ICT SME participation scheme standard
Introduction
A Queensland Government Enterprise Architecture (QGEA) standard provides a statement of mandatory requirements that agencies are expected to comply with. This standard applies to all Queensland Government departments (as defined by the Public Sector Act 2022) and agencies subject to the Queensland Procurement Policy (QPP).
Accountable officers (not already in scope of the Public Sector Act 2022) and statutory bodies under the Financial and Performance Management Standard 2019 must have regard to this policy in the context of internal controls, financial information management systems and risk management.
Other government entities such as government owned corporations who are not covered by the above, are encouraged to participate in the ICT SME participation scheme policy and contribute to achieving economic, environmental and social objectives through targeted ICT procurement spend.
For more information see:
Please see the Applicability of the Queensland Government Enterprise Architecture (QGEA) for further information.
The purpose of this standard is to describe the procurement processes to be used by agencies when engaging with Queensland small and medium enterprises (SMEs). This standard should be read in conjunction with the ICT SME participation scheme policy.
This standard also provides guidance, aimed at government buyers, to highlight the importance and benefits of doing business with SMEs. This is consistent with principle 2 of the Queensland Procurement Policy 2023.
Key policy changes since the previous version of this standard:
- the Queensland Governments Buy Queensland approach makes Queensland jobs the first priority and is increasing opportunities for Queensland SMEs to supply to the government.
- from 1 July 2020, all agencies subject to the QPP must contribute to a collective 25per cent target of government procurement spend by value from Queensland SMEs. The target will increase to 30 per cent by 30 June 2022.
to support these approaches, the ICT SME participation scheme policy and associated standard will now only apply to Queensland SMEs. A Queensland SME means an SME that has registered its main business location as Queensland, with the Australian Business Register.
Audience
This document is primarily intended for departmental and agency staff working in the areas of procurement, general ICT and project management.
Scope
This standard covers the relevant definitions, driving principles, procurement processes and tools required.
Use of keywords
This document contains mandatory and guidance elements. Mandatory elements are indicated by the words will, will not, must, or must not. All other elements are guidance.
The following is a summary of the mandatory elements of this document.
Element | Section of this document |
|---|---|
You must demonstrate that you have undertaken a market assessment to identify appropriate SMEs by obtaining offers from at least 1 Queensland SME for new procurement opportunities up to a value of $250,000 (incl.GST) where practical. | 5.1 2 For example, if 2-3 quotations are required |
All formal tenders must include the relevant questions confirming Queensland supplier SME status in their Response Schedules. | 5.2 Formal approach to market ITO |
Contract Managers must ensure that contracted SME payments have occurred. | 5.4 Auditing prime contractors |
If you are buying from a volume discount arrangement you must apply the SME policy as the arrangement has not been market tested. E.g. Sophos software products (ICTSS.0904) or Trend Micro software products (ICTSS.0905) are sold via nominated resellers and are not market tested. | 5.5 Procuring from an existing ICT panel or standing offer arrangement |
If you are buying from a supplier list arrangement you must apply the SME policy as the arrangement has not been fully market tested. E.g. The ICT Services Panel (ICTSS13.03B) was established on a capability and not a pricing basis. |
Background
The Queensland Government is committed to assisting Queensland SMEs to access and win government business for the supply of products and services.
SMEs contribute significantly to the Queensland economy. In fact, SMEs employ around 67 per cent of Queensland's total private sector workforce[1]. Additionally, small businesses (those employing less than 20 people) make up 97 per cent of all business in Queensland and employ more than 914,000 people which is 44 per cent of all private sector workers[2].
The ICT SME participation scheme standard is subject to and limited by other legislation, policy and agreements including but not limited to the following:
- Queensland Procurement Policy 2021
- Queensland Government priorities
- QGEA ICT SME participation scheme policy.
Agencies are also encouraged to support Queensland SMEs to engage more effectively with the Queensland Government through the SME and Indigenous Access Incentive:
Government can directly engage Queensland SMEs and Indigenous SMEs in the provision of ICT solutions/and or services up to $500,000 (incl.GST) that demonstrate value for Queensland in addressing government priorities.
