ICT SME participation scheme standard


Final | September 2018 | v3.0.1 | OFFICIAL - Public | Department of Housing and Public WorksClick to print


A QGEA standard provides a statement of mandatory requirements for Queensland Government departments for a given topic area. Standards are mandated through policy and departments are expected to comply with the contents of the standard.

The purpose of this standard is to describe the procurement processes to be used by departments when engaging with small and medium sized 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 2019.

The Queensland Government will continue to measure the effectiveness of the ICT SME participation scheme within government ICT business.


This document is primarily intended for departmental staff working in the areas of procurement, general ICT and project management.


This standard covers the relevant definitions, driving principles and procurement processes and tools required.


The Queensland Government is committed to assisting small and medium sized enterprises (SMEs) to access and win government business for the supply of goods and services.

SMEs contribute significantly to the Queensland economy. In fact, 60 per cent of businesses in Queensland employ less than 100 people.

The scheme is subject to and limited by other legislation, policy and agreements including but not limited to the following:

Departments are also encouraged to support SMEs to engage more effectively with the Queensland Government through the SME Access Incentive:

  • As outlined in section 6, Government can directly engage SMEs in the provision of solutions up to $500,000 that demonstrate value for Queensland in addressing government priorities.

What is a Small and Medium Enterprise

For ICT procurement purposes the Queensland Government uses the definition of a SME as outlined by the Australian Bureau of Statistics. This is defined as any business employing less than 200 people.

As a guide, people are both employees and contractors employed by the business.

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 goods or services. This also includes all legal entities that come under common ownership or control are regarded as a single business.


The following principles are a set of ambitions or values that departments should aspire to when undertaking any ICT procurement process to assist SMEs to access the Queensland Government market.

Driving better value for money

Decisions in government purchasing are based on assessments of value for money which requires 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 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 a department 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 departments within the government will have different needs. While a single supplier may meet the needs of one department, other suppliers may more appropriately meet the purchasing needs of a different department. 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 goods 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 SME’s and their suitability for partnering. They can be contacted by emailing ICTStrategicSourcing@hpw.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 – SME’s often struggle with cash flows within their business. The use of smaller, more frequent milestone payments during a project will assist SME’s in managing their financial position.

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 departments can minimise 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 – be flexible when determining levels of quality assurance and insurances required of suppliers. The level of insurance cover can impose a significant cost on a supplier which is either included in the price to government or acts as a deterrent for the supplier in seeking government business.
  • 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 SME’s responding to tenders.

Applying the SME participation scheme policy

Your approach to market will depend on your department’s procurement policies and procedures. Financial thresholds and risk profiles vary across departments, but for procurement of solutions up to $500,000, agencies are encouraged to apply the SME Access Incentive – refer to section 6

The policy can be applied in these three ways:

  • Informal approach to the market by obtaining quotations.
  • Formal approach to the market through a full tender process and ITO
  • Applying the SME Access Incentive

Informal approach to market RFQ

Apply SME Access Incentive

Refer to section SME Access Incentive.

For example, if 2 quotations are required:

You must demonstrate that you have undertaken a market assessment to identify appropriate SMEs by obtaining offers from at least 1 SME where practical.

For example, if 3 quotations are required:

You must demonstrate that you have undertaken a market assessment to identify appropriate SMEs by obtaining offers from at least 2 SMEs where practical.

Formal approach to market ITO

All formal tenders must include the relevant questions confirming supplier SME status in their Response Schedules.

During offer evaluation, you must allocate 10% of the 100% total evaluation criteria for the purpose of weighting SMEs vs non-SMEs.

If the offeror is a SME they receive the full 10% allocated.

If they are a non-SME they receive 0%.

However, if the offeror is a prime contractor engaging SME sub-contractors to deliver the work, they can receive a portion of the 10% 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 contracting officer can demonstrate that offers cannot be obtained from SMEs that are competitive on price, quality or delivery
  • a sole supplier, limited supplier, existing market tested panel arrangement (including standing offer arrangement), or other process where price information is not provided and/or evaluated, is to be used
  • 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:

  • annual reporting by the supplier of their SME contribution; and
  • requesting evidence from the supplier to support their contracted SME contribution compliance

Departments should report non-compliance to ICT Strategic Sourcing.

Procuring from an existing ICT panel or standing offer arrangement

Your requirements 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 or Trend Micro software products 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.
  • 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 E.g. Print and Imaging as-a-Service or Infrastructure as-a-Service.

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 SME participation scheme policy.

Reporting requirements

All departments must ensure that awarded contracts listed on QTenders has the nominated level of SME participation, i.e., company A with X per cent SME participation level.

This data will be used for ongoing monitoring, ministerial reporting and auditing as outlined in section 6.3.

SME Access Incentive

To further support the intent of the SME Participation Scheme to provide SME’s with greater access to the Queensland Government market, Government entities can directly engage SMEs for the provision of solutions up to $500,000 that demonstrate value for Queensland in addressing government priorities.

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.

Out of scope for the SME Access Incentive

This incentive cannot be used by an SME 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 reselling standard Amazon Azure hosting or Microsoft Office 365 product would not be eligible for this incentive.

SME Access Incentive reporting requirement

ICT Strategic Sourcing will not be involved in the assessment, selection or approval of specific solutions up to the value of $500,000 as submitted by SMEs but can provide guidance on the application of the scheme. Departments will however need to report to ICT Strategic Sourcing, all awards made using the SME Access Incentive. Departments will need to report:

  • That the solutions have been submitted by a genuine SME as per the definition provided in 3.1
  • 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 SME’s providing solutions where the SME Access 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, ICT Strategic Sourcing will require the following information:

  • date of award
  • total value of award
  • vendor name
  • SME status
  • overview of the solution
  • key business benefit of the delivered solution

Applying the SME 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 Incentive and the Queensland Procurement Policy

A new version of the Queensland Procurement Policy (QPP) came into effect on 1 June 2019. The QPP aims to further increase the social and economic benefit that can be delivered through procurement. The policy emphasises the use of a Local Benefits Test, maximising Queensland supplier opportunities to participate, supporting regional and remote communities, and stimulating the ICT sector and driving innovation.

The application of the Local Benefits Test (LBT) should be considered as a separate requirement to that of the SME Participation Scheme. The SME Participation Scheme requires the automatic application of a 10% weighting for SME’s 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 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 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 are encouraged to use local SME’s where possible when applying the SME 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.

In the past, there has been an emphasis on managing ICT product and service risk as part of the procurement process. The proactive understanding and management of risk within the business allows certain risks to be viewed as positive risk, that provides opportunity, i.e. the risk of using an SME who has developed a solution that addresses an agency or government priority, is understood and accepted by the business, and such acceptance supports the use of a more flexible procurement process such as the SME Access Incentive.

Appendix A SME participation scheme calculation

Calculate prime contractor’s participation percentage weighting

Prime contractors who are not SMEs but include a 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 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



Offer B

Non-SME prime contractor


$ 90,000

Offer C

Non-SME prime contractor



Offer D




Offer E

Non-SME prime contractor



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.

Last Reviewed: 05 May 2021