Commonwealth Lifts SME Procurement Targets

The Commonwealth has paired higher SME participation targets with a practical change that matters on day one of bidding: the SME exemption threshold has been lifted to $500,000 under CPR Exemption 17. In plain terms, agencies now have clearer latitude to buy directly from small and medium enterprises for suitable procurements up to that value—within probity and value-for-money guardrails.

The policy signal is two-track:

1) Targets up; access by design

SME participation targets have been lifted—25% for procurements under $1 billion and 40% for procurements under $20 million—and entities are expected to plan approaches that make those targets realistic. That means more use of lots (breaking scopes by region or workstream), staged delivery when risk is uncertain, and plain, testable requirements so smaller firms can enter without guesswork.

2) Exemption ceiling raised to $500k

By moving the SME exemption to $500,000, buyers can transact more efficiently with capable SMEs where competition is still preserved (e.g., multiple quotes, documented value tests) and where the market and risk profile justify it. This is not a blank cheque: agencies must still demonstrate value for money, keep records that explain the decision, and apply proportionate risk and compliance settings.

What changes for suppliers?

• More credible lanes to prime. Right-sized packages and the higher exemption open room for SMEs to lead discrete scopes—minor works, pilots, regional service lots, specialist advisory—instead of sitting behind a prime by default.
• Proof over prose. With targets in play, evaluators look for verifiable evidence: outcome-based case studies (time, cost, quality, safety), named personnel who will deliver, and whole-of-life pricing that surfaces assumptions. “Local capability” lands when tied to mobilisation plans and regional delivery arrangements.
• Proportionate compliance and payment terms. Guidance steers entities to match insurances, accreditations and security asks to the actual risk—and to set payment terms that don’t exclude smaller balance sheets. Where heavier settings are unavoidable, agencies should document the risk logic so bidders can price it.

Panels remain useful but are being stewarded—secondary competition at call-off, transparent selection criteria, and refresh cycles to avoid closed shops. If you’re on a panel, expect to re-prove value; if you’re not, watch for open approaches in categories where panel coverage isn’t fit for purpose or capacity needs to expand quickly.

Bottom line: the combination of higher SME targets and a $500k exemption is designed to convert policy intent into winnable opportunities. It doesn’t soften competition, but it widens the lane for capable SMEs that can show delivery certainty, make cost logic visible and meet probity expectations without friction.