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Department of Finance and Deregulation
(Financial Management Group)
Copyright Notice
Content
Commonwealth of Australia 2012
ISBN: 978-1-921600-99-9 (printed)
ISBN: 978-1-922096-00-5 (online)
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Foreword
I am pleased to issue the Commonwealth Procurement Rules
under Regulation 7 of the Financial Management and Accountability
Regulations 1997.
e Commonwealth Procurement Rules represent the Governments
policy framework under which agencies govern and undertake their
own procurement.
e Commonwealth Procurement Rules combine both Australias international obligations
and good practice, and enable agencies to design processes that are robust, transparent and
instil confidence in the Australian Governments procurement activities. is encourages
agencies to design processes that allow for innovative solutions and that reflect the scale,
scope and risk of the procurement.
e Government is committed to improving access to the Australian Government
marketplace, particularly for small and medium enterprises, Indigenous businesses
and competitive disability enterprises. Promoting the use of these competitive suppliers
benefits both the Government in expanding its supplier base and in supporting the
broader Australian community.
e Commonwealth Procurement Rules also focus on whole-of-government
arrangements, in particular coordinated procurements. Coordinated procurements
have improved the value for money achieved by agencies and have reduced agency
procurement and potential supplier tendering costs. In addition to the coordinated
procurements, agencies should continue to look for opportunities to establish
cooperative procurements for related goods and services.
Building on the success of AusTender, the Government is committed to ensuring
AusTender remains the primary source for procurement information. AusTender,
the Australian Governments central procurement information website, is now well
established in agencies, wider government and the private sector. AusTender provides
accurate and timely procurement reporting and the Government is committed to
ensuring this remains a focus of agencies.
To assist agencies in applying the Commonwealth Procurement Rules, a range of
guidance material, templates, tools and advice has been developed by my Department.
Officials are encouraged to make use of these resources when undertaking procurement.
I commend these Commonwealth Procurement Rules to Australian Government
officials involved in procurement.
Penny Wong
Minister for Finance and Deregulation
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Contents
INTRODUCTION
1. Summary of Commonwealth Procurement Rules .....................................................6
2. Procurement framework ................................................................................................8
3. How to use the Commonwealth Procurement Rules ..............................................12
DIVISION 1 RULES FOR ALL PROCUREMENTS
4. Value for money ...........................................................................................................14
5. Encouraging competition ............................................................................................17
6. Efficient, effective, economical and ethical procurement .......................................18
7. Accountability and transparency in procurement ...................................................20
8. Procurement risk ..........................................................................................................24
9. Procurement method ...................................................................................................25
DIVISION 2 ADDITIONAL RULES FOR PROCUREMENTS
AT OR ABOVE THE RELEVANT PROCUREMENT THRESHOLD
10. Additional rules ...........................................................................................................28
APPENDICES AND INDEXAppendix A: Exemptions from Division 2 ..........................................................................36
Appendix B: Abbreviations and acronyms ..........................................................................38
Appendix C: Definitions ........................................................................................................39
Index .........................................................................................................................................43
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2. Procurement framework
2.1 e Commonwealth Procurement Rules (CPRs) are issued by the
Minister for Finance and Deregulation (Finance Minister) under Regulation 7
of the Financial Management and Accountability Regulations 1997(FMA Regulations).
2.2 e CPRs set down the rules for Australian Governmentprocurement
and articulate the Australian Governments requirements for officials
performing duties in relation toprocurement.
2.3 Rules that mustbe complied with in undertakingprocurementare denoted by
the term must. Non-compliance with the rules of the CPRs is reportable in an
agencys Certificate of Compliance. e term should indicates good practice.
2.4 e CPRs are the core of the procurement framework, which also includes:
a. web-based guidance, developed by the Department of Finance
and Deregulation (Finance) to assist agencies to implement the
procurement framework;
b. Finance Circulars, which advise of key changes and developments
in the procurement framework; and
c. Chief Executives Instructions (CEIs), which a Chief Executive may use to
set out agency-specific operational rules to ensure compliance with the
rules of the procurement framework.
2.5 FMA Regulation 7 requires officials to comply with the CPRs whenperforming duties related toprocurement. e FMA Regulations also require
that proposals to spend public money (including proposedprocurement
ofgoodsand services) mustbe approved. In particular, FMA Regulation 9
requires an approver1to be satisfied, aer making reasonable enquiries, that
the spending proposal is an efficient, effective, economical and ethical use of
public money that is not inconsistent with the policies of the Commonwealth.
2.6 Nothing in any part of these CPRs prevents an official from applying measures
determined by their Chief Executive to be necessary for the maintenance or
restoration of international peace and security, to protect human health, forthe protection of essential security interests, or to protect national treasures of
artistic, historic or archaeological value.
1 FMA Regulations define an approver as a Minister, a Chief Executive, or a person authorised by legislationto approve proposals to spend public money. Chief Executives commonly delegate this power to officials intheir agency.
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Procurement
2.7 Procurementencompasses the whole process of procuringgoodsand services.
It begins when a need has been identified and a decision has been made on
the procurement requirement. Procurementcontinues through the processesof risk assessment, seeking and evaluating alternative solutions, the awarding
of a contract, the delivery of and payment for thegoodsand services and,
where relevant, the ongoing management of the contractand consideration of
disposal ofgoods.
2.8 In addition to the acquisition ofgoods and services by an agency for its own
use,procurementincludes the acquisition ofgoodsand services on behalf of
another agency or a third party.
2.9 Procurementdoes not include:
a. grants (whether in the form of a contract, conditional gi or deed)2 ;
b. investments (or divestments);
c. sales by tender;
d. loans;
e.procurementofgoodsand services for resale orprocurementofgoodsand
services used in the production ofgoodsfor resale;
f. any property right not acquired through the expenditure of public money
(for example, a right to pursue a legal claim for negligence);
g. statutory appointments;
h. appointments made by a Minister using the executive power
(for example, the appointment of a person to an advisory board); or
i. the engagement of employees, such as under the Public Service Act 1999,
the Parliamentary Services Act 1999, an agencys enabling legislation or the
common law concept of employment.
2 As defined in FMA Regulation 3A.
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2.11 e procurement framework is a subset of the financial management
framework related to theprocurementofgoodsand services.