This will also support the Queensland Governments commitment to the Queensland Indigenous Procurement Policy (QIPP).
What is a Queensland SME
The Queensland Procurement Policy 2021 sets out the definition of an SME as outlined by the Australian Bureau of Statistics. An SME is therefore defined as any business employing less than 200 people[3].
- A business is a single legal entity such as a registered company, partnership, trust, sole proprietor, religious organisation, government department or any other legally recognised organisation which provides products or services. Each business Australian Business Number (ABN) is regarded as a single business. Size is determined by the number of employees under an ABN.
- The ICT SME participation scheme policy and associated standard will only recognise and be applicable to Queensland SMEs. As per the whole-of-government SME procurement target, Queensland SME means an SME that has registered its main business location as Queensland, with the Australian Business Register
- For the purposes of this policy and standard, people include both employees and contractors employed by the business.
- For clarity, all SMEs whose main business location is not within Queensland will not be eligible for the incentives under the ICT SME participation scheme policy as outlined in sections 5 and 6 of this document, with the following exception:
- The SME and Indigenous Access Incentive applies to Indigenous SMEs across Australia and is not restricted to their main business location being in Queensland.
Principles
The following principles are a set of ambitions or values that agencies should aspire to when undertaking any ICT procurement process to assist Queensland ICT SMEs to access the Queensland Government market.
The information in this section is relevant for engaging SMEs more broadly. More information on how to increase opportunities for SMEs is provided in the SME Procurement target guide released by the Office of the Chief Advisor Procurement (OCA-P).
Driving better value for money
Decisions in government purchasing are on assessments of value for money which require a careful comparison of whole-of-life costs, benefits, fitness for purpose, alternatives and the outcome being sought.
SMEs can offer equivalent, if not better, value for money in the following ways:
- Innovation SMEs can be in a better position to offer alternative solutions which improve an organisation's ability to carry out its business effectively.
- Flexibility due to size, location and often a multi skilled workforce, SMEs can be in a position to quickly adapt to your changing requirements.
- Customer service to maintain viability, SMEs are often highly customer focused, which can lead to better relationship management and service outcomes.
- Industry development government business can make direct contributions to the social, economic, financial and cultural environment of a region.
- Increased local competition encouraging SME participation in government purchasing helps maintain a viable network of suppliers leading to better value for money outcomes.
- Non-cost factors SMEs can provide a more bespoke service enabling greater fitness for purpose, quality, delivery, service, support and sustainability impacts.
Communication is critical
Effective communication is important when dealing with suppliers, especially with SMEs. Ways in which to better communicate with SMEs are:
- Increase transparency continue advertising Invitation to Offers (ITO), especially higher value needs, as a minimum and invite local suppliers to respond. Alert local suppliers to view tenders on the QTenders website. Provide feedback to suppliers who were unsuccessful in their bid for business.
- Consult with SMEs inform SMEs of changes to government policies and programs that may affect how they respond to requests for products and services. Actively find out about the issues that affect SMEs and their industry sector.
- Reflect the market perform early market engagement[4] by consulting with SMEs and tailor request for quotations and tender documents to suit the industry sector so that it is relevant and understood by suppliers in that sector.
- Promote easy access structure requests for quotations and tenders in a simple and coherent manner. Provide contact points within an agency structure so that SMEs are informed of where to get information about business opportunities, policies and programs.
- Appropriate and timely information provide SMEs with sufficient information and time to prepare quotation and tender responses. An SME may not have a dedicated marketing or tender preparation team within their business and may have to engage outside assistance.
Careful procurement planning
Procurement planning that considers the impact on SMEs will influence whether SMEs will bid for and be successful in securing government business. Ways in which to promote SME participation through appropriate procurement planning are:
- Consider the different purchasing requirements across government different agencies within the government will have different needs. While a single supplier may meet the needs of one agency, other suppliers may more appropriately meet the purchasing needs of a different agency. Consideration of the different requirements across government can provide opportunities for participation by a wider segment of SMEs.
