Australia: Senate Committee Report on Commonwealth procurement procedures

Last Updated: 23 January 2015
Article by Ashley Cahif

On 17 July 2014, the Senate Finance and Public Administration References Committee (Committee) tabled a report on Commonwealth procurement procedures.

In an interesting twist, as the Committee was established under the previous Government, the majority of the Committee's membership comprised Labor Party and Greens members. As a result, the minority's report is probably indicative of the likely response of the current government.


The Committee examined the ratio of Australian goods and services compared to imported goods and services used by the Commonwealth through procurement procedures.

This involved a review of the policy and procedures under the Commonwealth Procurement Rules (CPRs) and the Financial Management and Accountability Act 1997 (Cth) (FMA Act) and associated legislation and guidance.

The majority report made 15 recommendations. They were that:

  • the Department of Finance
    • consult with Australian industry to develop an alternate test to provide more meaningful information on the quantity of Australian content in goods and services procured by the Commonwealth Government, and
    • how to build this information into
    • data collected in AusTender
    • provide a detailed explanation of the barriers to developing a preferencing scheme, which considers Australia's
    • free trade obligations
    • provide education and training to agencies and their staff regarding the inclusion of Australian standards, or the equivalent, in tender documentation
    • during the early implementation stages of the new suite of contract documents for procurements under $200,000, address the concerns about complexity of documentation raised during the inquiry and make any necessary adjustments
    • following consultation with stakeholders, establish an independent and effective complaints mechanism
    • for procurement processes
    • work with the lead agencies for procurement-connected policies and the Department of Prime Minister and Cabinet to develop a whole of government annual reporting framework for monitoring of and compliance with these policies, and
  • the Government
    • review the application of the non-discrimination principle to ensure that it does not inadvertently discriminate against Australian manufacturers
    • continue to fund the Australian Industry Participation policies and programs and reinstitute funding for the Enterprise Solutions Program
    • redraft the CPRs to provide an explicit exemption for practices to benefit or preference small and medium businesses
    • develop a methodology to quantify the factors used to assess whole-of-life costs
    • consider best practice examples from other jurisdictions to further simplify
    • the tender process
    • provide an explanation as to whether there are any reasons why the operation of the Competition and Consumer Act 2010 (Cth) should not apply to Commonwealth procurement
  • The Australian National Audit Office (ANAO), during its next procurement-related audit:
    • review the operation of the revised CPRs, particularly the revisions relating to the assessment of financial and non-financial costs and benefits, and provide an evaluation
    • undertake an assessment of the application and implementation of relevant procurement-connected policies, and
    • assess the application and implementation of procurement-connected polices also include an assessment of the competencies of agencies' procurement officers.
    • The minority report noted that this didn't need to be done by ANAO.

The three minority Committee members stated most of the recommendations proposed by the majority of the Committee were "unnecessary", and only supported four of the 15 recommendations proposed by the majority and indicated support "in principle" for one other recommendation.

The recommendations that the minority agreed with are highlighted in bold.

The minority also provided "in principle" support for the recommendation that the Government consider best practice examples from other jurisdictions to further simplify Australian tender processes. Full support was reserved on the basis that the majority's recommendation didn't specify any particular example jurisdictions, nor provide additional details of proposals to streamline the tender process.

Key issue葉he potential application of the Competition and Consumer Act 2010

One of the key areas that will need to be monitored closely is the majority recommendation for the Government to provide an explanation about why the operation of the Competition and Consumer Act 2010 (CCA) should not apply to Commonwealth procurement.

While the recommendation was not supported by the minority, it was on the basis that, following the 2013 election, the Government established an independent review of Australian competition policy. The minority preferred delaying any debate about the operation of the CCA until the results of the independent review are published.

If the CCA applied to Commonwealth procurement, this would mean that the "misleading or deceptive" provisions of the CCA would apply. Currently, the CCA only applies to Commonwealth bodies that "carry on a business", and "traditional" procurement by agencies is generally regarded as falling outside of the scope of the CCA.

Any change in this approach will need to be carefully considered and responded to in Commonwealth procurement practices.

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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Ashley Cahif
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