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Guide to ICT Sourcing - Appendix B: Relevant Legislation, Policies and Resources

Appendix B: Relevant Legislation, Policies and Resources

Financial Management and Accountability Act 1997

The Financial Management and Accountability Act 1997 (FMA Act) and associated Regulations provide the legislative framework governing financial management in all FMA agencies, including proposals for spending public money.

The framework comprises legislation, regulations, orders and guidelines that set out the financial management, accountability and audit obligations on agencies, including Departments, which form part of the Government sector. It covers:

Under the FMA framework, an example of a Department (of State) is the Department of Communications, Information Technology and the Arts (DCITA), an example of an agency is the Australian Customs Service. All FMA Act departments and agencies must have regard to the CPGs when carrying out activities relating to procurement of property and services.

Commonwealth Procurement Guidelines

The Commonwealth Procurement Guidelines (CPGs) set out value for money as the core principle underpinning procurement under the FMA Act, and articulate the policy framework to which officials should have regard when performing duties associated with procurement. Agencies may determine their own specific procurement practices within this framework of general principles and policies. Where an official takes an action that is inconsistent with the CPGs, he or she is required to make a written record of their reasons for doing so.

Officials undertaking procurement-related activity are expected to:

The CPGs address issues such as:

Agency Chief Executive’s Instructions

An agency’s Chief Executive’s Instructions (CEIs) provide agency-specific codification of the financial management framework, including provisions relating to procurement. They are the primary source of information on operational guidance for agency officials conducting procurement.

Limited Liability in Information and Communications Technology Contracts – Finance Circular 2006/03

The Finance Circular 2006/03 articulates and provides guidance on the Australian Government’s policy on the capping of liability when entering into ICT contracts.

This Circular applies to all agencies subject to the FMA Act.

Australian Government policy is that the liability of ICT suppliers contracting with agencies should, in most cases, be capped at appropriate levels. There must be a compelling defensible reason to include unlimited liability clauses.

The policy governing limited liability for ICT contracts is to be an Australian Government policy for the purposes of Regulation 9 of the Financial Management and Accountability Regulations 1997 (FMA regulations) and the CPGs.

Information and Communications Technology Multi Use List

The Information and Communications Technology Multi Use List (ICT MUL) is a list of ICT suppliers that wish to sell to the Australian Government. Australian Government departments and agencies can use the list to source suppliers of ICT goods and services and to conduct a select tender. Suppliers of ICT products and services can register to be included on the ICT MUL.

Inclusion of an ICT supplier on the ICT MUL does not imply that the Australian Government endorses use of that supplier’s product or services.

Australian Government agencies are not required to use the ICT MUL for procurement.

Guidance on the Mandatory Procurement Procedures

The purpose of the Guidance on the Mandatory Procurement Procedures is to help Australian Government agencies implement the CPGs and specifically the Mandatory Procurement Procedures.

Value for money is the core principle underpinning Australian Government procurement. This means that Australian Government officials need to be satisfied that the best possible outcome has been achieved taking into account all relevant costs and benefits over the whole of the procurement cycle. Depending on the property or service being procured, agencies may also include environmental, social and other costs in their calculations of the whole-of-procurement cycle. See also Guidance on Complying with Legislation and Government Policy in Procurement, below.

This operational guide promotes achievement of value for money by providing practical information on managing procurement processes that lead to agencies entering into a purchasing agreement with a supplier or suppliers. This information meets the requirements of the Government’s procurement framework requirements while facilitating delivery of good business outcomes. Therefore, this guide is an adjunct to the CPGs and will best serve the reader if they are familiar with the CPGs.

Guidance Complying with Legislation and Government Policy in Procurement

This guidance on Complying with Legislation and Government Policy in Procurement has been prepared to assist agencies subject to the FMA Act to comply with legislation, core procurement policy as contained in the CPGs and other relevant general Government policies when performing duties related to procurement of property and services.

In particular, the guidance:

AusTender

http://www.tenders.gov.au [External Site]

AusTender offers Australian Government agencies streamlined and cost-effective management and tracking of their open and restricted tender processes. It also provides an efficient way to distribute tender documentation to suppliers.

AusTender is a web-based secure application that will enable suppliers to:

AusTender allows Australian Government agencies to make tender documentation available from a central website. Suppliers can search, browse and download all relevant information online rather than requesting information to be sent to them. Suppliers can also ask to be automatically notified about tenders of interest to their business.