2.12 Chief Executives of Financial Management and Accountability Act 1997
(FMA Act)agencies may issue instructions (CEIs) on any matter thatpromotes the proper use3 of the Commonwealth resources for which they are
responsible. e CPRs provide the necessary framework for Chief Executives
when issuing CEIsand operational requirements in relation toprocurement.
In the area ofprocurement, CEIsprovide a mechanism to:
a. apply the principles and requirements of the financial management and
procurement frameworks, focusing on the agencys operations; and
b. provide primary operational instructions to agency officials in carrying
out their duties related toprocurement, in a way that is tailored to an
agencys particular circumstances and needs.2.13 Non-compliance with the requirements of the financial management
framework, including in relation toprocurement, may attract a range of
criminal, civil or administrative remedies (including under the FMA Act,
the Public Service Act 1999and the Crimes Act 1914).
Commonwealth Authorities and Companies Act
2.14 Bodies subject to the Commonwealth Authorities and Companies Act 1997
(CAC Act) are legally and financially separate from the Commonwealth
and are generally not subject to the CPRs. However, the CPRs as amended
by the Finance Ministers (CAC Act Procurement) Directions 2009
(CAC Act Procurement Directions) are applicable to some4CAC Act bodies.
International obligations
2.15 Australia is party to a range of bilateral free trade arrangements.
ese arrangements are implemented domestically by legislation
and/or Commonwealth policy. Relevant international obligations have
been incorporated in these CPRs. erefore, an official undertaking a
procurementis not required to refer directly to international agreements.
3 When the CPRs commenced, Proper use was defined in section 44 of the FMA Act as efficient, effective,economical and ethical use that is not inconsistent with the policies of the Commonwealth.
4 The CAC Act bodies subject to the Finance Ministers (CAC Act Procurement) Directions 2009are listed inSchedule 1 to the Commonwealth Authorities and Companies Regulations 1997.
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3. How to use the Commonwealth Procurement Rules
3.1 e CPRs set out the rules that officials mustcomply with when they procure
goodsand services. e CPRs have been designed to provide officials with
flexibility in developing and implementing procurement processes thatreflect their agencies needs.
3.2 Achieving value for money is the core rule of the CPRs. is requires the
consideration of the financial and non-financial costs and benefits associated
withprocurement. To assist officials to understand and undertakeprocurements
that achieve value for money, the CPRs have two divisions:
a. Division 1 Rules applying to allprocurementsregardless of their value or
whether an exemption applies to them. Officials mustcomply with the rules
in Division 1 when conductingprocurements; and
b. Division 2 Additional rules applying toprocurementsvalued at or above
the relevantprocurement threshold. Officials mustalso comply with the
rules in Division 2 where the expected value of theprocurementis at or
above the relevantprocurement thresholdand where an exemption in
accordance with Appendix A does not apply.
3.3 eprocurement thresholds(including GST) are:
a. for FMA Act agencies, other than forprocurements of construction services,
theprocurement thresholdis $80,000;
b. for relevant CAC Act bodies, other than forprocurements ofconstructionservices, theprocurement thresholdis $400,000; or
c. forprocurements ofconstruction servicesby FMA Act agenciesand relevant
CAC Act bodies, theprocurement thresholdis $9 million.
3.4 Further information and guidance on applying the CPRs are available on
Finances procurement policy website at www.finance.gov.au/procurement.
3.5 Agencies may have additional rules, guidance, templates or tools that apply
when conductingprocurements.
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1 Division 1 -Rules for all procurements
4. Value for money
Considering value for money
4.1 A thorough consideration of value for money begins by officials clearly
understanding and expressing the goals and purpose of theprocurement.
4.2 Where a business requirement arises, officials should consider whether a
procurementwill deliver the best value for money. It is important to take
into consideration:
a. non-procurement alternatives;
b. consultation with stakeholders;
c. the business need;
d. resourcing;
e. pre-existing arrangements; and f. Commonwealth policies.
4.3 Where an agency determines thatprocurementrepresents the best value for
money, those considerations will inform the development and implementation
of theprocurement.
Achieving value for money
4.4 Achieving value for money is the core rule of the CPRs.Approversmustbe
satisfied, aer reasonable enquires, that theprocurementachieves a value for
money outcome. Value for money inprocurementrequires: a. encouraging competitive and non-discriminatory processes;
b. using Commonwealth resources in an efficient, effective, economical
and ethical manner that is not inconsistent with the policies of the
Commonwealth5;
c. making decisions in an accountable and transparent manner;
d. considering the risks; and
e. conducting a process commensurate with the scale and scope of
theprocurement.
5 This reflects the requirement in section 44 of the FMA Act that a Chief Executive must manage theaffairs of the agencies for which they are responsible in a way that promotes the proper use ofCommonwealth resources.
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14.5 e price of thegoodsand services is not the sole determining factor inassessing value for money. A comparative analysis of the relevant financialand non-financial costs and benefits of alternative solutions throughout the
procurementwill inform a value for money assessment. Factors to consider
include, but are not limited to:
a. fitness for purpose;
b. apotential suppliersexperience and performance history;
c. flexibility (including innovation and adaptability over the lifecycle of
theprocurement);
d. environmental sustainability (such as energy efficiency and environmental
impact); and
e. whole-of-life costs.
Procurement-connected policies
4.6 Procurement-connected policies are policies of the Commonwealth for
whichprocurementhas been identified as a means of delivery. To assist
agencies in complying with policies of the Commonwealth, Finance
maintains a list of procurement-connected policies, which can be found at
www.finance.gov.au/procurement.
4.7 Many of these procurement-connected policies are the responsibility
of agencies other than Finance. e policy agency is responsible for
administering, reviewing and providing information on the policy as required.
Coordinated procurement
4.8 Coordinated procurement refers to whole-of-government arrangements for
procuringgoodsand services. A list of coordinated procurements can be found
at www.finance.gov.au/procurement.
4.9 Agencies must use coordinated procurements. Exemptions from coordinated
procurements can only be granted jointly by the requesting agencys Portfolio
Minister and the Finance Minister where an agency can demonstrate a special
need for an alternative arrangement.6
6 Or where the coordinated procurement specifies an alternative approach for obtaining exemptions.
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1 Cooperative agency procurement4.10 Cooperative agency procurements involve more than one agency as the buyer.
