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Minister for Finance Katy Gallagher and Minister for Small Business Julie Collins have jointly announced changes to the Commonwealth Procurement Rules to make it easier for small business to engage with Federal Government projects.

From July, a target will be introduced to source 25 percent of procurements below $1 billion, and 40 per cent of procurements below $20 million, from SMEs. The Government is also raising the SME exemption threshold to $500,000.

The Government is reducing the threshold for procurements that require an economic benefit assessment from $4 million to $1 million, meaning more procurements will be subject to an assessment of the benefit to Australian economy in the context of determining value for money. This is aligned with the messaging from government over the past year regarding Commonwealth procurement needing to satisfy ‘public good’ metrics in addition to value for money.

Commonwealth Supplier Code of Conduct

As part of the introduction of the new Commonwealth Procurement Rules, suppliers will now have to comply with a new Commonwealth Supplier Code of Conduct, which takes effect from 1 July 2024.

The new code is a key measure to strengthen supplier behaviour and it places a positive duty on suppliers to take proactive action to prevent breaches of the code, both by employees and subcontractors.

The code is broad reaching and covers ethical behaviour; corporate governance; business practices; health and safety, and employee welfare. Suppliers will be required to demonstrate they have the appropriate policies and frameworks in place regarding ethics, governance and accountability to comply with the expectations. It also includes a requirement for suppliers to periodically monitor and assess compliance with the code and provide evidence of this if requested.

Generally, the code is intended to support a high standard of ethical behaviour and is explicit that suppliers should emulate the values of the Australian Public Service if they are conducting work for the Commonwealth. Given a driver of the new procurement rules is greater access for small business, it should be noted that small firms will still need enough sophistication to demonstrate they have all the appropriate policies and monitoring practices in place to respond to the code.