Federal Govt changes IT shopping rules

Everything you need to know.

The Federal Government's estimated spend of around $4 billion a year on IT will be conducted under a new set of rules.

The former Commonwealth Procurement Guidelines (known as CPGs) were revised and renamed as The Commonwealth Procurement Rules (CPRs) and will come into effect from July 1 (pdf).

While the policies appear unchanged, the tone and terminology of the rules indicate a desire for improved compliance. 

Internal and external audits conclude that compliance with procurement rules remains uneven.

The most recent Australian National Audit Office report on the use of procurement panels by three separate agencies found they did not sufficiently document how individual procurements represented value for money for between 41 per cent and 71 per cent of the procurements examined (pdf).

Among the major changes:

• 'Value for money’ has been reworded to clarify that it incorporates other policies of the Commonwealth such as energy efficiency and environmental impact.
• Clarification of the treatment of contracts without end dates: "Where a contract does not specify an end date it must allow for periodic review and subsequent termination of the contract by the agency, if the agency determines that it does not continue to represent value for money".
• Procurement by third parties (such as prime contractors) on behalf of an agency cannot be used to avoid the value for money rules in the CPRs when procuring goods and services.
• AusTender 42 day reporting requirements have been clarified. They now mean agencies must report within 42 days of entering into or amending a contract.  

However the reporting thresholds have not changed. Including GST, these are:

• $10,000 for FMA Act agencies; and
• $400,000 for procurements other than construction services, for relevant Commonwealth Authorities and Companies (CAC) Act bodies

New names for old procurement methods

The rules also introduce benign-sounding alternatives for procurements that are otherwise not open for general competition.

Two of the three procurement methods have had a name change:

• Open tender — remain as before Open Tenders — an open approach to the market
• Select tenders are now called Prequalified tenders. This involves publishing an approach to a shortlist of market suppliers such as a procurement, a multi-use list or those with a specific licence or qualification essential for the procurement; and
• Direct Source has been renamed as Limited tender (an agency approaching one or more potential suppliers to make submissions, where the process does not meet the rules for open tender or prequalified tender.)

So-called “covered and non-covered procurements" are now described as being above or below the relevant procurement threshold (usually $80,000).  

These terms were “not well understood” by non-procurement practitioners, according to an explanation (pdf) of the changes.

Also a new exemption from Division 2 — rules for acquiring goods and services above agreed thresholds — has been added: number 17, procurement from a SME with at least 50 percent indigenous ownership.