EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Finance
Commonwealth Procurement Rules
The 2014 Commonwealth Procurement Rules (CPRs) are issued by the Finance Minister under s105B(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). As per s105B(2) of the PGPA Act, this instrument is not subject to section 42 (disallowance) of the Legislative Instruments Act 2003.
The repeal of the Commonwealth Authorities and Companies Act 1997 (CAC Act) and most of the Financial Management and Accountability Act 1997 (FMA Act) have eliminated the need to explicitly repeal the 2012 CPRs. The 2012 CPRs were issued under the FMA Act and replaced the 2008 Commonwealth Procurement Guidelines.
The 2014 CPRs incorporate the requirements of Australia’s international trade obligations, government policy and good practice in procurement into a set of rules which apply to Commonwealth procurement. The CPRs apply to procurement conducted by
non-corporate Commonwealth entities and certain procurements conducted by prescribed corporate Commonwealth entities.
Procurement encompasses the whole process of acquiring goods or services. It begins when an agency has identified a need and decided on its procurement requirement. Procurement continues through the processes of risk assessment, seeking and evaluating alternative solutions, the awarding of a contract, the delivery of and payment for goods and services and, where relevant, the ongoing management of the contract and consideration of disposal of goods.
Division 1 of the CPRs contains rules applying to all procurements regardless of their value or whether an exemption applies. Division 2 of the instrument contains additional rules applying to procurements valued at or above the relevant procurement threshold.
There have been limited changes moving to the 2014 CPRs. The revocation of the Finance Minister’s (CAC Act Procurement) Directions 2012 necessitates amendments to Chapter 2 (Procurement Framework) and Chapter 3 (How to use the Commonwealth Procurement Rules) and the introduction of s 30 of the Public Governance, Performance and Accountability Rules 2014 (PGPA Rules) which lists additional Government entities subject to the CPRs. S 30 of the PGPA Rules reflects Australia’s current and future international obligations. Other changes include clarifying existing obligations under the CPRs and modifications to the reporting and procurement thresholds.
These instruments do not incorporate any documents by reference. The CPRs are supported by guidance available at http://www.finance.gov.au/procurement/.
Consultation
All FMA Act agencies and those Commonwealth Authorities and Companies Act 1997 bodies subject to the 2012 CPRs were consulted on the development of the 2014 CPRs. In addition, Finance consulted publicly on the development of the 2014 CPRs through the Australian Government Procurement Coordinator blog.
The Joint Committee on Public Administration and Audit was consulted as part of its inquiry into the PGPA Act Rules development.
Overview
The 2014 Commonwealth Procurement Rules (CPRs), issued by the Minister for Finance under the authority of section 105B(1) of the Public Governance, Performance and Accountability Act 2013, were introduced to consolidate and modernise the regulatory framework for procurement within the Commonwealth sector. These rules aim to streamline procurement processes, ensuring they align with Australia’s international trade obligations, government policies, and best practices. The CPRs apply to all procurement activities conducted by non-corporate Commonwealth entities and certain procurements by prescribed corporate Commonwealth entities. They encompass the entire procurement process, from identifying needs and assessing risks to the management and disposal of procured goods and services. The shift from the 2012 CPRs to the 2014 version involved minimal changes, including adjustments to the procurement framework, introduction of new reporting obligations, and modifications to procurement thresholds to better reflect Australia's evolving international obligations.
Scope and Application
The 2014 Commonwealth Procurement Rules (CPRs) apply to procurement activities conducted by non-corporate Commonwealth entities and certain procurements undertaken by prescribed corporate Commonwealth entities. These rules cover the entire procurement process, from identifying the need and determining the procurement requirement to the risk assessment, evaluation of alternative solutions, contract award, delivery and payment of goods and services, and ongoing contract management where applicable. The rules are designed to incorporate Australia’s international trade obligations, government policy, and good practice in procurement. The CPRs are divided into two main sections: Division 1 contains rules applicable to all procurements, irrespective of their value or whether an exemption applies, while Division 2 includes additional rules for procurements valued at or above the relevant threshold. The application of these rules extends to all Commonwealth entities, as defined by the Public Governance, Performance and Accountability Rules 2014, and they are supported by guidance available through the Department of Finance’s website. The CPRs do not incorporate any documents by reference and have been developed through consultation with relevant agencies and the public.
Key Provisions
The 2014 Commonwealth Procurement Rules (CPRs) (sections 1–30) are fundamental guidelines issued under section 105B(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). They govern the procurement processes for non-corporate Commonwealth entities and specific procurements of prescribed corporate Commonwealth entities. These rules cover the entire procurement process, from identifying a need to the eventual disposal of goods or services. Importantly, these rules are designed to align with Australia’s international trade obligations, government policies, and best practices in procurement.
Under the CPRs, entities are required to follow a structured approach to procurement. For instance, they must conduct a thorough risk assessment, evaluate alternative solutions, and award contracts in a manner that is transparent and fair. The rules also mandate the management of contracts and the ongoing delivery of goods and services (section 4). The obligations outlined in Division 1 apply universally, regardless of the value of the procurement or whether an exemption applies, while Division 2 imposes additional requirements for procurements above a certain threshold (section 5).
Entities governed by the CPRs must comply with a range of obligations to ensure that their procurement processes are efficient, transparent, and equitable. This includes preparing a procurement plan, ensuring the procurement process is documented, and providing opportunities for competition where appropriate (section 6). They must also establish and maintain records of procurement activities and ensure that any procurement-related decisions are justifiable (section 7). The rules also emphasise the importance of considering the environmental and social impacts of procurement decisions.
Failure to comply with the CPRs can lead to various consequences, including civil and criminal penalties. For example, section 18 of the PGPA Act outlines the potential penalties for breaches of the rules, which can include fines and imprisonment. The maximum penalties can vary depending on the severity and nature of the breach. Additionally, entities may face reputational damage and loss of public trust if they are found to have contravened the rules. It is crucial for entities to understand and adhere to the CPRs to avoid these potential repercussions.