Changes To The Commonwealth Procurement Rules: What You Need To Know

Changes to the Commonwealth Procurement Rules (CPRs) have recently come into effect and all Commonwealth procurement activities will need to be conducted in accordance with these new requirements. The updated CPRs not only introduce changes to clarify existing rules but also include changes to thresholds and other substantive amendments.

Among the updates are new rules that prioritise Australian businesses and small to medium enterprises (SMEs) for specified procurements and to consider a supplier's ethical conduct in addition to value for money. The key changes to be aware of are set out in more detail below.

Changes to procurement thresholds

The procurement threshold for an open approach to market applicable to non-corporate Commonwealth entities has been lifted from $80,000 to $125,000, marking the first increase to this threshold since the CPRs were introduced in 2005.

Achieving value for money and competition

The new CPRs provide greater clarity regarding competition and supplier conduct. They clarify that procurements should encourage competition among potential suppliers and now require officials to consider a supplier's ethical conduct in addition to value for money.

Competition is also further encouraged in procurement activities carried out under standing offers. The updated CPRs mandate that, with respect to standing offers with more than one potential supplier, submissions must be taken from multiple suppliers, upgrading this from the recommendation.

Australian business and SME prioritisation

For procurements valued between $10,000 and the relevant procurement threshold, non-corporate Commonwealth entities must only invite Australian businesses to make submissions in the first instance (after compliance with the Indigenous Procurement Policy requirements) unless it is deemed that this is not appropriate.

For procurements under the Management Advisory Services Panel, the People Panel or any Digital Transformation Agency panel valued below $125,000, non-corporate Commonwealth entities must only approach SMEs in the first instance unless it is deemed that this is not appropriate.

It is also important to note that the updated CPRs provide new definitions for both 'Australian business' and 'SMEs', with the definition of Australian business also including businesses that are a New Zealand business as set out in the New Zealand Government's procurement rules.

Negotiations

New rules in relation to negotiations carried out as part of the procurement process have been introduced in Division 2 of the CPRs. Under the updated CPRs, request documentation must now include details on the entity's intent to conduct negotiations. The updated CPRs further provide that an entity may conduct negotiations where the entity has either specified its intent to conduct negotiations or following an evaluation where no single tenderer has been assessed as providing the best value for money.

Where negotiations are carried out, the relevant entity is now explicitly obligated to ensure that the elimination of any tenderer participating in negotiations is done in accordance with the essential requirements and evaluation criteria specified in the approach to market and request documentation. The relevant entity in carrying out negotiations must also ensure that all remaining tenderers are provided with the same deadline to submit any revised tenders.

What next?

Commonwealth entities should take steps to familiarise themselves with the new rules and thresholds and ensure all upcoming approaches to market align with these rules.

For further guidance on the new CPRs or to discuss , please contact Elizabeth Carroll or Samantha Haddon.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.