Exemptions from Division Two

Principles

1. A procurement valued above the relevant threshold must be conducted in accordance with Division 2 of the Commonwealth Procurement Rules (CPRs) unless an exemption applies from Appendix A

2. Exempt procurements remain subject to other requirements of Division 1 of the CPRs, especially the core principle of value for money.

3. Use of an exemption should be clearly documented by the decision maker, including for subsequent audit scrutiny.

4. The standard reporting requirements apply to all such procurements.

5. The CPRs and exemptions reflect Australia 's obligations under free trade agreements.

6. Where, under Paragraph 2.6 of the CPRs, relevant entities don 't comply with the CPRs because of measures for the maintenance or restoration of international peace and security; to protect human health; for the protection of essential security interests; or to protect national treasures of artistic, historic or archaeological value , relevant entities will need to:

  • identify the particular measures relating to the procurement which requires departure from the CPRs;
  • determine the extent of the departure from specific requirements of the CPRs to address the measure; and
  • document and obtain approval by the Accountable Authority on such measures.

Practice

Exemption 1: Procurement including leasing of land, existing buildings or other immovable property or any associated rights (note: the procurement of construction services is not exempt)

1. In respect of the leasing of accommodation, the exemption applies to leases for accommodation from the commercial goods market.

2. This exemption does not apply to situations where leasing by the Australian Government is being applied or considered as a method of financing a construction services project, as in the case of some forms of pre-commitment lease or a private financing initiative. In such instances, officials should treat these as procurements of construction services and apply the CPRs accordingly.

3. This exemption can be used to procure any rights associated with property, such as water entitlements and air rights.

Exemption 2: Procurement of goods and services by a relevant entity from another Commonwealth, state, territory or local government entity

4. This exemption can be used to direct source from another Commonwealth, State, Territory or Local Government entity, without needing to apply Division 2 – Additional rules for procurements at or above the relevant procurement threshold. Division 1 rules still apply to these procurements, most notably the core rule of achieving value for money.

Exemption 3: Procurements funded by international grants, loans or other assistance, when the provision of such assistance is subject to conditions inconsistent with this document

5. This exemption may be used where conditions attached to foreign assistance packages do not align with the Division 2 – Additional rules for procurements at or above the relevant procurement threshold.

Exemption 4: Procurements funded by grants and sponsorship payments from non-Commonwealth entities

6. This exemption applies directly to purchases funded from gifts, bequests and sponsorship funding provided by non-government entities.

Exemption 5: Procurement for the direct purpose of providing foreign assistance

7. Procurements with the direct purpose of providing foreign assistance are exempt from the Division 2 – Additional rules.

Exemption 6: Procurement of research and development services, but not the procurement of inputs to research and development

8. The use and application of this exemption should be judged using the normal dictionary meaning of research and development.

9. This exemption from the Division 2 – Additional rules to procurements at or above the relevant procurement threshold does not, however, apply to the procurement of inputs to research and development, such as computers, computer software or any other equipment required to conduct research and development. ' The exemption only applies if services being procured are themselves classed as research and development.

10. Typical procurements of research and development services include:

  • market/social research;
  • scientific research; and
  • similar actions that create 'new knowledge ' for an entity.

Exemption 7: The engagement of an expert or neutral person, including engaging counsel or barristers, for any current or anticipated litigation or dispute

11. For the purpose of the CPRs, the classification of expert or neutral persons refers to:

  • skilled legal professionals, such as barristers and counsel; and
  • neutral persons, such as mediators, conciliators, arbitrators and facilitators.

12. For the exemption to apply, there must be a current or anticipated litigation or dispute.

Exemption 8: Procurement of goods and services (including construction) outside Australian territory, for consumption outside Australian territory

13. Australian embassies and consulates can use this exemption for the procurement of goods and services for overseas use.

14. Both of the following conditions must be satisfied:

  • the procurement must occur overseas. ' If substantial planning and developments take place in Australia, the procurement may be viewed as having been conducted in Australia, regardless of the contract signing being conducted overseas; and
  • the procurement is only exempted if the consumption of goods and services takes place overseas.

Exemption 9: Acquisition of fiscal agency or depository services, liquidation and management services for regulated financial institutions, and sale and distribution services for government debt

15. This exemption is likely to be only relevant to the functions of the Reserve Bank of Australia and the Australian Office of Financial Management in relation to the services described.

Exemption 10: Procurement by the Future Fund Management Agency of investment management, investment advisory, or master custody and safekeeping services for the purposes of managing and investing the assets of the Future Fund

16. This exemption recognises the special requirements of the Future Fund Management Agency in relation to the management of their respective funds.

Exemption 11: Procurement of blood plasma products or plasma fractionation services

17. The National Blood Authority handles all procurement of blood and blood products in Australia as part of the National Blood Agreement between the Commonwealth and all State governments.

Exemption 12: Procurement of government advertising services

18. Government advertising services are to be purchased in accordance with the Guidelines for Campaign Advertising.

Exemption 13: 'Procurement 'of goods 'and services by, or on behalf of, the Defence Intelligence Organisation, the Australian Signals Directorate, or the Australian Geospatial Intelligence Organisation

19. This exemption recognises the special requirements of the Defence Intelligence Organisation, the Defence Signals Directorate, or the Defence Imagery and Geospatial Organisation.

Exemption 14: Contracts for labour hire

20. Contracts for labour hire are defined in the CPRs.

  1. 'This exemption specifically does not apply to contracting with an intermediary, for example, a personnel firm, for the provision of an individual to supply labour (other than where that intermediary is a firm which primarily exists to provide the services of only that specific individual). The procurement of the services of intermediaries such as personnel firms are subject to the Division 2 – Additional rules for procurements at or above the relevant procurement threshold.

Exemption 15: Procurement of goods and services from a business that primarily exists to provide the services of persons with a disability

22. This exemption provides for the procurement of goods or services from a business 'that primarily exists to provide the services of persons with a disability ' such as the Australian Disability Enterprises.

23. The exemption applies to all goods and services offered BY businesses that employ people with a disability, rather than FOR people with a disability. This means that, for instance, mail sorting services provided by people with a disability would fall under the exemption, whereas the supply of wheelchairs would not.

Exemption 16: Procurement of goods and services from an SME with at least 50 per cent Indigenous Ownership

24. A procurement of goods and services from an SME with at least 50 per cent Indigenous ownership will be exempt. This exemption is intended to reduce the costs and administrative requirements for Indigenous SMEs.


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