Winning the Contract Is No Longer Just About Having the Lowest Price
Written by: Melissa Cunliffe (CA)
Winning the Contract Is No Longer Just About Having the Lowest Price
For many small businesses, government work looks attractive for obvious reasons: large customers, potentially recurring revenue and the credibility that comes with being selected as a supplier. But the tender environment is changing. Being technically capable and competitively priced may no longer be enough on their own.
Offering the lowest price alone may not be enough to secure a contract when buyers also assess compliance, financial capacity and delivery capability.
The Commonwealth's draft Secure Australian Jobs Framework proposes clearer expectations around secure work, fair wages and conditions, safe workplaces, gender equality and diversity, and support for local jobs, skills and industry capability. Consultation remains underway, so the final form may change. But the direction is already useful for SMEs: a buyer increasingly wants confidence not only in what you will deliver, but in how the business behind the contract is run.
The commercial lesson is bigger than government procurement
Large private customers are moving in the same direction. They increasingly ask suppliers about payroll compliance, WHS, cyber security, sustainability, modern slavery, insurance and financial capacity. These are often treated as compliance matters until the day they decide whether the business wins or loses a contract.
That is the shift owners should notice. Governance is becoming part of the product. A business may provide excellent work but still struggle to qualify for larger opportunities if its records, employment practices or systems cannot survive due diligence.
What does tender-ready actually look like?
Tender-ready does not mean producing a glossy capability statement the night before a deadline. It means the underlying business can evidence what it says.
Start with award and payroll compliance, current insurance, WHS policies and incident records, subcontractor controls, cyber-security practices, financial statements, tax and super compliance, customer references and a clear explanation of local capability. Then make sure these items are maintained rather than recreated for every tender.
Lowest price can be a dangerous strategy
Winning work at a price that does not cover labour, compliance, finance, supervision and overhead is not a win. Government and major-corporate contracts can also carry longer payment cycles, reporting requirements and contractual risks. The right question is not 'Can we win this?' but 'Can we win it at a price and on terms that make the business stronger?'
A disciplined tender process should calculate the real cost to serve the contract, the working capital required before payment, the margin after additional compliance and the downside if volumes or delivery requirements change.
A useful readiness test
Before pursuing a major contract, ask whether the business could confidently hand a buyer its employment records, safety systems, insurance certificates, financial information and cyber policies tomorrow. If the answer is no, that is not a reason to avoid the opportunity. It is a roadmap for what to improve before the opportunity arrives.
Where the 4P's Future Prosperity Framework fits
People: Build employment practices and workforce capability that can stand up to scrutiny.
Preserve: Price contracts for the true cost of delivery and working capital.
Protect: Strengthen governance, payroll, WHS, cyber and contractual controls.
Prosper: Use stronger systems to compete for larger and more valuable customers.
FAQs / People Also Ask
Do small businesses have to comply with the Secure Australian Jobs Framework now?
The framework is still in consultation and final requirements may change. SMEs should monitor the final rules rather than assume the draft is already mandatory.
Is the cheapest tender usually the winning tender?
Not necessarily. Commonwealth procurement is based on value for money, and non-price factors can be important.
What should an SME prepare before tendering?
Financial capacity, pricing, employment compliance, WHS, insurance, cyber controls, capability evidence and the working-capital impact should all be reviewed.
Preparing to compete for larger contracts?
Strengthening your compliance, pricing and financial systems can help your business demonstrate its capability and pursue opportunities with confidence.
Talk to 4P's Future Accounting about building a stronger financial foundation for sustainable growth.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
