Tell me in 1 minute
Day 1 of the new Financial Year saw a revised set of procurement rules (here) adopted which contain some material, but unsurprising, changes that covered entities must comply with.
The changes crystallise into policy some of the themes we’ve seen from Government over the past year or so:
- more opportunities for small and medium sized enterprises to sell to the Commonwealth
- more guardrails to ensure integrity in the government buying process
- greater focus on ensuring use of tax payer funds have an ‘Australian economic benefit’
- signals that Government aims to support First Nations and female owned and led businesses
What are the key changes?
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RULE
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Topic
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Key Change
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Foreword |
- |
A complete re-write. The forward now emphasises the importance of SMEs (defined below), women-owned businesses, and First Nations entrepreneurship (including for Whole of Government panel arrangements). These changes are largely signalling however – other policy documents (such as the Indigenous Procurement Policy) and laws will need to do the heavy lifting to ensure these signals result in meaningful change. |
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3.2 and 3.3 |
Role of Ministers in procurement |
Updated to reflect government policy that Ministers should not be involved in the conduct of procurement processes or direct officials about the conduct of procurement processes. |
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4.7 |
Broader benefits to the Australian economy |
Officials are now required to consider economic benefits for procurements above $1 million (previously $4 million). |
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5.6 and 5.7 |
Small and Medium Enterprises (SMEs) |
The target for NCEs procuring from SMEs has increased to:
(previously it was 20% and 35%, respectively). SMEs are defined as Australian or New Zealand ‘firms’ with less than 200 full time equivalent employees. The new rules make it clear the threshold assessment is completed on a group basis - a ‘firm’ must now include employees of its parent company, subsidiaries and related bodies corporate when determining whether they are a SME. |
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6.10 |
Judicial review |
The requirement in relation to officials seeking to prevent corrupt practices is now declared to be a ‘relevant provision’ for the purposes of the Judicial Review (Procurement) Act 2018. This means a person can now seek to use the legal remedies under that Act (e.g. seeking a suspension of the procurement while a breach is investigated) in cases where corruption has occurred. |
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6.12 |
Supplier Code of Conduct |
Entities must include the Commonwealth Supplier Code of Conduct in all Commonwealth contracts… unless the accountable authority (eg the Secretary) decides not to (but if it does that it may (we suspect ‘must’ was intended) document its decision). |
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7.19 |
Reporting on amendments on Austender |
Entities must now report amendments on Austender within 42 days where the variation is $10,000 or more. |
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Appendix A, Exemption 17 |
Threshold for exemption to Div 2 |
Appendix A includes a list of exemptions from the requirement to issue an open tender. Entities are now permitted to directly engage a small and medium enterprise (SME) for procurements valued up to $500,000 (including GST). This threshold has been increased by $300,000 for agencies other than Defence (as it already had the benefit of the $500,000 threshold). |
What’s next?
Implementation! Government will need to engage further with tenderers’ corporate information and validate representations made by tenderers, as well as adopt risk management strategies for high-risk, high-value procurements from SMEs.
Please reach out if you’d like to discuss.
