Gov lays down procurement criteria for 'Australian businesses'

The government has for the first time drawn up an official definition of an Australian business as part of new federal procurement guidance.

To qualify as an Australian business, companies bidding for Commonwealth contracts will have to have local tax residency, be principally operated in Australia and have more than 50 percent local ownership.

If unable to qualify for the latter, businesses can also be principally traded on an Australian equities market.

While the move will not lead to any material change in the federal procurement process, it will allow companies on whole-of-government panels to report their Australian Business status using the new criteria. 

The announcement coincides with the release of a new report named the Broader economic benefits in ICT sector procurement.

According to the report, the tech sector accounted for 15 percent - or around $15 billion - of the $100 billion allocated towards federal contracts in the 2023-24 financial year.

Figures in the report show $4.9 billion of this was spent on computing services; $2.8 billion on aerospace systems and equipment; $1.9 billion on components for information technology or broadcasting or telecommunications and $1.2 billion on software.

Around 43 percent of IT contracts that year – or $6.45 billion – were awarded to small-to-medium-enterprises -- businesses with fewer than 200 employees.

Last July, the government unveiled new targets for awarding contracts to SMEs. 

As part of these, the government is aiming to award a quarter of contracts valued below $1 billion to SMEs.

For contracts valued under $20 million, this target was increased to 40 percent.

Additionally, the definition of SME was broadened to include a business’s ‘associates’, including a parent company, subsidiaries “and any related bodies corporate to the firm” last July.