Commonwealth agencies need to familiarise themselves with the revised Commonwealth Procurement Guidelines.
The Department of Finance and Deregulation has revised the Commonwealth Procurement Guidelines (CPGs), with the new Commonwealth Procurement Rules (CPRs) to come into effect on 1 July 2012.
This article outlines the changes to Commonwealth procurement effected by the new CPRs and the changes they introduce.
The CPRs are intended to update and clarify the existing CPGs and streamline procurement procedures for Commonwealth Agencies. The CPRs also focus on whole-of-government arrangements, notably co-ordinated procurement. While the core framework remains largely unchanged, the CPRs clarify requirements for the conduct of Commonwealth procurement activities.
Why have these reforms been developed?
The CPGs applied to all FMA Act Agencies and certain CAC Act bodies.
Since the introduction of the CPGs, a "wide range of procurement approaches" have been used across agencies. This result has proven to be both complex and unwieldy. A lack of clarity in the CPGs resulted in the use of different practices across otherwise similar procurements. The CPRs seek to address the recommendations of the Australian National Audit Office recommendations arising out of audit report No 11 2010-11 – Direct Source Procurement and feedback from Agencies aimed at clarifying procurement requirements.
What are the changes?
The CPRs reflect a clearer and more concise re-drafting of the CPGs. The CPRs retain the two division structure of the CPGs and many of the rules remain unchanged, including but not limited to the relevant compliance thresholds for covered procurement ($80,000 for FMA Act Agencies, $400,000 for CAC Act Agencies and $9million for construction activities). The CPRs clearly use "must" for all mandatory requirements and "should" for desirable processes.
The CPRs are divided into Divisions1 and 2. Division1 specifies the requirement for all procurements to be based on achieving value for money. Division2 applies extra requirements for procurements at or above the relevant procurement thresholds (previously "covered procurements").
The CPRs emphasise that Agencies must use whole-of-government coordinated procurement panels where they exist. Exemptions to using these panels are limited and can only be granted jointly by the Agency's Minister and the Finance Minister.
Methods of procurement
Finance has changed the terms used in the CPGs to describe methods of procurement, from "select tender" to "pre-qualified tender" and "direct source" to "limited tender". The term "open tender" remains unchanged. The new terms are also defined in more detail and align with the emphasis on value for money and "economical" use of Commonwealth resources.
The methods of procurement have been moved from Division 2 of the CPGs to Division 1 of the CPRs as have the paragraphs relating to estimating the value of a procurement.
CPRs as mandatory requirements
In the CPGs, the distinction between mandatory provisions and better practice guidelines was not always clear. Some Agencies incorrectly assumed that discretion was permitted when applying the CPGs. The new emphasis is on procurement procedures as rules, both in the name of the CPRs and language in the document.
Under the CPRs, AusTender must be used to publish "open tenders" and, to the extent practicable, make request documentation available.
Officials must maintain appropriate documentation for each procurement and retain that documentation in accordance with the Archives Act. Agencies must have appropriate documentation with the supplier (such as a contract).
All contracts and amendments must be reported on AusTender within 42days of entering into (or amending) contracts if they are valued in excess of $10,000 for FMA Act Agencies. All standing offers, regardless of value, must be reported.
All tender submissions must be kept confidential and contracts will specify what is confidential. Agencies must have a risk register for all procurements.
Division2 addresses the rules for a "limited tender" (previously direct source). Paragraph10.3 of the CPRs specifies the only circumstances where a limited tender can be used. These are the same as the circumstances in the CPGs.
Paragraph10.5 of the CPRs outlines the records required to support a decision to utilise a "limited tender". Importantly, the record must demonstrate how the procurement represented value for money.
The CPRs importantly specify that the request documentation "must include a complete description of the procurement, the conditions for participation, the minimum form and content requirements and all evaluation criteria (paragraph10.6 of the CPRs). Thus, it will not be possible to hide evaluation criteria or develop criteria during the evaluation process.
This is supported by the requirement in paragraph10.8 of the CPRs that Agencies must ensure that tenderers are dealt with fairly and in a non-discriminatory manner.
Modification of evaluation criteria or specifications
Further, if an Agency varies the evaluation criteria or specifications set out in the request documentation, the Agency must transmit all modifications to all potential tenderers participating at the time and allow them an adequate time to respond (paragraph10.12 of the CPRs).
The CPRs also include more detailed and clearer guidance on key areas of procurement. There is now a "how to use the CPRs" section and more detailed guidance on assessing value for money and more clarity on the reporting requirements.
What are your responsibilities?
The CPRs clarify responsibilities for officials performing duties in relation to procurement. Officials need to comply with the mandatory procurement requirements and thus should familiarise themselves with the requirements in the CPRs.
Internal agency procurement documentation (ie. Chief Executive Instructions and other operational guidance), any agency-specific procurement templates, and internal agency procurement training will need to be updated.
The shift in emphasis from guidelines to rules suggests that the Australian Government is serious about maintaining its reputation as a "respected, transparent and accountable procurer." As a result, Agencies and officials must adhere to the rules in the new CPRs for all Agency procurements.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.