Agencies can procure cooperatively by approaching the market together or by
joining an existing contractof another agency.4.11 If an agency intends to join an existing contractof another agency, the initial
request documentationand the contractmusthave already specified potential
use by other agencies.
4.12 Agencies joining an existing contractmustensure that:
a. value for money is achieved;
b. thegoodsand services being procured are the same as provided for within
the contract; and
c. the terms and conditions of the contractare not being materially altered.
Contract end dates
4.13 Where a contractdoes not specify an end dateit mustallow for periodic
review and subsequent termination of the contract by the agency, if the agency
determines that it does not continue to represent value for money.
Third-party procurement
4.14 Procurementby third parties on behalf of an agency can be a valid way to
procuregoodsand services, provided it achieves value for money. Agencies
must notuse third-party arrangements to avoid the rules in the CPRs when
procuringgoodsand services.
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15. Encouraging competition5.1 Competition is a key element of the Australian Governments procurement
framework. Effective competition requires non-discrimination and the use of
competitive procurement processes.
5.2 Participation inprocurementimposes costs on agencies andpotential
suppliers. ose costs should be considered when designing a process that is
commensurate with the scale, scope and risk of the proposedprocurement.
Non-discrimination
5.3 e Australian Governments procurement framework is non-discriminatory.
Allpotential suppliersto government must, subject to these CPRs, be treated
equitably based on their commercial, legal, technical and financial abilities and
not be discriminated against due to their size, degree of foreign affiliation orownership, location, or the origin of theirgoodsand services.
Small and Medium Enterprises
5.4 To ensure that Small and Medium Enterprises (SMEs) can engage in fair
competition for Australian Government business, officials should apply
procurement practices that do not unfairly discriminate against SMEsand
provide appropriate opportunities for SMEsto compete. Officials should
consider, in the context of value for money:
a. the benefits of doing business with competitive SMEswhen specifyingrequirements and evaluating value for money;
b. barriers to entry, such as costly preparation of submissions, that may prevent
SMEsfrom competing;
c. SMEscapabilities and their commitment to local or regional markets; and
d. the potential benefits of having a larger, more competitive supplier base.
5.5 e Australian Government is committed to FMA Act agenciessourcing at
least 10 per cent ofprocurementby value from SMEs.
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1 6. Efficient, effective, economical andethical procurement
6.1 e Australian Government promotes the proper use of Commonwealth
resources. Proper use means efficient, effective, economical and ethical usethat is not inconsistent with the policies of the Commonwealth.
6.2 Efficient relates to the achievement of the maximum value for the resources
used. Inprocurement, it includes the selection of a procurement method that
is not inconsistent with policies of the Commonwealth and that is the most
appropriate for the procurement activity, given the scale, scope and risk of
theprocurement.
6.3 Effective relates to the extent to which intended outcomes or results are
achieved. It concerns the immediate characteristics, especially price, quality
and quantity, and the degree to which these contribute to specified outcomes.
6.4 Economical relates to minimising cost. It emphasises the requirement to avoid
waste and sharpens the focus on the level of resources that the Commonwealth
applies to achieve outcomes.
6.5 Ethical relates to honesty, integrity, probity, diligence, fairness and consistency.
Ethical behaviour identifies and manages conflicts of interests, and does not
make improper use of an individuals position.
Ethical behaviour
6.6 In particular, officials undertakingprocurementfor the Australian Government
mustact ethically throughout theprocurement. Ethical behaviour includes:
a. recognising and dealing with actual, potential and perceived conflicts of interest;
b. dealing withpotential suppliers, tenderers andsuppliersequitably, including by
i) seeking appropriate internal or external advice where probity issues arise,
and
ii) not accepting inappropriate gis or hospitality;
c. carefully considering the use of Commonwealth resources; and
d. complying with all directions, including their agencys CEIs, in relation to
gis or hospitality, the information privacy principles of the Privacy Act 1988
and the security provisions of the Crimes Act 1914.
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16.7 Agencies must notseek to benefit from supplier practices that may bedishonest, unethical or unsafe. is includes not entering into contractswith tendererswho have had a judicial decision against them (not including
decisions under appeal) relating to employee entitlements and who have
not paid the claim. Officials should seek declarations from all tenderers
confirming that they have no such unsettled judgments against them.
6.8 If a complaint aboutprocurementis received, agencies mustapply equitable
and non-discriminatory complaint-handling procedures. Agencies should
aim to manage the complaint process internally, where possible, through
communication and conciliation.
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1 7. Accountability and transparency in procurement7.1 e Australian Government is committed to ensuring accountability and
transparency in its procurement activities. Accountability means that
officials are responsible for the actions and decisions that they take inrelation toprocurementand for the resulting outcomes. Transparency
involves agencies taking steps to enable appropriate scrutiny of their
procurement activity. e fundamental elements of accountability and
transparency inprocurementare outlined in this section.
Records
7.2 Officials mustmaintain appropriate documentation for eachprocurement.
e appropriate detail of documentation should be commensurate with the
scale, scope and risk of theprocurement. Documentation should provide
accurate and concise information on:
a. the requirement for theprocurement;
b. the process that was followed;
c. how value for money was considered and achieved; and
d. relevant decisions, including under the FMA Regulations, and the basis
of those decisions.
7.3 Agencies musthave appropriate documentation with the supplier, such as a
written contractor purchase order.7.4 Documentation mustbe retained in accordance with theArchives Act 1983.
AusTender
7.5 AusTender7, the Australian Governments procurement information system,
is a centralised web-based facility that publishes a range of information,
including agencies plannedprocurements, open tendersand contractsawarded.
It also supports secure electronic tendering to deliver integrity and efficiency
for agencies andpotential suppliers.
7.6 AusTenderis the system used to enable agencies to meet their publishingobligations under the CPRs. It also enables agencies to monitor and review
their AusTender-basedprocurements, including approaches to market,
publication of contractsand multi-use lists, and amendments to contractsand
multi-use lists.
7 AusTender is available at www.tenders.gov.au.
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1Annual procurement plans7.7 In order to draw the markets early attention to potential procurement
opportunities, each agency mustpublish by 1 July each year onAusTender an
annual procurement plancontaining a short strategic procurement outlook.7.8 e annual procurement planshould include the subject matter of any
significant plannedprocurementand the estimated publication date of the
approach to market. Agencies should update their plans regularly throughout
each financial year.
