How do Commonwealth entities procure?

Author: 
John Sheridan - CIO & CISO

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I thought it would be useful to kick off 2016 with a post that summarises and responds to a range of common questions asked of Commonwealth procurement.

 

Do all Commonwealth entities have to apply the Commonwealth Procurement Rules (CPRs)?

No, not all Commonwealth entities are subject to the CPRs. They do however apply to all non-corporate Commonwealth entities (like Finance, Defence, DHS and ATO) and 20 prescribed corporate Commonwealth entities (like CSIRO and the National Gallery). A complete list of these entities can be found on the governance flipchart hereTip: the corporate entities with a ℗ against them are subject to the CPRs.

 

How many procurement methods are there?

The Commonwealth Procurement Rules (CPRs) set out the rules when officials undertake procurement and include three procurement methods: open tender, prequalified tender and limited tender (found here). These procurement methods are flexible enough to enable innovative and value-enhancing approaches to be considered.

 

Are the procurement thresholds the same for all entities and what procurement method must be used? 

The CPRs have procurement thresholds which for all non-corporate Commonwealth entities is $80,000 and prescribed corporate Commonwealth entities is $400,000. These procurement thresholds aren’t “limits”, but above these values, entities are generally required to approach the entire market by conducting an open tender using AusTender, unless they have an appropriate reason not to.

The obligation to approach the open market can also be met by approaching a panel which itself was established by approaching the open market. This means that entities often have multiple ways of engaging suppliers.

There are circumstances when direct sourcing from a supplier (limited tenders) are appropriate and these are reflected in the CPRs in a list of exemptions here and a separate list of limited tender conditions here. One such limited tender condition relates to innovation. For example, if a supplier approaches an entity with an innovative proposal and the entity wishes to procure the goods/services, the CPRs allow this (regardless of value). A limited tender can be undertaken using Paragraph 10.3c (unsolicited innovative proposal). Of course, value for money still needs to be achieved.

 

I hope the above has been helpful.

If you have any questions let me know in the comments below, or email haveyoursay.procurement@finance.gov.au.

Regards

John

Comments (2)

Hi John,

We are a small agency and have an existing contract for a software system that is about to become unsupported due to advances in technology. We would like to upgrade it fairly quickly to better align it with the software used by our Portfolio Department. What are our options for finding a software provider, other than approaching the open market?

Regards

Greg Dennis

Hi Greg,

The Commonwealth Procurement Framework is flexible and provides a number of options to assist entities meet their business needs. There are circumstances under which you can directly engage with industry, the limited tender conditions at paragraph 10.3 of the CPRs, or an exemption from Division 2 at Appendix A of the CPRs may be applicable. If these are not suitable and your procurement is valued at or above the relevant threshold ($80,000 for non-corporate Commonwealth entities), you will need to openly approach the market noting that this does not need to be a complicated process.

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Last updated: 24 January 2018