Think of a capability statement as your business's ultimate calling card for government buyers. It's not a brochure. It’s a sharp, focused, one-to-two-page document that gets straight to the point: what you do, how you do it, and why you’re the right choice for the job. In the competitive world of Australian government tenders, this document is your first and most important handshake, and this guide will show you how to make it count.

Your Key to Unlocking Government Contracts

You wouldn't try to win a multi-million dollar government contract with a generic flyer, right? Of course not. Government procurement officers aren't looking for marketing fluff; they need hard facts and evidence that you can solve their problem with minimal risk. That's exactly what a capability statement delivers. It's a strategic summary of your business's suitability for government work.

For Australian small and medium businesses (SMEs), this document is your passport to getting in the door. The Commonwealth Government spends over $70 billion on procurement annually. With SMEs winning approximately 25% of that spend, a powerful capability statement is how you get noticed and prove you can deliver value for money. If you want to understand the government mindset, it’s worth checking out the latest government self-assessment results on their procurement capabilities.

Let's quickly break down what a capability statement is all about.

Capability Statement at a Glance

This table gives you a simple overview of what a capability statement is, why you need one, who reads it, and how to get started.

Element

Description

What is it?

A 1-2 page summary of your business's core services, past performance, and unique strengths, tailored for government buyers.

Why is it needed?

To introduce your business, prove you meet mandatory requirements, and stand out from competitors in the crowded government market.

Who is it for?

Government procurement officers, tender evaluation panels, and prime contractors looking for reliable subcontractors.

How is it used?

As a handout at industry briefings, an attachment with your tender response, or a proactive marketing tool sent to agency contacts.

Essentially, it’s your best foot forward, condensed onto a single, powerful document.

The Purpose of a Capability Statement

At its heart, a capability statement does three crucial things in the Australian government procurement game:

It Introduces: When you meet an agency representative or a potential prime contractor, this document is your instant introduction. It quickly and clearly says, "This is who we are, and this is what we're great at."

It Qualifies: It acts as a pre-qualification tool, showing you have the necessary experience, certifications, and track record to be a credible supplier. It ticks the boxes before they even read your full tender response.

It Differentiates: In a sea of competitors, your capability statement is your chance to shine. It’s where you spell out your unique value proposition and explain what makes you a better, safer, or smarter choice.

A great capability statement doesn't just list services; it tells a story of competence, reliability, and value for money—the three pillars of a successful government tender response.

Who Reads It and Why It Matters

Your primary audience is government procurement officers and evaluation panel members. These are incredibly busy people, often sifting through dozens, if not hundreds, of submissions. They use your capability statement to quickly sort potential suppliers into two piles: "worth a closer look" and "not for us."

A sloppy, generic, or poorly formatted statement is a one-way ticket to the second pile. Your business will be screened out before your full tender response even gets a look-in.

On the flip side, a sharp, tailored, and professional document builds immediate credibility. It signals that you understand the government's needs, you respect their time, and you’re a serious contender. It's not just a piece of paper; it’s the strategic key that can unlock the door to major government contracts.

Building a Statement That Gets Noticed

Alright, let's move from theory to action. It’s time to build a capability statement that a procurement officer will actually read, remember, and act on. This isn't about listing services; it's about telling a compelling story of your competence, reliability, and the value you bring to the table.

A knockout statement is built on a few essential, non-negotiable pillars. Each section has a specific job to do, working together to paint a complete picture of your business. From your quick-fire company overview to the hard evidence of your past work, every part needs to be sharp, concise, and focused on what the government buyer actually needs.

Let’s break down the core sections that form the backbone of a winning capability statement.

Company Overview and Core Competencies

This is your elevator pitch. The Company Overview is a short, punchy paragraph introducing who you are, what you do, and why you matter. It sets the scene instantly, giving the reader immediate context. Ditch the corporate jargon and marketing fluff—just be clear and direct.

