Changes to the Commonwealth Procurement Rules: What you need to know before 17 November 2025

The Commonwealth Government has announced changes to the Commonwealth Procurement Rules (CPRs).

On 17 November 2025 a revised set of CPRs takes effect, replacing the July 2024 CPRs. The reforms are the most extensive overhaul in almost a decade, designed to reinforce value for money outcomes, enhance ethical standards, and prioritise Australian businesses and SMEs. The changes also represent the first increase to key procurement thresholds in 20 years.

The CPRs are the core policy framework governing how Commonwealth entities procure goods and services. They set out the rules and principles that ensure procurement is conducted with integrity, transparency, and value for money, while supporting broader government objectives.

Below we outline the headline reforms, unpack what they mean in practice and provide a readiness checklist to help entities stay ahead of the curve.

Higher procurement threshold for goods and services

The general procurement threshold which will trigger the requirement for an open approach to market (and the application of the other Division 2 rules) will increase from $80,000 to $125,000 (inclusive of GST). This new threshold will apply to purchases by non-corporate Commonwealth entities (NCE) and certain prescribed corporate Commonwealth entities and represents the first increase to this threshold in 20 years.

As a result, more purchases will fall below the open tender line and outside the detailed Division 2 rules, allowing officials to use simpler, faster sourcing methods. This change will create a larger pipeline of opportunities for Australian businesses and SMEs, who can be considered first without competing in a full open (and therefore global) tender process.

Australian businesses prioritised

The CPRs include new requirements to prioritise Australian businesses for procurements below the relevant procurement thresholds (CPR 5.4). The non-discrimination rule currently requires agencies to treat all suppliers equally in all procurements, preventing any preference for Australian businesses. Under the updated CPRs, the non-discrimination rule has been moved to Division 2 and will only apply to procurements above the relevant threshold (CPR 10.2).

The definition of “Australian business” now requires that the business has 50% or more Australian ownership (or is principally traded on an Australian equities market), Australian tax residency, and a principal place of business in Australia. For procurements below the relevant threshold, qualifying New Zealand businesses are now also included as "Australian businesses".

From 1 July 2026, AusTender reporting will also require entities to specify why a contract was not awarded to an Australian or New Zealand business where the new preferencing rules apply.

Opportunities for small and medium enterprises 

For contracts with an estimated value under $125,000 sourced from the Management Advisory Services Panel, People Panel, or any standing offer managed by the Digital Transformation Agency, NCEs must invite only Small and Medium Enterprises (SMEs) (CPR 5.5) to make submissions.

The definition of “SME” has been refined to mean an Australian or New Zealand business with fewer than 200 full-time equivalent employees, including employees of associated entities.

These changes are expected to foster greater opportunities for Australian SMEs.

A new searchable supplier portal will be launched which will assist agencies in identifying whether a business is an Indigenous business, an SME, an Australian business or a women-owned business.

Ethical conduct and value for money

Ethical conduct is now explicitly included as a factor in value for money assessments (CPR 4.5(c)). Additionally, the provisions relating to efficient, effective, economical, and ethical procurement have been extended to apply to all procurements, not just those above the relevant threshold (CPR 6.6). In practice, this will place a spotlight on governance, modern slavery, fraud control and integrity of suppliers across all contract values.

Rising compliance obligations

Screening and checks will intensify because the requirement to make reasonable enquiries into suppliers’ compliance with workplace health and safety, environmental impacts and labour regulations compliance will now apply to all procurements and are no longer subject to the threshold (CPR 6.6). In addition, the requirement for agencies to not enter into contracts with suppliers who have unresolved judicial decisions against them relating to employee entitlements continues to apply (CPR 6.9).

Negotiation processes

The new CPRs set clearer rules on when and how negotiations with tenderers can occur. Entities can conduct negotiations with suppliers if this is flagged in the request documentation or if, following evaluation, no single tenderer offers best value for money (CPR 10.18). Additionally, any elimination of a tenderer during negotiations must be based on the original essential requirements and evaluation criteria, and a common deadline must be provided when giving an opportunity to submit revised tenders (CPR 10.19).

Alignment with audit recommendations

Several CPRs (including CPR 7.27, 10.6, 10.8, 10.9, 10.12, 10.18–10.19, 10.32)) have been reshaped to address findings from the ANAO Procurement Complaints Handling Audit in 2023. These changes focus on standards compliance, specification drafting, negotiations, and ensuring equitable treatment of suppliers.

What to do next – a readiness checklist

For agencies racing to update policies and precedents before 17 November 2025, there are three key actions.

1. Review your procurement pipeline

• Identify upcoming procurements, especially those at or above the new thresholds ($125,000 for non-construction) and ensure that all approaches to market scheduled on or after 17 November 2025 comply with the new CPRs.

2. Update policies and processes

• Review internal procurement processes and procedures to align with the new CPRs, including Australian business and SME prioritisation requirements.

• Ensure screening processes for supplier eligibility are appropriate and incorporate ethical sourcing requirements for all procurements.

• Update risk assessment and value for money frameworks to reflect the new CPR requirements, including broader economic benefits and ethical conduct.

3. Review templates and documentation

• Identify and update existing templates, including:

  • Approach to Market (ATM) documentation

  • evaluation plans and criteria

  • contract templates

  • declarations and self-assessment forms for Australian business/SME status.