The Minister for Finance, Senator Mathias Cormann recently announced that the current Commonwealth Procurement Rules (CPRs) – in force since July 2014 – will be revised to ‘support the Government’s long standing commitment of ensuring equitable access to government contracts for Australian businesses, in particular, small business’, with the new CPRs coming into force on 1 March 2017.

The revisions have been made to only Division 2 of the CPRs, meaning they only apply to covered procurements, ie procurements over specified thresholds, and not to procurements that are exempt from Division 2 of the CPRs. The revisions make no changes to Commonwealth bodies currently required to comply with the CPRs – Commonwealth bodies which are regarded to be ‘relevant entities’ under the current CPRs will continue to be regarded as ‘relevant entities’ under the revised CPRs.

Under the revised CPRs, the following new requirements will apply:

Tenderers must demonstrate their ability to comply with applicable Australian standards (paragraph 10.10 of the CPRs)

In procurements for goods or services where there is/are (an) applicable Australian standard(s), tenderers must demonstrate an ability to comply with such Australian standard(s) and contracts must set out details of the applicable Australian standard(s).

Ensuring compliance with applicable standards (Australian or otherwise) (paragraph 10.37)

Where applying a standard (Australian or otherwise) for goods or services, relevant entities must make reasonable enquiries to determine compliance with that standard and this includes, (i) gathering evidence of relevant certifications, and (ii) periodic auditing of compliance by an independent assessor.

Compliance with applicable Australian regulatory frameworks (paragraph 10.18 of the CPRs)

Officials must make reasonable enquiries that the procurement is carried out considering relevant regulations and/or regulatory frameworks, including (without limitation) tenderers’ practices in relation to, (i) labour regulations, including ethical employment practices, (ii) occupational health and safety, and (iii) environmental impacts.

‘Economic benefits’ to the Australian economy for covered procurements over $4 million (paragraphs 10.30 and 10.31 of the CPRs)

Additionally, for covered procurements above $4 million, officials are required to consider the economic benefit of the procurement to the Australian economy, within the context of relevant national and international agreements and procurement policies to which Australia is a signatory, including free trade agreements and the Australia and New Zealand Government Procurement Agreement.

Moving forward with the new CPRs

In light of the new CPRs, Commonwealth relevant entities should, moving forward:

  • ensure that their procurement documents and polices, eg RFTs, evaluation plans, and contracts etc, are updated, including ensuring, where applicable, that the exact requisite standards (Australian or otherwise) are clearly stated
  • comprehensively assess any potential impact that the revised CPRs will have on upcoming procurements, especially if key dates, eg deadlines for questions and closing times, straddle 1 March 2017
  • consider how they will comply with the new CPRs, bearing in mind that it may be potentially difficult in practice, to assess tenders against the new criteria set out in the revised CPRs unless additional resources are utilised, eg engaging external consultants or experts, especially (where applicable), in relation to the new criteria requiring Commonwealth relevant entities and officials to:
    • consider the ‘economic benefit to the Australian economy’;
    • assess whether or not tenderers are able to meet requisite standards (Australian or otherwise); and
    • assess whether or not tenderers are able to comply with applicable Australian regulatory frameworks, when evaluating tenders.

Given that the new CPRs have just been released, and the fact that there is some ambiguity to how the revisions will sit with the overarching value for money objective of the CPRs, we expect that the Federal Government will be releasing further guidance to the new CPRs prior to their commencement on 1 March 2017.