Right after that, your Core Competencies section lists what you’re genuinely good at. The best way to present this is with a bulleted list so it’s easy to scan. Don't throw in the kitchen sink; highlight the specific skills that line up with government needs and the tender you’re targeting.

Be Specific: Instead of "IT Services," say "Cyber Security Audits for Federal Government Agencies."

Use Keywords: Mirror the language you see in the tender documents and on the agency's website.

Focus on Strengths: What are you known for? Highlight that, not the services you only offer occasionally.

This one-two punch of a tight overview and a targeted skills list tells a procurement officer in seconds if you’re a real contender.

Past Performance That Builds Trust

This section is where the rubber meets the road. If you get one part right, make it this one. Government buyers are famously risk-averse; they need solid proof you can deliver on your promises, and your Past Performance section is that proof.

List three to five relevant projects you’ve completed. For each one, include:

A quick description of the work you did.

The client’s name (another government agency or a well-known company is ideal).

The project’s value and duration.

A contact person for a reference, if you can.

The goal here is simple: show you’ve done work that’s similar in size, scope, and complexity to what you're bidding on. It directly answers the buyer’s biggest question: "Can this supplier actually handle our project?"

Think of your capability statement like a business passport. Each section serves a purpose, stamping your credibility and granting you access to new opportunities.

This document is designed to open doors, its audience is the decision-makers, and its impact is winning the contracts that will grow your business.

Your Unique Differentiators

With dozens, sometimes hundreds, of companies chasing the same government contract, why should they choose you? Your Differentiators section is where you answer that question loud and clear. This is your chance to state your unique value in a few sharp, memorable points.

What makes you stand out? It could be anything from:

Specialised skills in a very specific niche.

Proprietary technology or processes that get better results.

Security clearances or specific industry certifications others don't have.

An unbeatable track record in a particular state or region.

A reputation for incredible customer service and stakeholder engagement.

What truly sets you apart from the business down the street? This is the section that helps the evaluation panel remember your name and gives them a reason to pick you. For businesses just starting out, a well-structured document is key. You can find more guidance and examples by exploring our capability statement template for Australian businesses.

Essential Corporate Data

Finally, make it dead simple for the government to do business with you. The Corporate Data section isn’t glamorous, but it’s critical. It’s a straightforward block of information with all the details a procurement officer needs to verify your company and plug you into their system.

Government agencies need suppliers who are organised, compliant, and easy to work with. Your corporate data section proves you are.

Your essentials must include:

Company Name: Your registered business name.

ABN/ACN: Your Australian Business Number/Australian Company Number.

Physical Address: Your main business address.

Website: A direct link to your professional site.

Primary Contact: The name, title, email, and phone number of the right person to call.

Relevant Codes: Any panel or industry codes (e.g., UNSPSC).

Certifications: Note any important credentials like ISO accreditation or if you're a Supply Nation certified Indigenous business.

This final section removes all friction. It presents your business as professional, organised, and ready to get to work.

To help you prioritise, here’s a quick breakdown of what’s a must-have versus what’s nice-to-have.

Essential vs. Optional Capability Statement Sections

Component

Priority

Why It's Important

Company Overview

Essential

Your 30-second introduction. If this doesn't grab them, they won't read on.

Core Competencies

Essential

Quickly shows if your skills match their needs. Use keywords from the tender.

Past Performance

Essential

This is your proof. Without it, you're just making empty claims.

Differentiators

Essential

Answers "Why you?" and helps you stand out from the competition.

Contact & Corporate Data

Essential

Makes you look professional and makes it easy for them to engage you.

Key Personnel Bios

Optional

Adds value for service-based businesses where expertise is a key selling point.

Client Testimonials

Optional

Great social proof, but past performance data is more critical.

Awards/Accolades

Optional

Nice to have, but only include them if they're relevant to the government sector.

Focus on getting the essential components perfect first. The optional sections are just the icing on the cake. By building your document around these core pillars, you create a powerful tool that doesn’t just inform—it persuades.