Notifications to the market
7.9 Agencies mustuseAusTender to publish open tendersand, to the extent
practicable, to make relevant request documentationavailable. Agencies may
useAusTenderto publishprequalifiedtenderor limited tender approachesto
market and make relevant request documentation available.
7.10 Agencies should include relevant evaluation criteriain request documentation
to enable the proper identification, assessment and comparison of submissions
on a fair, common and appropriately transparent basis.
7.11 In any additional notification through other avenues, such as printed media,
the details selected for inclusion in the notification mustbe the same as those
published onAusTender.
7.12 Where an agency provides request documentationor any other document,
already published onAusTenderin any other form (for example, a printedversion) that documentation mustbe the same as that published onAusTender.
7.13 A notice of a multi-use listmustbe published onAusTender. Where a
multi-use listis open to applications at any time, an approach to market
inviting applications mustbe published continuously onAusTenderfor the
entire period of the multi-use lists operation. Alternatively, where a multi-use
listwill be updated only at specific times and according to set deadlines for
application, an approach to marketinviting applications mustbe re-published
at least once every 12 months.
Providing information
7.14 Officials must, on request, promptly provide, to eligiblepotential suppliers,
documentation that includes all information necessary to permit thepotential
supplierto prepare and lodge submissions.
7.15 Following the rejection of a submissionor the award of a contract, officials
mustpromptly inform affected tenderersof the decision. Debriefings must
be made available, on request, to unsuccessful tenderersoutlining the reasons
the submissionwas unsuccessful. Debriefings mustalso be made available, on
request, to the successful supplier(s).
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1 Reporting arrangements7.16 Agencies mustreport contractsand amendments onAusTenderwithin 42 days
of entering into (or amending) a contractif they are valued at or above the
reporting threshold.7.17 ereporting thresholds(including GST) are:
a. $10,000 for FMA Act agencies; and
b. for relevant CAC Act bodies
i) $400,000 forprocurementsother thanprocurement of construction
services, or
ii) $9 million forprocurement of construction services.
7.18 Regardless of value, standing offers mustbe reported onAusTenderwithin
42 daysof the agency entering into or amending such arrangements.Relevant details in the standing offernotice, such as supplierdetails and the
names of other agencies participating in the arrangement, mustbe reported
and kept current.
Subcontractors
7.19 Agencies mustmake available on request, the names of any subcontractor(s)
engaged by a contractor in respect of a contract.
a. Agencies mustrequire contractors to agree to the public disclosure of
the names of any subcontractors engaged to perform services in relationto a contract.
b. Contractors mustbe required to inform relevant subcontractors that
the subcontractors participation in fulfilling a contractmay be
publicly disclosed.
Treatment of confidential information
7.20 When conducting aprocurementand awarding a contract, agencies should
take appropriate steps to protect the Commonwealths confidential
information. is includes observing legal obligations, such as those underthe Privacy Act 1988, and statutory secrecy provisions.
7.21 Submissionsmustbe treated as confidential before and aer the award of a
contract. Once a contracthas been awarded the terms of the contract,
including parts of the contractdrawn from the suppliers submission,
are not confidential unless the agency has determined and identified in the
contractthat specific information is to be kept confidential in accordance
with the guidance on Confidentiality roughout the Procurement Cycle
at www.finance.gov.au/procurement.
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17.22 e need to maintain the confidentiality of information should always bebalanced against the public accountability and transparency requirementsof the Australian Government. It is therefore important for officials to plan
for, and facilitate, appropriate disclosure of procurement information. In
particular, officials should:
a. include provisions in request documentationand contracts that alert
potential suppliersto the public accountability requirements of the
Australian Government, including disclosure to the Parliament and
its committees;
b. where relevant, include a provision in contractsto enable the Australian
National Audit Office to access contractors records and premises to carry
out appropriate audits; and
c. consider, on a case-by-case basis, any request by a supplierfor materialto be treated confidentially aer the award of a contract, and enter into
commitments to maintain confidentiality only where such commitments
are appropriate.
7.23 Where confidential information is required to be disclosed, for example
following a request from a parliamentary committee, reasonable notice in
writing mustbe given to the party from whom the information originated.
Other obligations
7.24 Other reporting and disclosure obligations apply to officials undertaking
procurement, including:
a. disclosure of procurement information for agency annual reporting purposes;
b. disclosure of non-compliance with the CPRs in an agencys Certificate
of Compliance;
c. disclosure to the Parliament and its committees, as appropriate, in line
with the Government Guidelines for Official Witnesses before Parliamentary
Committees and Related Matters;
d. disclosure of information consistent with the Freedom of Information
Act 1982; and
e. disclosure of discoverable information that is relevant to a case before
a court.
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1 8. Procurement risk8.1 Risk management comprises the activities and actions taken by an
agency to ensure that it is mindful of the risks it faces, that it makes
informed decisions in managing these risks, and identifies andharnesses potential opportunities.8
8.2 Agencies mustestablish processes for the identification, analysis,
allocation and treatment of risk when conducting aprocurement.
e effort directed to risk assessment and management should be
commensurate with the scale, scope and risk of theprocurement.
Agencies should consider risks and their potential impact when making
decisions relating to value for money assessments, approvals of proposals
to spend public money and the terms of the contract.
8.3 As a general principle, risks should be borne by the party best placed tomanage them; that is, agencies should generally not accept risk which
another party is better placed to manage. Similarly, where an agency is
best placed to manage a particular risk, it should not seek to inappropriately
transfer that risk to the supplier.
8 Department of Finance and Deregulation, Comcover Better Practice Guide Risk Management.
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19. Procurement method9.1 Australian Governmentprocurementis conducted by one of three methods
open tender,prequalified tenderor limited tender. ese methods are detailed
in this section.
Requirement to estimate value of procurement
9.2 e expected value of aprocurementmustbe estimated before a decision on
the procurement method is made. e expected value is the maximum value
(including GST) of the proposed contract, including options, extensions,
renewals or other mechanisms that may be executed over the life of the contract.