- Consider unbundling large (high value) contracts SMEs may be locked out of government opportunities that involve large aggregated contracts. Consideration could be given to facilitating SME participation through development of smaller contracts within an overall supply requirement, and whether there are contract segments that maximise opportunities for SMEs.
- Identify SME opportunities through the supply chain consider whether SMEs have opportunities to supply products and services as subcontractors or as part of a consortium. Ensure there is adequate time in the quotation/tender period for SMEs to investigate these types of arrangements, form consortium and to prepare a response. For example, SMEs tend to place greater emphasis on quality and service differentiation and innovation; they are more opportunistic; more cash-focused; and more oriented towards short-term decision making. A comprehensive mapping of local SMEs is a useful exercise to identify small businesses capabilities and determine which businesses could benefit most from the opportunity to participate in local supply chains. Local SMEs may be disadvantaged by existing/traditional procurement practices.Officers within ICT Strategic Sourcing can provide assistance in identifying SMEs and their suitability for partnering. They can be contacted by emailing ICTStrategicSourcing@qld.gov.au
- Promote government business opportunities advertise business opportunities wherever possible and consider the notification of upcoming requirements on the forward procurement schedules section of the QTenders website.
- Consider more flexible payment terms SMEs often struggle with cash flows within their business. The use of smaller, more frequent milestone payments during a project will assist SMEs in managing their financial position. Government buyers in scope of the Queensland Government on-time payment policy must ensure that small business customers are paid within a maximum of 20 calendar days. All other government buyers are encouraged to follow this policy.
Consider time and cost
A request for quotation or tender that is too complex will add significant time and cost to SMEs and may discourage them from bidding. Conversely, allow sufficient time for SMEs to respond to opportunities, particularly if they need to form relationships with other suppliers for sub-contractual or consortium arrangements.
Ways in which agencies can minimize time and cost incurred by SMEs are:
- Prepare simpler documents ensure requests for quotations and tenders are clear, concise and easy to understand. Provide templates to guide respondents where applicable.
- Adopt appropriate risk measures ensure the quality assurance requirements and the level of insurance cover are adequate to provide protection in line with the identified risk rating following the appropriate risk assessment.
- Streamline the purchasing process simplify internal purchasing processes to reduce costs for government as well as suppliers.
- Collaborate with other agencies when going to market to bundle tender processes into the one market engagement to reduce the impact on SMEs responding to tenders.
Applying the SME participation scheme policy
Government Buyers must seriously consider how their procurement processes will ultimately contribute to the Queensland Governments collective target of spend by value from Queensland SMEs.
Your approach to market will depend on your agency's procurement policies and procedures. Financial thresholds and risk profiles vary across agencies, but for procurement of ICT solutions and/or services up to $500,000 (incl.GST), agencies are encouraged to apply the SME and Indigenous Access Incentive.
For the purposes of applying the ICT SME participation scheme policy, a procurement process is categorised as either an informal or formal approach as outlined in the diagram below.
The ICT SME participation scheme can be applied in these two ways:
- informal approach to the market by obtaining Request for quotations (RFQ) Including considering applying the SME and Indigenous Access Incentive where appropriate
- formal approach to the market through a full tender process and ITO.
Informal approach to market RFQ
For example, if two or three quotations are required:
You must demonstrate that you have undertaken a market assessment to identify appropriate SMEs by obtaining offers from at least one Queensland SME for new procurement opportunities up to a value of $250,000 (incl.GST) where practical.
Consider applying the SME and Indigenous Access Incentive (one quotation)
Refer to section 'SME and Indigenous Access Incentive'.
