take a scattergun approach to government procurement, a concentrated effort on a small number of agencies will yield the best results.

“Find your ‘best fit’ market segment and then begin to work on opportunities from the very beginning of the sales cycle – that is, be aware of when an agency is likely to commence a scan of the market for the solution you offer, and ensure you’ve already made yourself known to them. This is when agencies are most receptive to new ideas, better ways of doing things and don’t yet have procurement related probity issues to contend with,” Hurditch suggests.

“Invest the time to get to know the particular business requirements of different agencies so that you can better target the most relevant markets for your business,” Bushell adds. “And it’s vitally important that you understand not just your target agencies, but the unique elements of the government sales cycles and procurement processes.”

Bushell stressed that while there were challenges, dealing with government was not all doom and gloom for SMEs. He cited a number of great success stories where SMEs have been able to forge long and profitable relationships with government departments.

A common misconception is that there is a single government procurement market, with a centralised list of suppliers and standard purchasing arrangements, Bushell says.

In fact, this is generally not the case. While the Commonwealth Procurement Guidelines set out the overall framework for Australian Government procurement, individual departments and agencies are largely responsible for their own business decisions and processes.

There are currently more than 100 departments, agencies, authorities and companies subject in some way to the Commonwealth Procurement Guidelines. Within these agencies, there are often many different areas responsible for buying private sector goods and services. This means that there is no one ‘government market' but many agencies effectively operating as separate markets and literally thousands of people across Australia making purchasing decisions on behalf of the government.

Both Bushell and Hurditch suggest that the best bet for start-up or very small SMEs are those agencies that spend less than $20m per annum on the acquisition of ICT goods and services.

“The size and scale of these agencies often make them more approachable,” Hurditch explains. “Smaller agencies often have small ICT areas or may not have a dedicated ICT function at all. These agencies are often looking for specialised solutions, but don’t necessarily know how to approach the market and therefore welcome any positive approaches made by SMEs.”

The message is clear: do your homework. And if you haven’t got the time because you’re too busy out there selling, there are people who can do the homework for you.

How can AIIA help SMEs win government business?
AIIA’s Government Business Taskforce (GBTF) spearheads AIIA's procurement policy development and implementation strategy. Led by AIIA Directors, John Grant (Managing Director of Data#3 Limited) and Lynda Chapman (Managing Director of Avoga Pty Ltd), the taskforce’s key priorities are to improve government business opportunities for members and reduce the cost of participation in government markets.

Visit AIIA’s website for more information or contact Bridget Larsen AIIA’s Government Procurement Policy Manager on (02) 6281 9412.

The issue of unlimited liability in government contracting has been high on AIIA’s agenda for a number of years, and the Association is working with governments in all Australian jurisdictions.

In November 2005, the government released a draft guide, which includes new measures to improve the contractual framework for ICT suppliers. This announcement follows sustained pressure from AIIA since the 2004 release of Better Practice, Better Outcomes, the Association’s report into the effect of government liability policies.

AIIA is also developing a ‘companion guide’ on the treatment on IP in government contracting, which will be launched in April.

AIIA’s innovative partnering program, CollabIT, can provide SMEs partners with experience, capability and capacity to bid for government work that may otherwise be out of reach. For more information on CollabIT, click here.

ONLINE RESOURCES

TenderBytes keeps SMEs informed about ICT tenders across all levels of government, education, and private industry. Subscribers receive a weekly email focused specifically on the opportunities out there for SMEs. A yearly subscription is $320 (plus GST).

Intermedium helps companies sell their services and products to federal and state governments in Australia. Intermedium publishes an annual series of research reports, conducts commissioned research, holds training programs and issues business intelligence newsletters.

Other tender sites include TenderSearch, Tendermatch and TenderLink.

Don’t forget, all public tender opportunities are listed on a central website. Agencies also have their own websites that provide plenty of information about what they do, and may also include current tenders and other business opportunities. There is an A-Z listing of government sites at www.australia.gov.au

Information about the policy framework for Australian Government procurement is also readily available.

Or learn more about AIIA's position on government procurement.

AIIA has created an Export Program in order to encourage growth and exporting within the ICT industry and support member participation in international ICT issues. Read more

AIIA keeps track of international research and reports in the ICT space. Find out more... Read more

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