9.3 e maximum value of thegoodsand services being procured mustinclude:
a. all forms of remuneration, including any premiums, fees, commissions,
interest, allowances and other revenue streams that may be provided forin the proposed contract;
b. the value of thegoodsand services being procured, including the value of
any options in the proposed contract; and
c. any taxes or charges.
9.4 Where aprocurementis to be conducted in multiple parts with contracts
awarded either at the same time or over a period of time, with one or more
suppliers,the expected value of thegoodsand services being procured must
include the maximum value of all of the contracts.9.5 Aprocurementmust notbe divided into separate parts solely for the purpose
of avoiding a relevantprocurement threshold.
9.6 Where the maximum value of aprocurementover its entire duration cannot be
estimated theprocurementmustbe treated as being valued above the relevant
procurement threshold.
Procurement thresholds
9.7 Where the expected value of aprocurementis at or above the relevant
procurement thresholdand an exemption in Appendix A does not apply,the rules in Division 2 mustalso be followed. eprocurement thresholds
(including GST) are:
a. for FMA Act agencies, other than forprocurementsof construction services,
theprocurement thresholdis $80,000;
b. for relevant CAC Act bodies, other than forprocurementsof construction
services, theprocurement thresholdis $400,000; or
c. forprocurementsof construction servicesby FMA Act agenciesor relevant
CAC Act bodies, theprocurement thresholdis $9 million.
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1 Three procurement methodsMethod 1 Open tender
9.8 Open tenderinvolves publishing an open approach to marketand
inviting submissions.
Method 2 Prequalified tender
9.9 Prequalified tenderinvolves publishing an approach to marketinviting
submissionsfrom allpotential supplierson:
a. a shortlist ofpotential suppliersthat responded to an initial openapproach
to marketonAusTender;
b. a list ofpotential suppliersselected from a multi-use listestablished through
an open approach to market; or c. a list of allpotential suppliersthat have been granted a specific licence or
comply with a legal requirement, where the licence or compliance with the
legal requirement is essential to the conduct of theprocurement.
9.10 Officials should report the original procurement method used to establish
the standing offerwhen they reportprocurementsfrom standing offers.
Method 3 Limited tender
9.11 Limited tenderinvolves an agency approaching one or morepotential suppliers
to make submissions, where the process does not meet the rules for open tenderorprequalified tender.
9.12 Forprocurementsat or above the relevantprocurement threshold, limited
tendercan only be conducted in accordance with paragraph 10.3, or where a
procurementis exempt as detailed in Appendix A.
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2 Division 2 - Additional rules forprocurements at or above therelevant procurement threshold
10. Additional rules
10.1 e rules set out in Division 2 are additional to those in Division 1 and
must notbe interpreted or applied in a manner that diminishes or negates
Division 1.
10.2 Aprocurement, except aprocurementthat is specifically exempt in
accordance with Appendix A, is subject to the rules contained in Division 2
if the expected value of theprocurementis at, or above, the relevant
procurement threshold(see paragraphs 3.3 and 9.7).
Conditions for limited tender
10.3 An agency must only conduct aprocurementat or above the relevant
procurement thresholdthrough limited tenderin the following circumstances:
a. where, in response to an approach to market
i) no submissions, or no submissionsthat represented value for money,
were received,
ii) no submissionsthat met the minimum content and formatrequirements
for submissionas stated in the request documentationwere received, or
iii) no tendererssatisfied the conditions for participation,
and the agency does not substantially modify the essential requirements of
theprocurement; or
b. where, for reasons of extreme urgency brought about by events unforeseen
by the agency, thegoodsand services could not be obtained in time under
open tenderorprequalified tender; or
c. forprocurementsmade under exceptionally advantageous conditions
that arise only in the very short term, such as from unusual disposals,
unsolicited innovative proposals, liquidation, bankruptcy, or receivership,
and which are not routineprocurementfrom regular suppliers; or
d. where thegoodsand services can be supplied only by a particular
business and there is no reasonable alternative or substitute for one of
the following reasons
i) the requirement is for works of art,
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2 ii) to protect patents, copyrights, or other exclusive rights,or proprietary information, or iii) due to an absence of competition for technical reasons; or
e. for additional deliveries ofgoodsand services by the original supplier orauthorised representative that are intended either as replacement parts,
extensions, or continuing services for existing equipment, soware,
services, or installations, where a change of supplierwould compel the
agency to procuregoodsand services that do not meet requirements for
compatibility with existing equipment or services; or
f. forprocurementsin a commodity market; or
g. where an agency procures a prototype or a first good or service that is
intended for limited trial or that is developed at the agencys request in
the course of, and for, a particular contractfor research, experiment, study,or original development; or
h. in the case of a contractawarded to the winner of a design contest,
provided that
i) the contest has been organised in a manner that is consistent with
these CPRs, and
ii) the contest is judged by an independent jury with a view to a design
contract being awarded to the winner; or
i. for new construction servicesconsisting of the repetition of similarconstruction servicesthat conform to a basic project for which an initial
contractwas awarded through an open tenderorprequalified tender, and
where the initial approach to marketindicated that limited tendermight
be used for those subsequent construction services.
10.4 Aprocurementat or above the relevantprocurement thresholdconducted
by limited tenderis not required to meet the rules in paragraphs 10.6 -10.12
(Request documentation), 10.17-10.27 (Minimum time limits),
or 10.31 (Awarding contracts).
10.5 In accordance with the general rules for accountability set out in these CPRs,for each contractawarded through limited tender, an official mustprepare and
appropriately file within the agencys records management system a written
report that includes:
a. the value and type ofgoodsand services procured;
b. a statement indicating the circumstances and conditions that justified the
use of limited tender; and
c. a record demonstrating how theprocurementrepresented value for money
in the circumstances.
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Request documentation
10.6 Request documentationmustinclude a complete description of:
a. theprocurement, including the nature, scope and, where known, the
quantity of thegoodsand services to be procured and any requirements tobe fulfilled, including any technical specifications, conformity certification,
plans, drawings, or instructional materials;
b. any conditions for participation, including any financial guarantees,
information and documents thatpotential suppliersare required to submit;
c. any minimum content and formatrequirements;
d. evaluation criteriato be considered in assessing submissions; and
e. any other terms or conditions relevant to the evaluation of submissions.
10.7 However, agencies are not obligated to release confidential information,information sensitive to essential security or information that may
impede competition.
