Finance Minister Lindsay Tanner issued a press release last Friday announcing revised Commonwealth Procurement Guidelines to come into effect from 1 December.
The changes appear quite subtle, but may have significant impact on the way Government agencies manage future procurements of certain goods and services. In particular:
Coordinated Procurement Contracting
There is now text explaining Coordinated Procurement Contracting arrangements, stressing it is mandatory for agencies to use the arrangement where it exists unless an exemption has been granted. Other goods and services may also be added to those currently planned to be purchased under these arrangements.
This signals the shift towards an „exception reporting‟ model, whereby a subtle centralising approach makes it easier for agencies to comply, rather than do their own thing. Look for more use of this flowing from the Gershon Report.
Requirements of Chief Executives
The requirement for Chief Executives to comply with the Guidelines, flowing from recent amendments to s44 of the Financial Management and Accountability Act 1997 (FMA Act).
This clarifies and channels the discretionary power of agency Chief Executives. In particular, the amendments to s44 insert “the Minister” (and in some cases, the Finance Minister) into certain processes, enhancing accountability of Chief Executives, ultimately to Parliament via Agency Ministers.
Formal incorporation of the risk management arrangements (capping liability) previously covered by a Finance Circular, rather than in the Guidelines.
This should enable formal negotiation of capped liability between an agency and the recommended contractor, following completion of a procurement process.
Disclosure by Prime Contractors
Prime contractors will be required to disclose, and maintain disclosure of, any sub-contractors engaged to deliver good/services.
This will increase transparency of contract delivery by agencies, and increase disclosure requirements on contractors to avoid „warehousing‟ and other arrangements.
Simplification of Contract Reporting
Reporting of contract will be simplified, with AusTender becoming the primary reporting vehicle, rather than current additional requirements such as via the Senate.
This will put pressure on AusTender to ensure timely and adequate reporting of contracts. If this does not occur, expect the Senate to initiate further questioning.
Cooperative Agency Procurement ("piggy backing")
Contract “piggy-backing” is clarified. Known as Cooperative Agency Procurement, this shows Finance will treat such arrangements favourable where an intention to allow such arrangements was disclosed during the approach to market.
Expect to see more agencies looking to procure goods and services based on existing contracts of other agencies, rather than through separate RFT processes.
The detail of these changes has significant scope to affect future Commonwealth procurement, and the way in which prospective suppliers may need to position themselves in the market.
Click to view the existing Commonwealth Procurement Guidelines.