Tailoring Your Message for Every Opportunity

Submitting a generic, one-size-fits-all capability statement is one of the fastest ways to land in the rejection pile. Government procurement officers can spot a lazy, untargeted document from a mile away. To win government tenders, you need a specific, tailored approach for every single opportunity.

Think of your master capability statement as a block of clay. For each new tender, you have to reshape and refine it into a sculpture that perfectly matches what the agency needs. This isn't just about changing a few words; it's about transforming a general document into a laser-focused submission that speaks their language and solves their specific problems.

Dissecting the Tender Documents

The first step is to put on your detective hat. All the clues you need are inside the Request for Tender (RFT) or Request for Quote (RFQ) documents. Don't just skim them—dissect them.

Your mission is to find the agency's core drivers and pain points. Look for keywords, phrases, and objectives that keep popping up.

Analyse the evaluation criteria: What are they actually scoring you on? Is it experience, technical skill, or value for money? Your capability statement must hit these high-weighting criteria hard.

Pinpoint the project goals: What is the agency really trying to achieve with this contract? You need to understand the "why" behind the "what."

Note the specific terminology: Does the Department of Defence talk about "mission-critical systems" while Services Australia focuses on "citizen-centric service delivery"? Using their exact language shows you belong in their world.

This analysis gives you a blueprint. It ensures every word you write serves a specific purpose.

Mapping Your Strengths to Their Needs

Once you know what the agency values, you have to connect your capabilities directly to those needs. A generic list of services is meaningless. But a list of services that solves their specific problem? That’s compelling.

A tailored capability statement doesn’t just say "We offer project management." It says, "We provide AS/NZS ISO 9001 certified project management for complex infrastructure projects, ensuring on-time and on-budget delivery for state government clients."

This process is all about reframing your strengths through the lens of their requirements.

Actionable Steps for Mapping:

Create a two-column list: On the left, list the key requirements from the RFT. On the right, write down exactly how your company’s skills or past projects meet each requirement.

Prioritise your past performance: Reorder your case studies. The project most similar to this tender should go first, even if it wasn't your biggest contract.

Rewrite your core competencies: Adjust your bullet points to mirror the language and priorities you found in the RFT.

This mapping exercise makes sure your document isn't just about you; it's about what you can do for them.

Adjusting Tone and Focus for Different Agencies

Finally, remember that every government department has its own culture and mission. The tone that resonates with a creative agency like Screen Australia will be very different from what the Australian Taxation Office wants to see.

Your tailoring should reflect this nuance. For a technical agency, you might highlight specific certifications and methodologies. For a community-focused department, you could emphasise your stakeholder engagement skills or your commitment to the Indigenous Procurement Policy.

It’s about showing you're not just another supplier. You're a potential partner who gets their unique context.

Crafting these tailored documents can feel time-consuming, but the return is huge. For more structured guidance and real-world examples, it's worth reviewing a sample capability statement for government tenders. This strategic effort is what separates the businesses that merely bid from the businesses that consistently win.

Avoiding Common Capability Statement Pitfalls

Even the most capable Australian businesses can shoot themselves in the foot with a clumsy capability statement. You have to remember, a procurement officer might only give your document a 60-second glance before deciding if it’s worth a proper read. In that short window, small mistakes can have huge consequences.

Let’s walk through the most common errors we see trip people up, and more importantly, how you can sidestep them to keep your business in the running.

Mistake 1 Vague Language and Marketing Fluff

The fastest way to get your document tossed aside is by filling it with meaningless marketing jargon. Phrases like "synergistic solutions," "innovative frameworks," or "customer-centric paradigms" are just noise. Government buyers don't want fluff; they need hard proof of what you can do.

What to do instead: Be specific. Be direct. And wherever you can, quantify your achievements.

Don't say: "We provide excellent project management."

Do say: "We delivered 95% of government IT projects on or ahead of schedule over the past three years, managing budgets up to $1.2 million."

