The fundamental objective of procurement by Australian Government agencies subject to the FMA Act is to achieve value for money by delivering the Government’s programs efficiently, effectively and ethically.
Part 7 of the Financial Management and Accountability Act 1997 (the FMA Act) places the onus for promoting the ‘proper use of … Commonwealth resources’ on the Chief Executive of each agency. The Financial Management and Accountability Regulations (FMAR) made under the Act stipulate in more detail the Government’s requirements. FMAR can be found at www.finance.gov.au.
In recent years, agencies had considerable latitude in the conduct of procurement processes because the Government emphasised achievement of outcomes, rather than the observance of detailed procedures. From January 2005, however, the CPGs are far more directive in their approach. For example, it is now virtually mandatory (with some exceptions) to begin with an open tender process in the case of so-called ‘covered’ procurements; the previous option of moving immediately to a select tender no longer exists.
FMAR 7 provides for the issue by the Finance Minister of Commonwealth Procurement Guidelines (CPGs) about procurement matters and FMAR 8(1) requires that officials who procure property or services must have regard to the CPGs.
The CPGs (DOFA 2004d) are available on the Finance website. Note that the publication is divided into three separate parts. The first outlines the procurement policy framework, including the concept of value for money. Mandatory requirements are specified in the second part, and other government policies relevant to procurement are addressed in the third. More detailed guidance on the mandatory procurement procedures is published by Finance as DOFA 2005a.
It is possible to depart from the provisions of the CPGs, but FMAR 8(2) requires that 'an official who takes action that is not consistent with the Guidelines must make a written record of his or her reasons for doing so'.
Most of the content of the CPGs is reflected throughout this Best Practice guide. But officials considering the engagement of consultants should always consult the CPGs, Chief Executive’s Instructions (CEIs) and DOFA (2005) directly.
A key provision is FMAR 6, which authorises Chief Executives to give instructions (called the Chief Executive’s Instructions) to officials in their agency on matters such as ‘making commitments to spend public money’, and ensuring or promoting the ‘proper use and management of public money’, property and other Commonwealth resources.
While this publication provides a summary of the key considerations in using a consultant, Government agencies may differ in their approach to procuring goods and services. A first step in considering the use of a consultant should therefore be to consult the Chief Executive’s Instructions (CEIs) for the agency concerned.
Except in the special case of an intelligence or security agency, FMAR 9 requires that a person approving the spending of public money must be satisfied that the proposed expenditure satisfies all of the following conditions:
Written authorisation is required from the Minister for Finance where expenditure under a spending proposal is not covered by an appropriation under ‘the provisions of an existing law or a proposed law that is before the Parliament’ (FMAR 10). Finance (DOFA 2005, 4.11) recommends the preparation of a Business Case for formal approval by an appropriate official.
Ethical behaviour and fair dealing make good business sense by engendering trust and allow the parties to a transaction to minimise conflict and uncertainty.
Australian Government Public Servants are also bound by the Australian Public Service (APS) Values and Code of Conduct under sections 10 and 13 of the Public Service Act 1999. Relevant behaviours include accountability to the Parliament through the Government, the need to behave with honesty and integrity, avoidance of conflict of interest, prohibition of the improper use of inside information or the employee’s position to gain (or seek to gain) benefit or advantage for the employee or others, and the need to act with care and diligence. Section 6.25 of the CPGs also points out that procurement activity ‘ought to be conducted in a way that imposes as far as practicable the same level of accountability and responsibility on a service provider as would exist if the agency carried out the services itself’.
Partly as a result of Australia’s signature of bilateral free trade arrangements with New Zealand, Singapore, the USA and Thailand, the CPGs stipulate that potential suppliers must be treated equitably, ‘and not on their degree of foreign affiliation or ownership, location or size’.
Agencies are expected under the CPGs (7.16) to ‘publish on AusTender, by 1 July each year, an Annual Procurement Plan (APP) to draw business’ early attention to potential procurement opportunities’. Agencies are also required to comply with a range of reporting obligations (detailed in the CPGs) to provide broader visibility of their procurement activity.
Specific requirements for reporting on consultancies in Annual Reports are set out in PM&C (2004) at www.pmc.gov.au, and DOFA (2004a.)