EXPLANATORY STATEMENT
Revocation of the Commonwealth Procurement Guidelines – December 2008
The legislative authority under which the instrument is made
Subsection 65(1) of the Financial Management and Accountability Act 1997 (FMA Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the FMA Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the FMA Act.
Subsection 64(1) of the FMA Act provides that the regulations may authorise the Minister to issue guidelines to officials on matters within the Minister’s responsibility. Subregulation 7(1) of the Financial Management and Accountability Regulations 1997 (FMA Regulations) provides in general terms, for the Finance Minister to issue guidelines in relation to procurement. Subregulation 7(2) of the FMA Regulations provides that the guidelines are to have a title approved by the Finance Minister.
Subsection 33(3) of the Acts Interpretation Act 1901 in general terms provides that where an Act confers a power to make, grant or issue any legislative instrument of a legislative or administrative character the power is construed to include a power to repeal, rescind, revoke, amend or vary the instrument.
Purpose of the instrument
The Minister for Finance and Deregulation issued the Commonwealth Procurement Rules – July 2012 (CPRs) under regulation 7 of the FMA Regulations to commence on 1 July 2012.
The CPRs will replace the Commonwealth Procurement Guidelines (CPGs). The CPRs represent the Government Policy Framework under which agencies govern and undertake their own procurement and combine both Australia's international obligations and good practice. Together, these enable agencies to design processes that are robust, transparent and instill confidence in the Australian Government's procurement.
The CPRs do not alter existing procurement policy, but clarify the CPRs as a rule set, ensure consistent and well understood use of terminology, redefine the procurement methods, and address the recommendation of the Australian National Audit Office (ANAO) raised in performance audit No.11 2010-11 on Direct Source Procurement.
From 1 July 2012 all departments and agencies subject to the FMA Act and relevant Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies will be required to comply with the CPRs.
The CPGs remain applicable to 30 June 2012. This instrument revokes the CPGs upon the commencement of the new CPRs.
Consultation
During the development of the CPRs, all FMA Act agencies and those CAC Act bodies subject to the instrument were consulted on the development of the instrument. Throughout the consultation process, agencies were made aware that the CPRs would replace the CPGs.
Consultation was unnecessary for this legislative instrument as this instrument is of a machinery/technical nature.
Human Rights Statement
This legislative instrument is exempt from disallowance under subsection 64(3) of the FMA Act. As such, a statement of compatibility prepared under section 9 of the Human Rights (Parliamentary Scrutiny) Act 2011 is not required in this Explanatory Statement.
Overview
The Commonwealth Procurement Rules – July 2012, enacted to address gaps in the existing procurement framework, were introduced to replace the Commonwealth Procurement Guidelines (CPGs) under the authority of the Financial Management and Accountability Act 1997. This legislation was enacted by the Minister for Finance and Deregulation, aiming to establish a robust, transparent, and internationally compliant procurement framework for all agencies subject to the FMA Act and relevant Commonwealth Authorities and Companies Act 1997 bodies. The primary purpose of the new rules is to ensure consistent terminology, redefine procurement methods, and incorporate international obligations and best practices, thereby instilling greater confidence in the government's procurement processes. The CPGs were revoked upon the commencement of the new rules on 1 July 2012, ensuring a seamless transition to the new regulatory framework.
Scope and Application
The Commonwealth Procurement Rules (CPRs) of 2012, established under the Financial Management and Accountability Act 1997 (FMA Act), serve as a comprehensive policy framework governing procurement activities within the Australian Government. This Act applies to all departments and agencies subject to the FMA Act, as well as relevant bodies under the Commonwealth Authorities and Companies Act 1997 (CAC Act), ensuring a uniform approach to procurement across the Commonwealth. The CPRs were introduced to replace the existing Commonwealth Procurement Guidelines (CPGs), effective from 1 July 2012, while the CPGs remained applicable until 30 June 2012. The new rules aim to provide clarity on terminology, redefine procurement methods, and address recommendations from the Australian National Audit Office, thereby enhancing transparency and robustness in government procurement processes. This legislative instrument does not necessitate consultation beyond the standard consultation processes already undertaken with affected agencies, as it is of a technical nature. It is important to note that this instrument revokes the CPGs upon the commencement of the CPRs, and as such, it is exempt from disallowance under the FMA Act, rendering a Human Rights statement unnecessary.
Key Provisions
The primary operative sections of the legislation (subsections 65(1) and 64(1) of the Financial Management and Accountability Act 1997 (FMA Act), along with subregulations 7(1) and 7(2) of the Financial Management and Accountability Regulations 1997 (FMA Regulations)) empower the Governor-General to make regulations prescribing matters required or permitted by the FMA Act. These sections also allow the Finance Minister to issue guidelines on procurement matters, which are to be titled as approved by the Minister. The Act, therefore, provides the authority for the issuance and revocation of guidelines related to procurement within the Commonwealth. In this case, the Commonwealth Procurement Rules – July 2012 (CPRs) are introduced to replace the Commonwealth Procurement Guidelines (CPGs). These new rules aim to unify procurement practices across agencies, ensuring consistency and compliance with both international obligations and good practices.
The Act imposes several obligations and requirements on the entities it governs. All departments and agencies subject to the FMA Act, as well as relevant bodies under the Commonwealth Authorities and Companies Act 1997 (CAC Act), must adhere to the CPRs from 1 July 2012. These entities are mandated to implement procurement processes that are robust, transparent, and reflective of the new rules. The transition from the CPGs to the CPRs involves ensuring that all procurement activities are aligned with the new framework. This includes clarifying the rules, ensuring consistent terminology, redefining procurement methods, and addressing recommendations from the Australian National Audit Office, such as those related to direct source procurement.
The legislation also outlines the consequences for non-compliance with the new procurement rules. While the specific penalties for breaching the CPRs are not detailed in the explanatory statement, the overarching implication is that failure to comply with the guidelines may result in legal or administrative repercussions. Given the nature of the FMA Act and its regulations, non-compliance could potentially lead to both civil and criminal penalties, although the exact nature of these penalties would depend on the specific breaches and the discretion of the relevant authorities. The Act's authority to repeal or revoke instruments suggests that the consequences for non-compliance could be significant, impacting the operations and reputation of non-compliant entities.