The second version has substance. It’s believable.

Mistake 2 Focusing on ‘Us’ Instead of ‘Them’

So many businesses fall into the trap of making their capability statement all about their company's history or their product features. They forget the reader is only asking one question: "How does this help me?" Your document should be a mirror reflecting their needs, not a portrait of your company.

What to do instead: Frame every single point through the lens of the government agency’s problems and goals. Connect every skill, project, and achievement back to the outcome they want.

A winning capability statement answers the buyer's unspoken question: "How will you make my job easier and help my agency succeed?" It's not about your features; it’s about their benefits.

Mistake 3 Poor Formatting and Readability

A dense wall of text is an instant turn-off for a busy procurement officer. Cluttered layouts, tiny fonts, and no white space make your document a chore to read. It signals a lack of professionalism and, frankly, a lack of respect for their time.

What to do instead: Make your document clean, organised, and easy to scan.

Use clear H2 and H3 headings to break up sections.

Lean on bullet points for lists of services or key differentiators.

Leave plenty of white space—let the content breathe.

Keep paragraphs short and punchy, 2-3 sentences max.

Stick to a professional, easy-to-read font like Arial or Calibri, at 11-point or larger.

Mistake 4 The One-Size-Fits-All Approach

Sending the same generic capability statement with every tender is a massive, unforced error. It’s the tendering equivalent of a form letter. Each agency has its own language, priorities, and evaluation criteria, and a generic document screams that you haven't bothered to learn them.

What to do instead: As we covered earlier, tailor every single submission. Reorder your past projects to highlight the most relevant ones first. Tweak the language in your core competencies section to mirror the terms used in the tender documents. This focused effort shows genuine interest and positions you as a thoughtful, strategic partner, not just another number.

Avoiding these simple mistakes is a huge step forward. For more tips on what not to do in your bids, check out our deep dive into the top 10 tender mistakes that lead to rejection.

Your Final Pre-Submission Checklist

Before you hit 'send' on that tender response, it’s time for one last, crucial quality check. Think of this as your final pre-flight inspection. Running through this list ensures your capability statement is polished, professional, and ready to make the best possible impression on the evaluation panel. A simple oversight can undermine hours of hard work.

Use this quick guide to catch any lingering errors and confirm your document is truly ready to go.

Formatting and Readability

First impressions count, and a messy document suggests messy work. Your formatting needs to be impeccable.

Is it professional? Stick to a consistent, easy-to-read font like Arial or Calibri, at 11pt or larger. Make sure there’s plenty of white space.

Is it concise? The unofficial standard for government capability statements is one to two pages. Have you gone over this?

Is it scannable? Use clear headings, short paragraphs (1-3 sentences), and bullet points. Make it easy for a busy evaluator to find what they need in seconds.

If you’re submitting a printed copy, the final product must be flawless. Using an essential printing quality control checklist can help you verify everything from paper stock to colour accuracy is spot-on.

Core Content Essentials

Next, let's look at the substance. Does your document tell a compelling and targeted story?

Is it tailored? Does the language directly mirror the keywords and objectives you found in the Request for Tender (RFT)?

Is the past performance relevant? Have you highlighted projects that are genuinely similar in scope, scale, and complexity to this opportunity?

Are your differentiators clear? Can a reader immediately grasp what makes you the best choice? They won't spend time digging for it.

A great final check is to read your capability statement from the perspective of a time-poor procurement officer. Does it answer their main question—"Can this supplier solve our problem with minimal risk?"—quickly and convincingly?

Compliance and Proof

Finally, it's time to dot the i's and cross the t's. Small compliance mistakes can get you instantly disqualified.

Are all details correct? Double-check your company name, ABN, and contact information. An incorrect phone number is an unforgivable error.

Is it completely error-free? Meticulously proofread for any spelling or grammar mistakes. Use a tool, then get a colleague to read it with fresh eyes.