10.8 Agencies mustensure thatpotential suppliersandtenderersare dealt with fairly
and in a non-discriminatory manner when providing information leading to,
or following, an approach to market. Agencies mustpromptly
reply to any reasonable request from apotential supplierfor relevant
information about aprocurement, and when responding to such enquiries
mustavoid apotential supplier, or group ofpotential suppliers, gaining an
unfair advantage in a competitive procurement process.
Specifications
10.9 In prescribingspecificationsforgoodsand services, an agency must:
a. not use specificationsor prescribe any conformity assessment procedure in
order to create an unnecessary obstacle to trade;
b. where possible, set out the specificationsin terms of performance and
functional requirements; and
c. base technical specificationson international standards, where they exist
and apply to the relevantprocurement, except where the use of international
standards would fail to meet the agencys requirements or would impose
greater burdens than the use of recognised Australian standards.
10.10 A specificationmust notrequire or refer to a particular trademark or
trade name, patent, copyright, design or type, specific origin, producer,
or supplier, unless there is no other sufficiently precise or intelligible way
of describing the requirement. In an exceptional circumstance where this
type of specificationis used, words such as or equivalent mustbe included
in the specification.
2
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10.11 An agency may conduct market research and other activities in developing
specificationsfor a particularprocurementand allow a supplierthat has been
engaged to provide those services to participate inprocurementsrelated to
those services. Agencies mustensure that such a supplier will not have an
unfair advantage over otherpotential suppliers.
Modification of evaluation criteria or specifications
10.12 Where, during the course of aprocurement, an agency modifies the
evaluation criteriaor specificationsset out in an approach to marketor in
request documentation, or amends or reissues an approach to marketor request
documentation, it musttransmit all modifications or amended or reissued
documents:
a. to all thepotential suppliersthat are participating at the time the
information is amended, if known, and, in all other cases, in the samemanner as the original information; and
b. in adequate time to allowpotential suppliersto modify and re-lodge
their submissions, if required.
Conditions for participation
10.13 Agencies may specify conditions for participationthatpotential suppliers
mustbe able to demonstrate compliance with in order to participate in a
procurementor, if applicable, class ofprocurement. Conditions for participation
mustbe limited to those that will ensure that apotential supplierhas the legal,commercial, technical and financial abilities to fulfil the requirements of
theprocurement.
10.14 Conditions for participationmay require relevant prior experience where that
experience is essential to meet the requirements of theprocurementbut must
notspecify, as a requirement, thatpotential suppliershave previous experience
with the agency or with the Australian Government or in a particular location.
10.15 In assessing whether a tenderersatisfies the conditions for participation,
an agency must:
a. evaluate financial, commercial, and technical abilities on the basis of the
tenderersbusiness activities, wherever they have occurred; and
b. base its determination solely on the conditions for participationthat
the agency has specified in either the approach to marketor the
request documentation.
10.16 An agency may exclude a tendereron grounds such as bankruptcy,
insolvency, false declarations, or significant deficiencies in performance
of any substantive requirement or obligation under a prior contract.
2
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Minimum time limits
10.17 Potential suppliersmustbe required to lodge submissionsin accordance with a
common deadline.
10.18 Agencies mustprovide sufficient time forpotential suppliersto prepare andlodge submissionsin response to an approach to market. Time limits discussed
in this section represent minimum time limits to lodge submissionsand should
not be treated as default time limits.
10.19 e time limit forpotential suppliersto lodge a submissionmustbe at least
25 daysfrom the date and time that an agency publishes an approach to
marketfor an open tenderor aprequalified tender, except under the following
circumstances where an agency may establish a time limit that is less than
25 daysbut no less than 10 days:
a. where the agency has published details of theprocurementin an annualprocurement planonAusTender, at least 30 daysand not more than
12 months in advance, and those details include a description of the
procurement, the timing of the approach to marketand the procedure
to obtain request documentation;
b. where the agency procures commercial goods and services;
c. in the case of second or subsequent approaches to the market for
recurringprocurements; or
d. where a genuine state of urgency renders the normal time limit impracticable.10.20 Where an agency has not electronically issued an approach to market,
the 25 dayperiod referred to in the preceding paragraph mustbe extended
to 30 days.
10.21 e time limits stated above apply to each approach to market. at is, a single
approach to marketmustcomply with the time limits or, in the case of a
multi-stageprocurement(such as inviting expressions of interest followed by a
prequalified tender), each approach to marketmustcomply with the time limits
stated in paragraph 10.19.
10.22 Where an agency intends to specify conditions for participationthat requirepotential suppliersto undertake a separate registration procedure, the agency
muststate the time limit for responding to the registration in the approach to
market. Any such conditions for participationmustbe published in sufficient
time to enable allpotential suppliersto complete the registration procedures
within the time limit for theprocurement.
10.23 Where an agency extends the time limit for registration or submission,
or where negotiations are terminated andpotential suppliersare permitted to
lodge new submissions, the new time limit mustapply equitably.
2
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Late submissions
10.24 Late submissionsmust notbe accepted unless the submissionis late as a
consequence of mishandling by the agency. An agency must notpenalise any
potential supplierwhose submissionis received aer the specified deadline ifthe delay is due solely to mishandling by the agency.
10.25 Agency mishandling does not include mishandling by a courier or mail
service provider engaged by apotential supplier to deliver a submission.
It is the responsibility of thepotential supplierto ensure that thesubmissionis
dispatched in sufficient time for it to be received by the agency by the deadline.
10.26 Late submissionsshould be returned unopened to thepotential supplier
who submitted them, to:
a. ensure that they are not evaluated or compared with submissionswhich
were submitted by the due time and date;
b. demonstrate to other tenderersthat the process for receiving submissions
is fair and impartial; and
c. eliminate scope for any suggestion that the submissionwas rejected for
any reason other than because it was late.
10.27 It may be necessary to open a late submissionif there is no return address or
any indication of which approach to marketthe submissionrelates. Where a
submissionhas been opened under such circumstances thepotential supplier
should be advised that the submissionwas rejected due to lateness and advised
of the reason it was opened.
Receipt and opening of submissions
10.28 Procedures to receive and open submissionsmustguarantee fairness and
impartiality and mustensure that submissionsare treated in confidence.
