Australian procurement: How SME's can punch above their weight using AI

The volume and value of Australian government procurement continues on an upward trajectory, reaching over 83,000 contracts worth $74.8 billion in 2022-23. With over 50% of contract value awarded by the Department of Defence alone, it's clear that responding to complex government tenders is big business. However, the statistics also show most contracts (52.47%) are actually under $80,000, indicating a long tail of smaller contracts up for grabs.

This growth in tender volume presents both an opportunity and a challenge for businesses hoping to tap into government procurement. While representing a expanding source of potential revenue, manually reviewing and responding to more tender documents requires considerable effort and resources. This is where AI-powered solutions can help.

By automatically scanning and extracting key requirements from tender documents, organizations can build a database of knowledge to respond more efficiently. Rather than analysts needing to read and interpret each tender manually, they can focus on higher value tasks like refining responses.

The government's own data shows that over half of procurement contract volume (52.8%) is awarded to SMEs. Solutions that reduce the overhead of tendering make it easier for smaller companies with specialized expertise to compete with large contractors. Automating repetitive tasks allows lean teams to punch above their weight.

With the average contract size under $1 million, providers of AI-powered tender response tools have an addressable market worth billions. And by lowering the barriers to tendering, more competition ultimately leads to better value for government buyers as well.

The growth trends show no signs of slowing down. As tender volumes continue to rise, AI promises to boost efficiency and open doors for new entrants. The result is a win-win for both buyers and sellers in the government procurement market. The key is making the most of technology to work smarter in addressing this growing opportunity.

Note: All numbers and figures were obtained from the Department of Finance.

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