Is the file format correct? Save the document as a PDF with a clear, logical file name (e.g., "YourCompany_CapabilityStatement_TenderNumber.pdf").

This final review is a non-negotiable step. For a deeper dive into the entire submission process, from these checks right through to lodging your response correctly, check out our guide on submitting a government tender in Australia. A flawless submission always starts with a flawless document.

Get Ahead of the Competition with GovBid AI

Let's be honest, drafting a tailored capability statement for every government tender is a huge time sink. The average tender response takes 40-80 hours to complete, and a lot of that is repetitive documentation. For most Australian SMEs, that’s precious time you simply don’t have. But what if you could turn this tedious manual job into a real competitive advantage?

This is where smart technology, specifically GovBid's AI platform, changes the game. Instead of starting from a blank page every single time, you can build a fast, repeatable, and seriously effective workflow. It’s all about freeing you up to think about strategy, not paperwork.

Your Central Knowledge Library

The secret to this efficiency starts with GovBid's Knowledge Library. Think of it as your single source of truth—a secure spot where all your company's most important information lives, organised and ready to go.

Company Overviews: Your master company profile and mission, ready to be tweaked for any tender.

Past Performance: Detailed case studies, project values, client testimonials, and proof of your great work.

Team CVs: Up-to-date resumes for your key people, highlighting their specific expertise.

Compliance Data: All your certifications, licences, ABN, and other corporate details, all in one place.

Having everything organised like this means your best content is always at your fingertips. No more frantic searching through old folders for that one perfect case study. It ensures you’re consistent and professional across every document you submit.

AI-Assisted Drafting and Tailoring

Now for the magic. Once your Knowledge Library is loaded up, GovBid's AI-Assisted Drafting gets to work. It intelligently pulls the most relevant information from your library and drafts sections of your capability statement that are specifically aligned with the tender you’re going for.

By scanning the Request for Tender (RFT), our AI helps you spotlight the exact past performance examples and core skills the evaluation panel wants to see. It’s not just about being faster; it’s about being smarter and more precise.

This powerful combination helps you create a highly customised, persuasive capability statement in a fraction of the time it would normally take. You can learn more about the specifics in our guide to AI tender writing in Australia.

GovBid is designed to make the whole process smoother, giving your business the power to compete for more government contracts with greater speed and accuracy. And while you're at it, exploring other AI tools for small businesses can uncover even more ways to boost efficiency—something worth mentioning in your capability statement to show you're a modern, forward-thinking supplier.

Your Questions, Answered

Once you start drafting your capability statement, a few practical questions always pop up. We get asked these all the time by businesses trying to nail their government submissions, so let's get you some straight answers.

How Long Should a Capability Statement Be?

Keep it to one or two pages. That’s it. Procurement officers are buried in paperwork, and sending them a novel is the fastest way to get ignored. A sharp, concise document shows you respect their time and can get straight to the point.

Should I Put Pricing in There?

Absolutely not. Never. A capability statement is your professional handshake, not an invoice. It’s a marketing document designed to prove you’re the right choice. Pricing only belongs in the commercial sections of a tender response, exactly where the RFT asks for it. Putting it here looks amateur and out of place.

How Often Should I Update It?

You should think of this in two ways. First, have a 'master' capability statement that you review every quarter, or at the very least, whenever you finish a major project or gain a new certification. It’s your single source of truth.

But—and this is critical—you must tailor a specific version for every single tender you bid on. A generic, copy-pasted document screams "low effort."

Can I Just Use the Same Statement for Different Departments?

Don’t do it. While your ABN and core details won't change, sending the same document to the Department of Defence and Services Australia is a missed opportunity. Each agency has its own language, priorities, and problems. Always customise your examples and differentiators to show you understand their specific world. A one-size-fits-all approach just tells them you haven’t done your homework.

Ready to win more government tenders with AI? GovBid's platform helps you organise your best content and generate targeted capability statements that get noticed.

Start your free 7-day trial at GovBid.com.au