Govt procurement rules changed to favour Australian business

From 17 November 2025, rules for procurement will now require that only Australian businesses be invited to tender for government contracts valued below $125,000.

The increase in the threshold for open tendering, from $80,000 to $125,000, is the first time the threshold has been increased in over 20 years.

For construction services, the requirement to prioritise Australian businesses extends to government contracts valued below $7.5 million.

The new rules mean that Australian businesses will now be front of the queue for approximately 31,000 Australian government contracts, valued at almost $2 billion (based on 2024‑25 data).

Buyers using the BuyICT marketplace and panels will need to, when using a mandatory category, first approach an SME if the estimated value is under $125,000. When using non-mandatory categories, if the estimated value is under $80,000, SMEs must be approached first.

If the estimated value is between $80,000 and $200,000, Indigenous businesses must be approached first. If no suitable Indigenous business is identified and the value is under $125,000, SMEs must then be approached.

If no suitable seller is identified from the above processes, buyers may approach any seller on the panel.

Businesses will also need to declare themselves as an Australian business to be considered for prioritised contracts. The definition of an Australian business was released earlier this year following a public consultation process.

Supplier Portal coming in 2026

The Government is also improving AusTender, the central procurement information system.

Starting this month, the Supplier Portal will be introduced to give suppliers control over their own information and display their key characteristics. Suppliers will be able to detail their businesses capabilities and identify whether they are an Australian business, First Nations business, and/or a small or medium enterprise.

Starting with the 645 suppliers on the Management Advisory Panel and People Panels, the Supplier Portal will be available for all suppliers to join from July 2026.

When a business registers on the Supplier Portal it will also be able to identify whether it is a women-owned business. From 2026-27, the Government will report on the number of contracts being awarded to women-owned businesses.

Senator Katy Gallagher, Minister for Finance, said this is about making sure more of the Commonwealth’s purchasing power flows directly to Australian businesses, creating local jobs and supporting the economy.

“This is a big change in the way government does business, it’s about backing Australian capability and making sure taxpayer dollars support Australian jobs," she said.