EXPLANATORY STATEMENT
Subject - Finance Minister’s (CAC Act Procurement) Directions 2012
The Finance Minister’s (CAC Act Procurement) Directions 2012 (2012 Procurement Directions) replace the Finance Minister’s (CAC Act Procurement) Directions 2009 (2009 Procurement Directions).
The 2009 Procurement Directions referred to the Commonwealth Procurement Guidelines (CPGs), which were replaced by the Commonwealth Procurement Rules (CPRs) on 1 July 2012.
The 2012 Procurement Directions are intended to apply the CPRs to the relevant Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies to the same extent that the 2009 Procurement Directions applied the former CPGs to the relevant CAC Act bodies.
The relevant CAC Act bodies are listed in Schedule 1 to the Commonwealth Authorities and Companies Regulations 1997. The relevant CAC Act bodies at 1 July 2012 are also outlined in Attachment A to this Explanatory Statement.
The 2012 Procurement Directions require relevant CAC Act bodies to apply all CPRs when undertaking procurement at or above the relevant procurement threshold.
For relevant CAC Act bodies, the procurement threshold, other than for procurement of construction services, is $400,000. The procurement threshold for procurement of constructions services is $9 million.
The 2012 Procurement Directions do not require relevant CAC Act bodies to apply the CPRs for procurement below the relevant threshold (however, relevant CAC Act bodies may choose to apply the CPRs for procurement below the relevant threshold).
The 2012 Procurement Directions is a legislative instrument for the purposes of the Legislative Instruments Act 2003, although neither section 42 (disallowance) or Part 6 (sunsetting) of that Act apply to the 2012 Procurement Directions (CAC Act subsection 47A (6A) applies).
The 2012 Procurement Directions commence on the day of their registration (on the Federal Register of Legislative Instruments).
Authority: Subsection 47A(2) of the Commonwealth Authorities and Companies Act 1997.
Commonwealth authorities subject to section 47A of the CAC Act
1 Australian Institute of Health and Welfare
2 Australian Institute of Marine Science
3 Australian Maritime Safety Authority
4 Australian National Maritime Museum
5 Australian Nuclear Science and Technology Organisation
6 Australian War Memorial
7 Comcare
8 Commonwealth Scientific and Industrial Research Organisation
9 Director of National Parks
10 Export Finance and Insurance Corporation
11 Grains Research and Development Corporation
12 National Gallery of Australia
13 National Museum of Australia
14 Reserve Bank of Australia
15 Sydney Harbour Federation Trust
16 Tourism Australia
Wholly-owned Commonwealth company subject to section 47A of the CAC Act
17 Aged Care Standards and Accreditation Agency Ltd
Overview
The Finance Minister’s (CAC Act Procurement) Directions 2012 were enacted to align the procurement practices of certain Commonwealth authorities and companies with the new Commonwealth Procurement Rules (CPRs), which replaced the previous Commonwealth Procurement Guidelines (CPGs) effective from 1 July 2012. This legislation addresses the gap created by the transition from the CPGs to the CPRs, ensuring that relevant entities continue to operate under a consistent procurement framework. The Directions were issued under subsection 47A(2) of the Commonwealth Authorities and Companies Act 1997 and apply to the bodies listed in Schedule 1 of the Commonwealth Authorities and Companies Regulations 1997. These bodies must adhere to the CPRs for procurement activities exceeding the specified thresholds, with the general threshold set at $400,000 and a higher threshold of $9 million for construction services. While the Directions mandate the application of CPRs above these thresholds, entities have the discretion to apply the CPRs for procurement below these amounts. This legislative instrument is registered under the Legislative Instruments Act 2003, with specific exclusions regarding disallowance and sunsetting provisions.
Scope and Application
The Finance Minister’s (CAC Act Procurement) Directions 2012 apply to specific Commonwealth authorities and wholly-owned Commonwealth companies listed under the Commonwealth Authorities and Companies Act 1997 (CAC Act). These entities are mandated to adhere to the Commonwealth Procurement Rules (CPRs) for procurement activities that meet or exceed the specified thresholds. For most procurements, this threshold is set at $400,000, while for construction services, it is significantly higher at $9 million. These Directions, which replace the previous 2009 Procurement Directions, ensure that the CPRs are applied consistently across the relevant CAC Act bodies. It is noteworthy that these Directions do not mandate the application of CPRs for procurements below the established thresholds, although these bodies may still opt to apply the CPRs voluntarily in such cases. The legislative instrument is governed by the Legislative Instruments Act 2003, with specific exceptions regarding disallowance and sunsetting provisions, as outlined in subsection 47A(6A) of the CAC Act.
Key Provisions
The Finance Minister’s (CAC Act Procurement) Directions 2012 (2012 Procurement Directions) establish the application of the Commonwealth Procurement Rules (CPRs) to certain Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies, as outlined in Schedule 1 to the Commonwealth Authorities and Companies Regulations 1997 (paragraph 1). These directions replace the previous Finance Minister’s (CAC Act Procurement) Directions 2009, aligning with the transition from the Commonwealth Procurement Guidelines (CPGs) to the CPRs effective from 1 July 2012 (paragraph 2). The 2012 Procurement Directions mandate that relevant CAC Act bodies apply all CPRs to procurement activities at or above the specified thresholds (paragraph 3). The general procurement threshold is set at $400,000, with a higher threshold of $9 million specifically for the procurement of construction services (paragraph 4).
Relevant CAC Act bodies must adhere to the CPRs for procurement activities meeting or exceeding the established thresholds, ensuring compliance with the rules governing procurement processes (paragraph 3). Although the 2012 Procurement Directions do not mandate the application of the CPRs for procurement below these thresholds, these bodies are permitted to voluntarily apply the CPRs in such instances (paragraph 4). This flexibility allows entities to exercise discretion in applying the CPRs to lower-value procurements if they so choose.
Failure to comply with the 2012 Procurement Directions could lead to significant consequences for the relevant CAC Act bodies. While the specific penalties are not detailed in the Explanatory Statement, non-compliance with procurement directives typically involves administrative or financial repercussions, potentially impacting the entity’s ability to undertake future procurement activities. The legislative framework does not explicitly outline penalties but implies that adherence to the procurement rules is critical to avoid potential administrative or financial sanctions.
The 2012 Procurement Directions are considered a legislative instrument under the Legislative Instruments Act 2003, which governs the creation, operation, and oversight of legislative instruments (paragraph 6). However, the directions do not fall under the purview of section 42 (disallowance) or Part 6 (sunsetting) of the Legislative Instruments Act 2003, as subsection 47A(6A) of the CAC Act specifically applies (paragraph 7). The commencement of the 2012 Procurement Directions occurs on the day they are registered on the Federal Register of Legislative Instruments (paragraph 8).