10.29 Where an agency provides tendererswith opportunities to correct
unintentional errors of form between the opening of submissionsand any
decision, the agency must provide the opportunity equitably to all tenderers.
10.30 Further consideration mustbe given only to submissionsthat meet minimumcontent and formatrequirements.
2
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Awarding contracts
10.31 Unless an agency determines that it is not in the public interest to award
a contract 9, it mustaward a contractto the tendererthat the agency has
determined: a. satisfies the conditions for participation;
b. is fully capable of undertaking the contract; and
c. will provide the best value for money, in accordance with the essential
requirements and evaluation criteriaspecified in the approach to marketand
request documentation.
10.32 An agency must notcancel aprocurement, or terminate or modify an awarded
contract, so as to avoid the rules of Division 2 of these CPRs.
2
9 Public interest grounds generally arise in response to unforeseen events or new information thatmaterially affects the objectives or reasons underlying the original procurement requirement as specifiedin the request document.
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Appendices
Appendix A: Exemptions from Division 2
Procurementsthat are exempt from the rules of Division 2 by the operation
of Appendix A are still required to be undertaken in accordance with value
for money and with the rules of Division 1 of these CPRs.
Division 2 does not apply to:
1. leasing orprocurementof real property or accommodation(note: theprocurementof construction servicesis not exempt);
2. procurementofgoodsand services by an agency from other Commonwealth,
state, territory or local government entities where no commercial market
exists or where legislation or Commonwealth policy requires the use of a
government provider (for example, tied legal services);
3. procurementsfunded by international grants, loans or other assistance,
where the provision of such assistance is subject to conditions inconsistent
with this document;
4. procurementsfunded by grants and sponsorship payments from
non-Commonwealth entities;
5. procurementfor the direct purpose of providing foreign assistance;
6. procurementof research and developmentservices, but not theprocurement
of inputs to research and developmentundertaken by an agency;
7. the engagement of an expert or neutral person, including engaging counsel or
barristers, for any current or anticipated litigation or dispute;
8. procurementofgoodsand services (including construction) outside Australian
territory, for consumption outside Australian territory;
9. acquisition of fiscal agency or depository services, liquidation and
management services for regulated financial institutions, and sale and
distribution services for government debt;
10. procurementof motor vehicles;
11. procurementby the Future Fund Management Agency of investment
management, investment advisory, or master custody and safekeeping services
for the purposes of managing and investing the assets of the Future Fund;
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12. procurementof blood plasma products or plasma fractionation services;
13. procurementof government advertising services10;
14. procurementofgoodsand services by, or on behalf of, the Defence Intelligence
Organisation, the Defence Signals Directorate, or the Defence Imagery andGeospatial Organisation;
15. contracts for labour hire;
16. procurementofgoodsand services from a business that primarily exists to
provide the services of persons with a disability; and
17. procurementofgoodsand services from an SMEwith at least 50 per centIndigenous ownership.11
10 This includes information and advertising services for the development and implementation of informationand advertising campaigns.
11 FMA Regulation 7b Commonwealth Cleaning Services Guidelines (Act s64) must be complied within theuse of this exemption for the procurementof cleaning services.
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Appendix B: Abbreviations and acronyms
CAC Act Commonwealth Authorities and Companies Act 1997
CEIs Chief Executives Instructions
CPRs Commonwealth Procurement Rules
Finance Department of Finance and Deregulation
Finance Minister Minister for Finance and Deregulation
FMA Act Financial Management and Accountability Act 1997
FMA Regulations Financial Management and Accountability Regulations 1997
GST Goods and Services Tax
SMEs Small and Medium Enterprises
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Appendix C: Definitions
e following definitions apply for the purposes of these CPRs:
Annual procurement plan a document published onAusTenderthrough which
agencies provide a short summary of their strategic procurement outlook for the
coming year and information on significantprocurementsthey plan to undertake.
Approach to market any notice invitingpotential suppliersto participate in a
procurementwhich may include a request for tender, request for quote, request
for expression of interest, request for application for inclusion on a multi-use list,
request for information or request for proposal.
Note: the acronym ATM is used on AusTender and other procurement documents
to reference an approach to market.
Approver is defined by the FMA Regulations as:
a. a Minister; or
b. a Chief Executive; or
c. a person authorised by or under an Act to exercise a function of approving
proposals to spend public money.
AusTender the central web-based facility for the publication of Australian
Government procurement information, including business opportunities,
annual procurement plansand contractsawarded.
CAC Act bodies entities that are subject to the Commonwealth Authorities and
Companies Act 1997(CAC Act). CAC Act bodiesare legally and financially separatefrom the Commonwealth but can be directed by the Finance Minister under
section 47A of the CAC Act to apply the CPRs in accordance with the CAC Act
Procurement Directions if they are listed in schedule 1 to the CAC Regulations
(relevant CAC Act bodies).
Chief Executives Instructions (CEIs) directions issued by the Chief Executive of
an agency under the authority of section 52 of the FMA Act and FMA Regulation 6.
Commercial goods and services commercialgoodsand services are of a type
that are offered for sale to, and routinely purchased by, non-government buyers
for non-government purposes, including any modifications common in thecommercial marketplace and any minor modifications not common in the
commercial marketplace.
Commodity market a recognised exchange dealing in generic, largely
unprocessed, goods that can be processed and resold.
Conditions for participation minimum conditions thatpotential suppliersmust
demonstrate compliance with, in order to participate in a procurement process or
for submissionsto be considered. is may include a requirement to undertake an
accreditation or validation procedure.
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Construction servicesprocurementsrelated to the construction of buildings and
allprocurementscovered by the Public Works Committee Act 1969.
Contractan arrangement, as defined by the FMA Regulations, for theprocurement
ofgoods and services under which public money is payable or may become payable.
Note: this includes standing offers and panels.
Contracts for labour hire a contractunder which an agency engages an individual
to provide labour, where the individual is engaged either directly or through a firm
which primarily exists to provide the services of only that individual. is includes
the appointment of an eminent individual to a special role by a Chief Executive,
or the appointment of a person or persons by a Chief Executive to a governance
committee (for example, an audit committee, ethics committee or steering
committee), but does not include the engagement of consultants.
Days means calendar days.
End date (in a contract) can be defined by reference to a specific date or by
reference to a specific event.
