On 1 January 2019, changes to the Commonwealth Procurement Rules (CPRs) will take effect.
The changes are primarily to reflect requirements arising from Australia's international trade obligations and to clarify existing obligations.
The changes will not be retrospective and will apply only to new procurements undertaken from 1 January 2019. It is therefore imperative that, leading up to this date, Commonwealth entities ensure they have a thorough understanding of the changes and update their procurement policies and procedures.
This is particularly important in the context of the Government Procurement (Judicial Review) Act 2018 (Cth) which commences on 20 April 2019 (if not proclaimed earlier). Under the new Act, suppliers will be able to make a complaint to the accountable authority of a relevant Commonwealth entity where their interests are affected by a contravention or proposed contravention of the CPRs during a procurement to which both Divisions 1 and 2 of the CPRs applies.
Changes to the CPRs
The updated CPRs including the following material changes that Commonwealth entities should be aware of:
- Emphasis on "value for money": There is a renewed emphasis on achieving value for money in procurements. The amendments to the CPRs make clear (in the Foreword and at paragraph 4.5) that price is not the only factor when assessing value for money and officials are required to consider all relevant financial and non-financial costs and benefits associated with a procurement.
- "Prequalified Tenders" removed: Amendments have been made to reflect the removal of prequalified tenders (involving procurement from the Legal Services Multi-use List, which has expired) as a procurement method under the CPRs.
- Procurement threshold now applies to the Regional Investment Corporation (RIC): The Regional Investment Corporation has been added to the list of corporate Commonwealth entities that must apply a procurement threshold and reporting threshold of $80,000 for procurements other than the procurement of construction services (paragraph 3.7). The Australian Digital Health Agency, Australian Human Rights Commission, National Portrait Gallery of Australia and Old Parliament House were already required to apply a procurement threshold and reporting threshold of $80,000, despite being prescribed corporate Commonwealth entities.
- Entities must apply timely complaint-handling procedures: Paragraph 6.8 has been updated to require relevant entities to apply timely complaint-handling procedures, including providing acknowledgement soon after a complaint is received.
- Reason for limited tender must be reported: There is a new requirement under paragraph 9.11 requiring a relevant entity to report on AusTender the relevant exemption or condition it is relying on if it is conducting a limited tender.
- Clarification regarding procurements from standing offers: Paragraph 9.12 has been amended to clarify that procurements from standing offers are not subject to the rules in Division 2 of the CPRs (but must comply with the rules in Division 1).
- International standards to be used: The obligations in relation to specifications (at paragraphs 10.9 - 10.13) have been amended to expressly require specifications to be set out in terms of performance and functional requirements and based on international standards. The exception allowing entities to not base specifications on international standards when this would impose greater burdens than the use of recognised Australian standards has been removed. Paragraph 10.39 has also been amended to refer only to "standards" (as defined), rather than Australian standards, or in its absence, international standards.
- Minimum time limits: Paragraph 10.24 has been amended to require a relevant entity to establish a time limit for potential suppliers to lodge a submission of no less than 13 days when procuring commercial goods or services in circumstances when it does not accept submissions electronically. Previously, relevant entities could establish a time limit that was no less than 10 days in such circumstances.
- Procurement of motor vehicles no longer exempt from Division 2: The exemption under Division 2 for the procurement of motor vehicles has been removed, meaning that such procurements above the procurement threshold will now be subject to Division 2 of the CPRs.
Action Commonwealth entities should take
As discussed above and as addressed in our previous article, the introduction of the new Act means that Commonwealth entities must be particularly vigilant in understanding and complying with the CPRs.
Prior to the updated CPRs taking effect on 1 January 2019, Commonwealth entities should prepare now by ensuring their procurement policies and procedures are updated to reflect the changes.
Please contact us if you would like further information on the changes to the CPRs or if you require any assistance in reviewing and updating your procurement policies and procedures before 1 January 2019 or the commencement of the new Act.