Increasing focus on Australian businesses, SMEs and ethics in the new procurement rules: what you need to know

Procurement (2.9)

Expanded the scope of what is not a procurement for the purposes of the CPRs to include:

• procurement of goods and services used in the production or supply of goods and services for resale
• secondment of employees between and within Commonwealth entities and from state, territory and local government entities,

arrangements between non-corporate Commonwealth entities where no other ‘potential’ suppliers were approached.

Compliance with the two divisions of the CPRs (3.10 and 3.11)

The procurement threshold for certain corporate Commonwealth entities (as specified in the CPRs) has increased from $80,000 to $125,000. 

Achieving value for money (4.4.a)

Clarification in relation to the requirement for procurements to be non-discriminatory by now instead requiring the procurement to encourage competition amongst potential suppliers.

Ethical conduct- relevant to achieving value for money (4.5.c)

Significantly, the ethical conduct of a supplier has been added to the list of potential financial and non-financial costs and benefits to be considered when determining value for money.

Encouraging competition (5.1 and 5.3)

The express reference to the procurement framework being ‘non-discriminatory’ and the requirement for potential suppliers to not be discriminated against due to ‘their size, degree of foreign affiliation or ownership, location, or the origin of their goods and services’ has been removed from Division 1 of the CPRs.

The non-discrimination requirement now only applies to procurements over the relevant procurement threshold (see below).  

Consideration of Australian Businesses (5.4 and 5.5)

1. For procurements with an expected value between $10,000 and $125,000, non-corporate Commonwealth entities (NCCEs) must first satisfy any relevant requirements under the Indigenous Procurement Policy (IPP) and then must only invite Australian and New Zealand businesses to make submissions. The requirements under the IPP refer to the Mandatory Minimum Requirements (MMRs) and the Mandatory Set Aside (MSA).

The MMRs do not apply to procurements with an expected value within this range. For procurements with an expected value between $10,000 and $125,000, the MSA only applies to:

• remote procurements
• procurements delivered wholly in Australia with an estimated value between $80,000 and $125,000.[2]

Where the MSA applies, NCCEs must first determine whether an Indigenous SME could deliver the required good or service on a value for money basis.

If no suitable Indigenous SME is identified, or the MSA does not apply, then the NCCE must approach an Australian or New Zealand business, unless it is determined that approaching an Australian or New Zealand business or businesses is not appropriate.

2.In addition, for procurements with an expected value below $125,000 from the Management Advisory Services Panel, the People Panel or a standing offer managed by the DTA, NCCEs must only invite SMEs on the panel or standing offer to make submissions, unless it is determined that approaching an SME is not appropriate.

For standing offers managed by the DTA, the same process as above must be followed with respect to the IPP before approaching SMEs. For both (1) and (2) above, the NCCE can only make a general approach to market if there are no submissions, or no submissions represent value for money.

Treatment of confidential information (7.25.a)

The provisions relating to disclosure of information has been amended to clarify that procurement information provided by suppliers can be shared to other Commonwealth entities where it serves the Commonwealth’s legitimate interests (such as for policy development, research, compliance, regulatory and other non-commercial purposes).

Procurement thresholds (9.7.a)

The procurement threshold for non-construction procurements for non-corporate Commonwealth entities has increased from $80,000 to $125,000. 

Procurements from standing offers (9.14)

Where standing offers include multiple potential suppliers, officials should approach multiple potential suppliers. Presumably, this does not require that all suppliers with standing offers be approached. 

Non-discrimination (10.2)

The requirement for potential suppliers to not be discriminated against due to ‘their size, degree of foreign affiliation or ownership, location, or the origin of their goods and services’ now only applies procurements over the relevant procurement threshold.

Request documentation (10.6.e)

Request documentation for procurements over the relevant procurement threshold must now include a complete description of the relevant entity’s intention to conduct negotiations.

Negotiations (10.18 and 10.19)

New rules have been included for when and how negotiations can be conducted for procurements over the relevant procurement threshold. Finance has also issued guidance to support entities subject to the CPRs in considering and undertaking contract negotiations.