Evaluation criteria the criteria that are used to evaluate the compliance
and/or relative ranking of submissions. Evaluation criteriamustbe clearly stated
in the request documentation.
FMA Act agencies agencies as defined in section 5 of the Financial Management
and Accountability Act 1997(FMA Act).
Goods every type of right, interest or thing which is legally capable of being
owned. is includes, but is not restricted to, physical goods and real propertyas well as intangibles such as intellectual property, contractoptions and goodwill.
Limited tender involves an agency approaching one or morepotential suppliers
to make submissions, where the process does not meet the rules for open tenderor
prequalified tender.
Minimum content and format requirements criteria that a tenderers submission
is required to meet, when responding to an approach to market, to be eligible for
further consideration in a procurement process.
Multi-use list a list, intended for use in more than one procurement process, of
pre-registered supplierswho have satisfied the conditions for participationon the list.
Each approach to a multi-use listis considered a newprocurement.
Open approach to market any notice inviting allpotential suppliersto participate
in aprocurementwhich may include a request for tender, request for quote, request
for expression of interest, request for application for inclusion on a multi-use list,
request for information and request for proposal.
Open tender involves publishing an openapproach to marketand inviting submissions.
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Potential supplier an entity or person who may respond to anapproach to market.
Prequalified tender involves publishing an approach to marketinviting
submissionsfrom allpotential supplierson:
a. a shortlist ofpotential suppliersthat responded to an initial open approach tomarketonAusTender;
b. a list ofpotential suppliersselected from a multi-use listestablished through an
open approach to market; or
c. a list of allpotential suppliersthat have been granted a specific licence or
comply with a legal requirement, where the licence or compliance with the legal
requirement is essential to the conduct of theprocurement.
Procurement encompasses the whole process of procuringgoodsand services.
It begins when a need has been identified and a decision has been made on the
procurement requirement. Procurementcontinues through the processes of risk
assessment, seeking and evaluating alternative solutions, the awarding of a contract,
delivery of and payment for thegoodsand services and, where relevant, ongoing
contractmanagement and consideration of disposal ofgoods. Procurementdoes
not include:
a. grants (whether in the form of a contract, conditional gi or deed)12;
b. investment (or divestment);
c. sales by tender;
d. loans;
e. procurementofgoodsand services for resale orprocurementofgoodsand services
used in the production ofgoodsfor resale;
f. any property right not acquired through the expenditure of public money
(for example, a right to pursue a legal claim for negligence);
g. statutory appointments;
h. appointments made by a Minister using the executive power
(for example, the appointment of a person to an advisory board); or
i. the engagement of employees, such as under the Public Service Act 1999,the Parliamentary Services Act 1999, an agencys enabling legislation,
or the common law concept of employment.
Procurement thresholds theprocurement thresholds(including GST) are:
a. for FMA Act agencies, other than forprocurementsof construction services,
theprocurement thresholdis $80,000;
b. for relevant CAC Act bodies, other than forprocurementsof construction services,
theprocurement thresholdis $400,000; or
c. forprocurementsof construction servicesby FMA Act agenciesor relevantCAC Act bodies, theprocurement thresholdis $9 million.
12 As defined in FMA Regulation 3A.
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accountability and transparency, 203
annual procurement plans, 21, 32
definition, 39
approach to market, 21, 26, 2834
definition, 39
approver, 8, 14
definition, 39
audit, 23
AusTender, 202, 26, 32
definition, 39
awarding contracts, 29, 34
CAC Act bodies, 112, 22, 25
definition, 39
Certificate of Compliance, 8, 23
Chief Executives Instructions (CEIs), 8, 11, 18
definition, 39
commercial goods and services, 32
definition, 39
commodity market, 29
definition, 39
competition, 2930
encouragement of, 17
conditions for participation, 28, 30-2, 34
definition, 39
confidential information, 30
treatment of, 223
confidentiality
submissions, 22-3, 33
construction services 12, 22, 25, 29
definition, 40
contract end dates, 16
definition, 40
contracts, 9, 16, 1925
definition, 40
see alsoawarding contracts
contracts for labour hire, 37
definition, 40
cooperative agency procurements, 16
coordinated procurement, 15
disclosure, 223
Division 1: Rules for all procurements, 12, 1426
Division 2: Additional rules for procurementsat or above the relevant procurement threshold,12, 2834
exemptions from, 256, 28, 3637
documentation, 20
see alsorequest documentation
evaluation criteria, 21, 301, 34
definition, 40
expected value of procurement, 12, 25, 28
financial framework, 10
FMA Act agencies, 112, 17, 22, 25
definition, 40
gifts, 18
goods
definition, 40
international obligations, 11
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late submissions, 33
legislative and policy environment, 10
limited tender, 21, 256, 289
definition, 40
minimum content andformat requirements, 28, 30, 33
definition, 40
minimum time limits, 29, 32
modification of evaluationcriteria or specifications, 31
multi-use list, 201, 26
definition, 40
non-discrimination, 17
notifications to the market
and AusTender, 21
open approach to market, 26
definition, 40
open tender, 201, 256, 289, 32
definition, 40
opening of submissionsseereceipt and opening of submissions
potential suppliers, 15, 178, 201, 23, 26, 303
definition, 41
prequalified tender, 21, 256, 289, 32
definition, 41
probity issues, 18
procurement, 9
definition, 41
procurement framework, 8
procurement methods, 256
procurement risk, 9, 14, 24
procurement thresholds, 12, 256
definition 41
providing information, 212, 30
receipt and opening of submissions, 33
records, 20, 23, 29
reporting arrangements, 22
reporting thresholds, 22
definition, 42
request documentation, 16, 21, 23, 2832, 34
definition, 42
research and development, 36
definition, 42
risk seeprocurement risk
small and medium enterprises (SMEs), 17, 37
definition, 42
specification, 301
definition, 42
standing offer, 22, 26
definition, 42
subcontractors, 22submissions, 17, 212, 26, 28, 303
definition, 42
supplier, 18, 205, 2831
definition, 42
tenderer, 189, 21, 28, 301, 334
definition, 42
third-party procurement, 16
value for money, 12, 147, 20, 24, 289, 34
value of procurement
requirement to estimate, 25
web-based guidance, 8