Set-Asides
In line with the ICT Category Strategy 2020, government buyers can reserve certain government procurement contracts for Queensland SMEs; specifically, for certain subcategories or procurement's where only Queensland SMEs will be invited to participate:
- for procurement up to $30,000 (incl.GST), and depending on individual agency policy, agencies are able to obtain only one quote as long as it is from a Queensland SME. If this approach is unsuccessful, then non-SMEs can be considered, with preference given to Queensland non-SMEs.
- for procurement up to $100,000 (incl.GST) and depending on individual agency policy, agencies are able to obtain only two quotes as long as they are both from a Queensland SME.
If this approach is unsuccessful, then non-SMEs can be considered, with preference given to Queensland non-SMEs.
Formal approach to market ITO
All formal tenders must include the relevant questions confirming Queensland supplier SME status in their Response Schedules.
During offer evaluation, you should allocate a minimum of 10 per cent of the 100 per cent total evaluation criteria for the purpose of weighting Queensland SMEs vs non-Queensland SMEs and non-SMEs.
If the offer or is a Queensland SME, they receive the full 10 per cent allocated.
If they are a non-Queensland SME or non-SME, they receive 0 per cent.
Or, if the offer or is a prime contractor engaging Queensland SME sub-contractors to deliver the work, they can receive a portion of the 10 per cent weighting depending on their level of SME participation.
The weighting they receive is calculated on the net proportion of the contract which is to be paid to SMEs.
Please refer to Appendix A for advice on how you can calculate their level of participation.
Exemptions to the SME participation scheme policy
Exemptions to the scheme apply where:
- the government buyer can demonstrate that offers cannot be obtained from SMEs that are competitive on price, quality or delivery
- the government buyer intends to use a sole supplier, limited supplier, existing market tested panel arrangement (including standing offer arrangement), or other processes where pricing has been provided and/or evaluated
- an employment or labour hire firm is used - these firms do not qualify for SME participation advantages.
Auditing prime contractors
Prime contractors can be audited. Unexplained changes to the contracted SME commitment can be subject to a payment withholding process.
Contract Managers must ensure that contracted SME payments have occurred.
This can be done through the following steps:
- accepting the prime contractor assertion of payment.
- requesting evidence from the supplier to support their contracted SME contribution compliance, e.g. proof of payment.
- auditing the prime contractors financial records.
Agencies should report non-compliance to ICTStrategicSourcing@qld.gov.au
Procuring from an existing ICT panel or standing offer arrangement
Your requirements may depend on the type of arrangement you are buying from and whether it has been market tested or not, for example:
- if you are buying from a volume discount arrangement you must apply the SME policy as the arrangement has not been market tested. E.g. Sophos software products (ICTSS.0904) or Trend Micro software products (ICTSS.0905) are sold via nominated resellers and are not market tested.
- if you are buying from a supplier list arrangement you must apply the SME policy as the arrangement has not been fully market tested. E.g. The ICT Services Panel (ICTSS13.03B) was established on a capability and not a pricing basis. All SMEs are identified on this panel.
- if you are buying from a specific arrangement you do not need to apply the SME policy as it was already applied during the panel establishment process. However, where an SME belongs to a panel they should be considered when requesting quotations and SME weightings should be applied to evaluations. E.g. Information Technology as-a-Service (ICTSS.1804) or Infrastructure as-a-Service (ICTSS.1307).
If in doubt as to what type of arrangement you are procuring from, government buyers should contact the relevant arrangement owner to ascertain if the SME policy was applied at the establishment of that arrangement. Buyers Guides would normally include this clarification of whether the arrangement was market tested.
The establishment of a new panel arrangement is subject to the ICT SME participation scheme policy. To help you determine what type of arrangement you are procuring from, please refer to the accompanying Buyers Guide and/or contact the Contract Manager.
Reporting requirements
There is only one specific reporting requirement for agencies SME and Indigenous Access Incentive, please refer to the table below. Each agency is accountable for contributing to the aggregate SME target, progress against this target will be reported from the whole-of-government category spend data.