Suppliers must register to download tender documentation. Registration allows suppliers to be notified immediately of any change to the information relating to the tender.

Once suppliers have developed their tender response they can submit it via AusTender if the tendering agency has elected to use this facility. All responses are stored in a secure electronic tender box until the closing time for the tender has passed. AusTender uses encryption software to secure tender responses during transmission to AusTender and for storage in the electronic tender box.

The electronic tender box is opened in the same way as a physical tender box. A duly authorised committee must be present to open the electronic tender box.

AusTender aims to provide suppliers to government with:

SourceIT Model Contracts

http://www.sourceit.gov.au
Finance, through AGIMO, has developed a suite of model contracts for ICT procurement (called SourceIT model contracts), which are designed to cater for simple procurement of hardware acquisition and support, license and support of commercial off-the-shelf software and ICT consultancy services.

The model contracts provide templates for Australian Government agencies to develop sound commercial agreements efficiently and effectively. It is expected that this will encourage good business practice and minimise the risk of conflict and disagreement between agencies and suppliers.

Government Information Technology and Communications Contracting Framework

http://www.gitc.finance.gov.au

Government Information Technology and Communications (GITC4) is a legal framework that was developed as a cooperative effort between Australian industry representatives and the Australian Government. Although able to be used for simple procurement, GITC 4, with its clause-by-clause ‘build a contract’ functionality can also be used for more complex procurement scenarios, including IT services and provision of related products, business consultancy, systems integration and facilities management.

Statement of Intellectual Property Principles

The Statement of Intellectual Property Principles sets out the Australian Government’s policy for managing intellectual property (IP) by departments and agencies subject to the FMA Act. The statement covers 15 principles relevant to IP management, including procurement, record keeping, industry development and broader innovation policy, and public access. With respect to procurement activities, Principle 8 requires agencies to take a flexible approach to ownership of intellectual property in procurement activities. This means agencies should not rely on a default position for IP ownership, but should consider appropriate IP ownership arrangements on a case-by-case basis.

Agencies are required to comply with the requirements of the statement by 1 July 2008. Guidance on implementation will be available in the form of an IP Manual, which is expected to be published in 2007. Further information can be found at http://www.ag.gov.au/cca [External Site].

Management of Security Accountability

http://www.ag.gov.au/www/protectivesecurityHome.nsf [External Site]

http://www.dsd.gov.au/library/acsi33/acsi33.html [External Site]

Managing security accountability is a key consideration in the lifecycle of ICT sourcing. For example, paragraph A2.7 of the Australian Government Protective Security Manual 2005 (PSM) states, in part, that ‘when outsourcing a function, agencies remain accountable for the efficient and secure performance of that function’. Further, Part F provides policy and guidance on the security framework for competitive tendering and contracting. In general, the outsourcer should be expected to meet the same security requirements for protecting classified information and ICT systems, as would the Australian Government agency, should the function remain in-house.

International Obligations

http://www.finance.gov.au/publications/fmg-series/procurement-guidelines/index.html

Australia is a signatory to a range of bilateral free trade arrangements.

After January 2005, those arrangements, which include specific Australian Government procurement commitments, include:

These arrangements are implemented domestically as Australian Government policy and/or legislation, and hence policies and procedures to implement obligations under international agreements must be complied with in order to approve proposed procurement under FMA Regulation 9. All relevant international obligations are incorporated into the procurement policy framework as expressed in the CPGs.

Whole-of-Government Telecommunications Arrangements

The Whole-of-Government Telecommunications Arrangement (WOGTA) is a contracting framework managed by Finance’s AGIMO. Under the WOGTA framework, carriers and carriage service providers licensed under the Telecommunications Act 1997 are required to sign a WOGTA Head Agreement before they are able to provide services to the Government. Under this arrangement, the Australian Government is treated as a single customer and uses competitive processes wherever practical to seek access to new and innovative telecommunications services.

Risk Management Standard AS/NZS 4360:2004

http://www.standards.org.au [External Site]

According to Standards Australia, the risk management standard ‘provides a generic guide for the establishment and implementation of the risk management process involving the identification, analysis, evaluation, treatment and ongoing monitoring of risks’. It also notes that this standard ‘may be applied at all stages in the life of an activity, function, project or asset. The maximum benefit is usually obtained by applying the risk management process from the beginning.’

Contact for information on this page: ICT Procurement

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Last Modified: 14 January, 2009