A Big Win for Small Businesses: CPR Reforms to Rebalance the Procurement Landscape

From 17 November 2025, changes to the Commonwealth Procurement Rules (CPRs) are set to rebalance the procurement landscape, providing an opportunity for small and medium-sized businesses (SMEs) to more readily compete for Commonwealth contracts.

SMEs play a critical role in strengthening sovereign capability, and new Commonwealth procurement settings will see more of the government's procurement dollar going to the Australian businesses that fuel innovation and resilience.

The reforms aim to make it easier for SMEs to increase their participation and create a more transparent and fair procurement process tailored for their growth and success. Some key actions SMEs can do now to prepare and take advantage of these changes include:

• ensuring you clearly state that you are an SME and that you are Australian owned (or Australia is your principal place of business);
• monitoring panel portals. Due to the uplift of the CPR thresholds for SMEs, it will be easier to engage in smaller, more bespoke projects. Monitor the portals to ensure you are aware of opportunities;
• stregnthening your value narrative! It will be important to highlight why as an SME, you would be better placed to assist;
• updating your capability statements! Emphasise you are an SME in your promotional and marketing materials.

Increased Procurement Thresholds for Simplified Access

One of the key changes is the increase in the procurement threshold for non-corporate Commonwealth entities from $80,000 to $125,000 for non-construction contracts. This higher threshold means that more contracts will be procured through simpler methods rather than open tenders, giving SMEs an easier entry point to government business without the complexity and costs associated with large-scale tenders.

Exclusive Tender Opportunities for Australian SMEs

New rules specify that for procurements between $10,000 and $125,000 (excluding existing panels), only Australian businesses will be invited to tender. More significantly, for contracts under $125,000 that fall under specific panels such as the Management Advisory Services Panel or People Panel, only SMEs will be eligible to participate. This effectively reserves a large volume of government contracts exclusively for SMEs, increasing their changes of winning government work and growing their businesses.

Clearer SME and Australian Business Definitions

The CPRs now provide an updated and clearer definition of what constitutes an Australian business and SME, ensuring consistency and transparency in supplier eligibility. The SME definition includes associated entities and captures businesses with fewer than 200 employees, making it easier for government buyers to identify qualifying SMEs and for SMEs to understand their eligibility for preferential procurement treatment.

Government Procurement Targets for SMEs

The changes include stregnthened inclusion of targets to increase SME participation in government contracts. Commonwealth entities are required to source at least 25% of contracts valued up to $1 billion from SMEs (previously 20%). This target rises to 40% for contracts valued below $20 million (previously 35%). These mandatory goals ensure SMEs becoem a significant focus in government procurement stratgies, guaranteeing more contracts and business opportunities.

Enhanced Transparency and Supplier Support

The reforms bring in new reporting requirements and a publicly searchable supplier portal (https://help.tenders.gov.au/getting-started-with-austender/supplier-portal/) listing businesses categorised as SMEs, Indigenous-owned, women-owned, and other groups. This transparency helps government procurement officers readily identify SME suppliers, facilitating greater SME inlusion. Alongside system improvements, officials receive training tailored to better engage SMEs and understand their unique challenges in government contracting.

Emphasis on Ethical and Regulatory Compliance Benefiting SMEs

The value-for-money provisions require procurement officials to consider supplier conduct, including adherence to laws and contribution to broader economic benefits such as SME development. This ethical emphasis fosters fair treatment of SMEs, promoting responsible procurement practices that spotlight smaller businesses' positive economic roles.

SME Opportunities and Growth Outlook

With these changes, SMEs can expect increased access and better odds of winning government contracts, opening the door to growth and innovation opportunities. The government anticipates these measures will further lift SME participation well beyond the current rate, fostering a more inclusive procurement environment that supports Australian entrepreneurship and job creation. SMEs can prepare and unlock the benfits of the strategic, SME-focused approach that the government is taking to unlock greater potential for small and medium businesses across the country, driving local solutions with national impact.