The push for ‘true’ sovereign capability in Australia’s tech sector

The inquiry also highlighted that foreign-owned and operating SMEs, possessing an ABN, are currently able to sell to the Australian government under the guise of being an Australian SME.

“A number of Australian-owned and operating tech SMEs submitted their frustration with these arrangements, arguing that it distorted the playing field in favour of foreign suppliers dominating government procurement opportunities in Australia,” Pocock says.

Pocock supports the recommendation that the definition of SMEs (small and medium enterprises) in the Commonwealth Procurement Rules be replaced with a definition of “Sovereign Australian Small and Medium Enterprises”.

Such enterprises should be headquartered in Australia, be at least 51 per cent owned by Australian shareholders and 51 per cent governed by Australian directors. They also should not be a subsidiary of a company that is not a sovereign Australian SME.

Along with clarifying the difference between sovereign and domestic in order to bolster sovereign capabilities, it is also important to ensure that government procurement contracts are structured in a way that makes them accessible to sovereign Australian SMEs.

Size can matter

For genuinely Australian-owned SMEs to successfully bid for contracts, the work packages must be broken into smaller components for which SMEs can realistically tender, says Andrew Bridge, CEO of Australian SME Informatech, which specialises in the provision of ICT services within defence and federal government departments.

Instead, large contracts worth hundreds of millions of dollars are typically awarded to major multinational providers, which may then subcontract some elements of the work to Australian SMEs, Bridge says.

“True Australian sovereign capability requires tenders Australian businesses can win,” he says. “Australian SMEs need to work collaboratively with government to clearly define work packages that can be supported by sovereign supply chains, which can take on larger contracts without so much reliance on multinationals.

“There’s a lot of talk in Australia at the moment about establishing ‘sovereign prime capability’, growing and developing Australian providers that can manage projects at scale, in a multi-vendor environment, to take the country’s sovereign capability to the next level.”

Informatech is a veteran-owned-and-led 100 per cent Australian company which specialises in providing technical support to government, defence and national security projects. It began as a specialised ICT testing provider but has expanded to meet rising demand for comprehensive ICT solutions.

Informatech’s Level 3 DISP (Top Secret) accreditation and local ownership reinforce the company’s capacity to handle some of the most sensitive government projects, helping Australia maintain independent control over its ICT capabilities.

Over the past year, Informatech has grown its annual revenue to nearly $60 million supporting defence and federal government projects, and was a finalist in the Sovereign Industry Champion category at the Australian Defence Industry awards for the second year running. The company has also earned three consecutive listings in the AFR’s Fast 100.

Empowering small operators

Australian SMEs looking to bolster the nation’s sovereign capability would also benefit from greater access to and engagement with government departments, Bridge says. It is very difficult for small Australian vendors to get direct access to departments in order to showcase their skill sets and what they have to offer.

Procurement processes in government departments also need to be transparent and encourage SME participation to ensure that these companies are not left by the sidelines to the detriment of Australia’s crucial sovereign capabilities.

“Enhanced engagement would also help Australian SMEs better understand the government’s strategic direction, in order to better pre-position their resources and develop their workforces to meet the challenges that lie ahead,” Bridge says.

Looking to the future, Bridge is upbeat about the prospects for Australian SMEs such as Informatech.

“Our success has been built upon our commitment to quality delivery for our clients and a genuine desire to see Australian sovereign capability grow to reinforce our national security,” he says.

“With the support of government, we can build a powerful, sovereign supply chain capable of driving our tech sector forward.”

To learn more, visit informatech.com.au/