Tech giant Dell employs nearly 100,000 people globally, but the Department of Defence has classified its local arm in Australia as a small or medium enterprise 20 times in 2026 on the government's procurement website, AusTender.
An analysis by procurement platform Tenders+ revealed the Dell misclassification was not an outlier. Instead, it exposed a number of data entry errors and administrative flaws at the heart of the federal government's latest procurement reforms.
In November 2025, the Finance department announced key changes to the Commonwealth Procurement Rules (CPR) designed to provide small and medium enterprises (SMEs) a larger slice of the federal procurement pie.
The reforms raised the general procurement threshold from $80,000 to $125,000, which was the first increase in 20 years, and mandated that agencies invite only small businesses for relevant panel contracts such as management advisory and staffing, under that threshold.
Under the updated rules, an SME was strictly defined as having fewer than 200 full-time equivalent (FTE) staff, which explicitly included employees of global parent entities and related corporate bodies to prevent large multinationals from using local subsidiaries as loopholes.
To test the reforms' impact, Tenders+ analysed AusTender data across matched the 296-day windows before and after implementation. The results pointed to widespread compliance failures.
Over a 10-month period, using the same Australian business number (ABN), Defence logged Dell as a non-small enterprise on 27 other instances, directly contradicting the 20 instances where it marked the company as a small business.
In July 2026, Defence recorded a $60,768 hardware contract with Dell as a small business engagement.
Just three weeks later, for a separate $118,574 contract, it logged Dell as a non-SME, justifying the decision by saying no invited small business submitted a value for money offer. Tech subsidiary HP PPS Australia was similarly misclassified as a small business.
The different declarations recorded for Dell were attributed to an administrative oversight.
"Validation and assurance controls are being implemented continuously to strengthen the accuracy and consistency of SME reporting", a Defence spokesperson said.
Defence officials recorded vendor size based supplier provided information and the Finance portal, and worked to correct the errors when the discrepancies were identified.
The hardware contract was discreetly updated to state that a small business was not engaged, replacing the old entry with a new justification for the multinational purchase that capability or capacity was not available from an SME.
The AusTender data consistently showed the system was failing to catch these discrepancies and distinguish between companies with fewer than 200 staff that met the new definition.
Nearly one in five (18.4 per cent) of all ABNs flagged as SMEs had conflicting business size declarations.
Over the 10-month window since November 2025, the errors spanned 59 agencies across 600 contracts, casting doubt over $18 million of the $52.5 million in contract value that supposedly went to smaller local businesses.
In addition, the policy appeared to achieve the opposite of its intended goal as the analysis also revealed that the total spend under $125,000 across the covered panels fell from $166.7 million to $149.6 million following the rule change.
The total number of suppliers fell from 594 to 536 rather than creating opportunities for smaller businesses as the market share captured by the top 10 suppliers rose from 28.6 per cent to 30.2 per cent.
ACT independent senator David Pocock expressed frustration with the findings as the CPR was meant to level the playing field for SMEs against the large multinationals.
"I welcomed the changes to the CPRs. They were meant to give Australian SMEs a fair go against large multinationals," Senator Pocock said.
"It's really concerning that this analysis suggests the intent of those reforms isn't showing up in the outcomes.
"And it's frankly ridiculous that any part of Dell or HP could be counted as an SME. The fact that Defence logged Dell as an SME 20 separate times this year is absurd.
"SME status should be verified centrally, and carried across every contract, rather than left to each agency to tick a box with no one checking. I'll be looking carefully at how this apparent lack of enforcement came about."
A Finance spokesperson said agencies were responsible for the accuracy of the AusTender reporting with official statistics and analysis relying on the Australian Bureau of Statistics aggregation of the data rather than individual contract logs.
While current CPR cap small businesses at 200 FTE, a limit that included all staff from global parent companies and subsidiaries, Finance said there was no explicit guidance for agencies on the definition.
"There is is no normal guidance on accounting for global parent company headcount when assessing whether a local subsidiary qualifies under the 200 FTE threshold, but there is general guidance on procuring from SMEs", the spokesperson said.
The spokesperson said it was "too early to draw any conclusions at this stage" regarding the falling supplier numbers as the changes had been in place for less than a year.
The Digital Transformation Agency took a similar stance as Finance about the enforcement of small business rules for its tech and advisory panels.
Mr Quarrell said there was strong representation of SMEs across the federal marketplaces and panels as they represented 67 per cent of the 3107 approved sellers as of end of August 2026.
47 per cent of contracts facilitated by the agency in 2026-27 totalling $625 million were awarded to small businesses, he said.
"The DTA resets SME status annually and sellers are required to re-declare their status each year. These declarations are validated by the DTA and support the regular review of SME statistics", Mr Quarrell said.
On the misclassification of large IT vendors, Mr Quarrell said small business markers were self-reported by sellers and validated by the agency, with the status requiring an annual re-declaration.