Threshold | Market Approach | Requirements from the market | Reporting requirements |
|---|---|---|---|
Up to $30k (incl. GST) | Set-aside (reserved for QLD SMEs only) | Need at least 1 quote from a QLD SME | None |
Up to $100k (incl. GST) | Need at least 2 quotes from QLD SME | None | |
Up to $250k (incl. GST) | Informal approach to market E.g. RFQ | Must obtain offers from at least 1 QLD SME for new procurement opportunities up to a value of $250,000. | None |
ICT Formal approach to market Any value | Formal approach to market E.g. ITO | All formal tenders must include questions whether a supplier is a QLD SME. A minimum of 10% evaluation criteria should be attributed to whether the supplier is a QLD SME. | None |
ICT SME and Indigenous Access Incentive Up to $500k (incl. GST) | Direct approach to market E.g. Sole supplier sourcing | Can directly engage a QLD SME if they demonstrate value for Queensland in addressing government priorities. Can directly engage any Indigenous SME | Please refer to section 6.3 |
SME and Indigenous Access Incentive
To further support the intent of the ICT SME Participation Scheme policy to provide Queensland SMEs and Indigenous suppliers with greater access to the Queensland Government market, subject to individual agency procurement guidelines, government agencies can directly engage Queensland SMEs and Indigenous suppliers for the provision of solutions and/or services up to $500,000 (incl.GST) that demonstrate value for Queensland in addressing government priorities.
The Queensland Indigenous Procurement Policy (QIPP) provides a whole-of-government framework to increase Queensland Government procurement from Aboriginal and Torres Strait Islander suppliers to at least three percent of addressable spend by 2022.
For the purposes of the QIPP, an Indigenous business is one that is at least 50 per cent owned by an Aboriginal person/s and/or a Torres Strait Islander person/s.
To further support the achievement of this target and in recognition that the vast majority of Indigenous suppliers would be SMEs; Government Buyers are encouraged to broaden their application of the SME Access Incentive to Indigenous suppliers from across Australia.
For clarity, the engagement of a supplier under the SME and Indigenous Access Incentive does not waive the requirement for the buyer to obtain all necessary approvals that may be required by your local agency procurement and expenditure policies or procedures.
In scope for the SME Access Incentive
All ICT and technology related procurement for new initiatives and/or the updating/replacement of an existing solution or service.
Out of scope for the SME Access Incentive
This incentive cannot be used by an SME or Indigenous suppliers reselling standard offerings, products or upgrades from a non-SME manufacturer or provider (off-the-shelf or as-is and, without demonstrating significant value-add).For example, an SME or Indigenous supplier reselling standard Amazon Azure hosting or Microsoft Office 365 product would not be eligible for this incentive.
SME Access and Indigenous Incentive reporting requirement
ICT Strategic Sourcing will not be involved in the assessment, selection or approval of specific ICT solutions and/or services up to the value of $500,000 (incl.GST) as submitted by SMEs but can provide guidance on the application of the SME and Indigenous Access Incentive. Agencies will however need to report to ICT Strategic Sourcing, all awards made using the SME and Indigenous Access Incentive. Agencies will need to report:
- that the solutions and/or services have been submitted by a genuine Queensland SME as per the definition provided in 3.1. or an Indigenous supplier as per the definition in the QIPP.
- the contract type used, as per the QITC framework.
The following reporting requirement is contained in the ICT SME participation scheme policy:
The reporting of awards made to SMEs providing solutions/and or services where the SME and IndigenousAccess Incentive has been applied, are to be directed to ICTStrategicSourcing.qld.gov.au on a quarterly basis. In order to assess the benefits of this change to the SME Scheme Policy, ICT Strategic Sourcing will require the following information:
- date of award
- total value of award
- supplier name
- SME status
- Indigenous status
- overview of the solution/service
- key business benefit of the delivered solution/service.
