Commonwealth Agencies should review their internal procurement policies and templates to ensure they comply with the Commonwealth Procurement Rules (CPR) which replace the Commonwealth Procurement Guidelines (CPG) as of 1 July 2012.
Whilst confirming well-established procurement principles, the CPR provide more detailed guidance and are generally more prescriptive than the CPG.
What are the CPR?
The CPR are a series of procurement rules which can be broken down into two categories:
- mandatory (these are denoted by the word ‘must’); and
- non-mandatory, i.e. those that indicate good practice (these are denoted by the word ‘should’).
Division 1 contains rules applicable to all procurements and Division 2 contains rules applicable to procurements above the relevant thresholds. The relevant threshold (incl GST):
- for Financial Management and Accountability Act 1997 (Cth) (FMA Act) agencies, other than for procurements of construction services, is $80,000;
- for relevant Commonwealth Authorities and Companies Act 1997 (Cth) (CAC Act) bodies, other than for procurements of construction services, is $400,000; and
- for procurements of construction services by FMA Act agencies and relevant CAC Act bodies, is $9 million.
Who must comply
All FMA Act Agencies as well as CAC Act bodies that are listed in Schedule 1 to the Commonwealth Authorities and Companies Regulations 1997 (Cth) are subject to the CPR.
Consequences of non-compliance with the CPR and the general financial management framework
Non-compliance with the mandatory rules is reportable in the agency’s Certificate of Compliance.
It is also worth noting that a failure to comply with the general financial management framework under legislation such as the Crimes Act 1914 (Cth) and the FMA Act, can attract criminal liability for individuals. For example, pursuant to the Crimes Act, Commonwealth Officers may face up to 2 years imprisonment for improper disclosure of information and, pursuant to the FMA Act, officials may face up to 7 years imprisonment for the misapplication or improper use of public money.
The Public Service Act 1999 (Cth) also imposes a range of sanctions on APS employees who breach the APS Code of Conduct. For example, an APS employee may be reprimanded, or have their employment terminated or reduced in classification.
What you need to do
Ensure your procurement policies and templates reflect the requirements in the CPR. For example, consider if:
- your internal policies and procedures:
- ensure that debriefs are provided (if requested) to both unsuccessful and successful tenderers (s 7.15 of the CPR);
- adequately address the requirements in relation to the confidentiality of suppliers’ material after the award of the contract, i.e. ensure there is clear guidance on how a decision is to be made as to whether material is to be kept confidential on the supplier’s request on a case-by-case basis (s 7.22 c. of the CPR);
- establish proper procurement risk management processes (s 8 of the CPR); and
- for procurements above the relevant thresholds – ensure that the time limits are observed (e.g. at least 25 days tender period with some exceptions); and
- your contract templates include the following provisions:
- the contractor agrees to the public disclosure of the names of any subcontractors that are engaged to perform services in relation to a contract (s 7.19 a. of the CPR);
- the contractor must ensure that its subcontracts contain a provision obtaining the subcontractor’s consent for the subcontractor’s participation in the contract to be publicly disclosed (s 7.19 b. of the CPR);
- the contractor agrees to provide access to its records to the Australian National Audit Office to carry out appropriate audits (s7.22 b. of the CPR);
- the contractor acknowledges that the process and contract related materials may be disclosed to Parliament and its committees (s 7.22 a.); and
- a provision specifying periodic performance review and termination rights for contracts with no end date in the event that VFM is not achieved.
The list above is provided as a set of examples only and is not an exhaustive and comprehensive checklist for compliance with the CPR.
If you wish to further discuss any of the above or other procurement and probity issues, please don’t hesitate to contact one of the team.
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