Australia: Key changes to the Commonwealth Procurement Rules and the new Commonwealth Contracting Suite, commencing July

Focus: New Commonwealth procument rules and new Commonwealth contracting suite
Services: Commercial

The Minister for Finance and his department have recently issued:

  • New Commonwealth Procurement Rules (CPR) effective from July 2014 made by the Minister under Section 105B(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act)
  • A new contracting suite for procurement under $200K on 3 July 2014.

The Commonwealth contracting suite

On 3 July 2014, the Department of Finance implemented changes to procurement support for contracts up to $200,000. The changes are intended to reduce costs and improve time efficiency for tenderers and Commonwealth Government agencies during acquisition processes, including those that require an Approach to the Market (expression, tender and proposal process).

The Basic Contract Suite (BSC) has been replaced with the Commonwealth Contracting Suite (CCS). The CCS essentially comprises of a set of three standard documents, including the 'Approach to Market', the 'Response to Approach to Market' and the 'Commonwealth Contract".

The CCS covers contracting with the Commonwealth Government for the following four contracting categories:

  1. Goods
  2. Services
  3. Goods and Services
  4. Consultancies.

The CCS is supported by standard Approach to Market Terms, Contract Terms and a Glossary covering the entire CCS. The Department of Finance has also produced what they have termed 'The Decision Tree' which is a checklist of contracting alternatives relevant to Commonwealth procurement intended to be consulted before using the CCS. The Department has advised online CCS and support materials and guidance is currently being developed.

Please click here for the CCS.

Commonwealth procurement rules

The new CPRs now reflect the consolidation of the former Financial Management and Accountability Act and Commonwealth Authorities and Companies Act bodies under the same accountability regime under the PGPA Act. What used to be known as agencies are now called non-corporate Commonwealth entities and prescribed corporate Commonwealth entities. The entities must now comply with the new 2014 CPRs and use the CCS.

Key changes include:

  • The CPRs are made under Section 105B(1) of the PGPA Act not regulation 7 under the Financial Management and Accountability Act 1997, which has now been repealed.
  • The importance of the Accountability Authority Instructions (formerly Chief Executives Instructions) are highlighted in paragraph 2.5. This is interesting in the light of comments made in The Report of the National Commission of Audit - Towards Responsible Government – Phase One, February 2014 suggesting that the role of Chief Executive's Instructions may be reduced in the future.
  • Procurement thresholds remain the same for the procurement of goods and services (as they are determined under the provisions of various Free Trade Agreements) but are now referred to in only one paragraph, paragraph 9.7. However, paragraphs 7.17 and 9.7 include the revised construction threshold to $7.5 million as was foreshadowed in January 2014.
  • Amendments due to the removal of the Finance Ministers (CAC Act Procurement) Directions 2012.
  • A new paragraph 3.7 noting that use of Appendix A exemptions is at an entity's discretion and that even under the exemptions Division 1 requirements must still be followed.
  • What in practice will be a very important consideration, in new subparagraph 4.2(f) adding the market's capacity to competitively respond to procurement as a factor in determining whether to undertake a procurement.
  • The quality of goods and services has been included as a factor when considering relevant financial or non-financial costs and benefits of a procurement under paragraph 4.5. While previously this was always part of the consideration it is helpful to have it expressed.
  • The concept of whole-of-life costs has been expanded into its own paragraph 4.6 for considerations officials must make in a procurement.
  • The term 'claim' has been replaced with 'resulting order' under paragraph 6.7 for clarity.
  • Record keeping requirements have been clarified under paragraphs 7.2 and 7.3.
  • Paragraphs 7.7 and 7.8 have been amended to reflect the move to rolling procurement plans and the need to maintain a current annual procurement plan.
  • To ensure that the AusTender ATM function is not used when there is a continuous request for applications on a multi-use list paragraph 7.13 has been amended.
  • Amendments to paragraph 9.12 clarify the position as it has always been understood, that is, that procurements from a standing offer must comply with Division 1.
  • The definitions appendix (formerly Appendix C) has moved to Appendix B and the acronyms appendix deleted. Where necessary Appendix B definitions now refer readers back to the text of the CPRs or to the PGPA Act (instead of replicating definitions). Many definitions and acronyms have changed.

Please click here for the CPR.

The reforms are intended to cut complexity, eliminate repetition and reduce unnecessary contractual burdens. This is consistent with current trends and the recommendation of Phase 1 of the Commission of Audit.

The Department of Finance is seeking comment from a user's perspective on:

  1. What works well?
  2. What needs improvement and how?
  3. Is anything missing?
  4. Is any part too detailed?
  5. Are there any special terms that should be added?
  6. Were negotiations necessary, and if yes, on what?

We are undertaking a comprehensive analysis of the impact these changes and the changes to the PGPA Act will have to tendering process and government accountability generally.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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