Applying the SME and Indigenous Access Incentive
- Document the scope of the procurement need this should be a simple problem statement which requires a business solution thus allowing an SME to propose a suitable solution
- An approach can be made to a minimum of one SME with a problem statement
- Evaluate the SME response in line with the Queensland Procurement Policy, and if appropriate initiate workshop and scoping session to further clarify suitability of the solution
- Any award to an SME should be based on a business outcome that provides the best value for the Queensland Government
- The department can elect to use one of the QITC contract types but for simplicity, supplier terms and conditions should be considered for low risk procurement valued at $100,000 or less
- The department to report to ICT Strategic Sourcing on all awards made to SMEs using the SME Access Incentive as per the requirements in section 6.3.
SME Access and Indigenous Incentive and the Queensland Procurement Policy
A new version of the QPP came into effect on 1 February 2021. The QPP aims to further increase the social, environmental and economic benefit that can be delivered through procurement. The policy emphasises the use of a Local Benefits Test (LBT), maximising Queensland supplier opportunities to participate, supporting regional and remote communities, and stimulating the ICT sector and driving innovation.
The application of the LBT to significant procurement activities, should be considered as a separate requirement to that of the ICT SME Participation Scheme policy; noting that significant procurement thresholds will vary depending on the agency[5]. The ICT SME Participation Scheme policy requires the application of a minimum 10 per cent weighting for Queensland SMEs as per advice in section 5.2 and this applies in addition to the LBT weighting. The aggregate of both weightings would therefore contribute to the total score for each supplier who has submitted an offer.
The SME Access and Indigenous Incentive on the other hand, could be an automatic sole supplier justification, however, this is subject to individual agency procurement guidelines. The operation of the SME and Indigenous Access Incentive does not rely on the evaluation of multiple offers, as it allows the agency to procure on the basis of only receiving one offer. However, it is recommended that agencies use a methodology for evaluating individual offers, that includes the consideration of local benefits in line with the QPP, if the procurement is considered significant by the agency. Agencies must use only Queensland SMEs when applying the SME and Indigenous Access Incentive.
Management of procurement related risk
There should be regular and ongoing dialogue between the agency's procurement function, business areas, and senior management to facilitate understanding of, and application of risk management practices when procuring ICT products and services.
Appendix A SME participation scheme calculation
Calculate prime contractors participation percentage weighting
In formal approaches to the market, prime contractors who are non-SMEs or who are not Queensland SMEs but include a Queensland SME contribution will receive proportional weighting in the evaluation of their offer.
You can calculate the SME participation percentage weighting using the following formula:
(Amount of Queensland SME contribution / Total amount of offer) x 10
The following examples have been provided to assist you:
| SME, Non-SME prime contractor | Amount of SME contribution | Total amount of offer |
|---|---|---|---|
Offer A | Non-SME prime contractor | $112,500 | $125,000 |
Offer B | Non-SME prime contractor | $4,500 | $ 90,000 |
Offer C | Non-QLD prime contractor | $30,000 | $100,000 |
Offer D | QLD SME | $110,000 | $110,000 |
Offer E | Non-SME prime contractor | $0 | $115,000 |
You would calculate the SME percentage weighting as follows:
Offer A (112,500 / 125,000) x 10 = 9
Offer B (4,500 / 90,000) x 10 = 0.5
Offer C (30,000 / 100,000) x 10 = 3
Offer D (110,000 / 110,000) x 10 = 10
Offer E (0 / 115,000) x 10 = 0
Therefore, out of the maximum 10 per cent SME evaluation weighting, offers would receive the following:
- Offer A would receive 9 per cent
- Offer B would receive 0.5 per cent
- Offer C would receive 3 per cent
- Offer D would receive the full 10 per cent
- Offer E would receive 0 per cent
Following this, your remaining 90 per cent evaluation criteria should be applied as normal.
- Advancing Small Business Queensland Strategy 2016-20
- https://www.publications.qld.gov.au/dataset/queensland-state-of-small-business 2019-20
- A small business is defined as a business employing less than 20 people. A medium business employs 20 or more people but less than 200
- https://www.qld.gov.au/gov/early-market-engagement
- Local benefits test threshold list