Q & A: 14 December 2020 Amendments to the Commonwealth Procurement Rules

When were the amendments introduced?

The Minister for Finance issued new Commonwealth Procurement Rules (CPRs) under section 105B(1) of the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) which came into effect on 14 December 2020.

How does it change non-corporate entities (NCEs) engagement with small to medium sized enterprises (SMEs)?

For procurements of goods and services (not related to construction) valued between $80,000 and $200,000, NCEs can now directly engage SMEs and are not required to conduct an open approach to market. SMEs are defined as Australian or New Zealand firms with fewer than 200 full-time equivalent employees. The SME exemption can be utilised by NCEs provided a suitable indigenous supplier cannot be engaged to meet the procurement requirements and achieve value for money (VFM).

Does the Department of Agriculture, Water and the Environment’s Sustainable Procurement Guide need to be considered when assessing VFM?

Paragraph 4.5 of the CPRs has been amended to state when assessing VFM of a procurement ‘an official must consider the relevant financial and non-financial costs and benefits of each submission including, but not limited to the….

• environmental sustainability of the proposed goods and services (such as energy efficiency, environmental impact and the use of recycled products):

• recognising the Australian Government’s commitment to sustainable procurement practices, entities are required to consider the Australian Government’s Sustainable Procurement Guide where there is opportunity for sustainability or use of recycled content;
• the Sustainable Procurement Guide is available from the Department of Agriculture, Water and the Environment’s website; and

• whole-of-life costs.’

The changes signal the Commonwealth’s commitment to sustainable procurement practices by requiring officials to consider environmental impacts as well as whole-of-life costs of procurements including any indirect costs¹.

Have the payment terms for SMEs changed?

Paragraph 5.8 of the CPRs has been updated to state NCEs must make all payments to suppliers under contracts valued up to $1 million (GST inclusive) within 5 calendar days for electronic invoicing and 20 calendars days for all other.

What are the obligations for arrangements between NCEs?

The CPRs now state that arrangements between NCEs (where no other suppliers are approached) are not considered a procurement for the purpose of the Rules².

Should cyber security risks be assessed?

CPRs have been updated to include a requirement for officials to assess cyber security risk in accordance with the Australian Government’s Protective Security Policy Framework³. This key change reflects the Government’s commitment to protecting Commonwealth networks from cyber risks.

When should the Commonwealth Contracting Suite (CCS) be used?

NCEs must use the CCS for contracts under $200,000. This is not a new requirement on officials but rather reflects existing Commonwealth policies.

How does the Modern Slavery Act 2018 (Cth) apply?

The Modern Slavery Act 2018 came into effect on 1 January 2019. The CPRs now reflect the Commonwealth’s requirement to publish a modern slavery statement on an annual basis in relation to procurement undertaken⁴.

Please contact us if you would like to discuss the changes to the CPRs and how they apply to your procurement.