The CPGs issued in January 2005 reflect quite significant changes to the Government procurement environment. They apply to all FMA agencies, and, where directed by the Minister for Finance, to bodies that are subject to the Commonwealth Authorities and Companies Act 1997.

For all ‘covered’ procurements of consultancy services (those over $80,000 including GST) an open tender process or some derivative is virtually mandatory under the CPGs. Where the maximum value of a contract cannot be estimated, it is to be regarded as a covered procurement. And contracts with multiple parts are valued as a single contract. Non-covered procurements allow greater discretion, but agencies are still expected to comply with the overall procurement policy framework.

Where an open tender process has first been used to gain Expressions of Interest (and the AusTender notice made this clear), responses can be used to seek tender submissions from a shortlist of those expressing interest. Another form of select tender involves use of a list of all qualified suppliers from an independent accrediting or regulatory authority, but all those on the list must be invited to tender. A third form of select tendering that is of less relevance to choosing consultants, involves ‘multi-use lists’ of pre-qualified suppliers of frequently used services (for example, in IT procurement).

Panels of potential suppliers of identified services can be established by agencies, but only through an open approach to the market, under the significantly more prescriptive conditions of the new CPGs. Once a panel has been established, however, the procurement process does not attract the operation of the mandatory procurement procedures of the CPGs. However, other elements of the CPGs, such as achieving value for money, continue to apply. Direct source tendering can only be used under quite restrictive and specific conditions, as set out in section eight of the CPGs.

The CPGs also specify that request documentation (documents provided to potential suppliers; electronically as far as practicable) must include a complete description of:

Potential suppliers must generally be given at least 25 days to lodge a submission from the date that an agency publishes an invitation to the market. Once begun, however, a procurement process cannot be terminated if satisfactory submissions have been received, unless the agency determines that it is not in the public interest to continue. A contract must be awarded, provided that at least one of the tenderers meets the requirements of the RFT, including the provision of value for money.

An agency’s Chief Executive’s Instructions (CEIs) are an essential starting point in preparing request documentation. According to clause 1.7 of the CPGs, ‘the CPGs provide the framework within which Chief Executives may prepare CEIs and associated operational guidance related to procurement in a specific agency’.

All open approaches to the market (open tenders) must be advertised on AusTender (www.tenders.gov.au). Agencies may also advertise opportunities in other media, at their own discretion, but the wording must be identical to that published on AusTender.

For select tenders, agencies are required to issue all invitations to tender electronically (where practicable), and, to the extent practicable, make tender documentation available electronically to all potential suppliers invited.

The Accountability and Transparency section of the CPGs stipulates that procurement officials ‘must offer unsuccessful bidders a written or oral debriefing as to why their offers were not successful’. Rather than making the offer separately after the selection process has been completed, time and effort can be saved by inserting debriefing offers in tender documentation, including relevant contact details.

Competitive neutrality requires that government business activities do not accrue net competitive advantages over their private sector competitors simply as a result of their public ownership. Observance of competitive neutrality helps ensure efficient use of public resources, promotes transparency and accountability, and fosters ethical behaviour and fair dealing where a government agency is competing with the private sector in the provision of goods or services. Further detail and practical guidance is provided in DOFA and Treasury (2004).

Section 5.6 of the CPGs states that the Government ‘is committed to FMA agencies sourcing at least 10 per cent of their purchases by value from SMEs [small and medium enterprises]’. The CPGs also require that officials ensure that procurement methods do not unfairly discriminate against SMEs, and outline a number of factors that should be taken into account to ensure that SMEs have appropriate opportunities to compete for business.

Australia is a signatory to bilateral free trade arrangements with New Zealand, Singapore, the USA and Thailand. These arrangements are implemented domestically as Government policy and/or legislation, and all relevant international obligations have been incorporated into the CPGs.

High insurance costs in recent years have increased pressure from consultants for caps on their contractual liability, or caps on insurance required by them. Reducing insurance costs can help keep down the cost of services supplied to government agencies. However, caps on liabilities borne by suppliers are reflected in commensurate increases in risk and contingent liabilities borne by the Australian Government.

The CPGs require (sections 6.12 to 6.19) agencies to undertake a risk management process, and to seek legal advice appropriate to the complexity of the purchase and the level of risk. Contractual arrangements must be considered against the ‘value for money’ paradigm, and the CPGs note that ‘better practice request documentation will include a draft contract with clear liability provisions, with potential suppliers required to indicate compliance against each clause of the draft contract, including liability provisions, and to clearly state and cost any alternative clauses’.

In determining the treatment of intellectual property, it is the agency’s responsibility to identify, at an early stage, the intellectual property likely to be developed during a project. It should also consider its own requirements regarding the ownership of intellectual property.

Whatever approach an agency adopts, it is essential that the contract clearly reflect the arrangements. Contract managers should actively track and report intellectual property outcomes if value for money is to be achieved for the Commonwealth. See www.dcita.gov.au.

As a consequence of FMA Regulation 9, Australian Government officials are expected to ‘comply with legislation and relevant policies that interact with a procurement activity, irrespective of whether an action is consistent with the CPGs’.

Government policies are continually subject to change, so it is prudent to check with the responsible administering agency about specific policy requirements. However, DOFA (2005d) contains a table compiled in November 2004 that provides an initial guide to the range of policies and legislation relevant to procurement activity.

Some examples relevant to consultancies include:

In recent years, Parliamentary committees have expressed concern about the proliferation of ‘commercial in confidence’ clauses in contracts, as well as apparent attempts to use them to shield Public Servants from accountability to Parliament.

Chapters 6 and 7 of the CPGs that were issued in January 2005 have now consolidated and made explicit the accountability and transparency requirements associated with the procurement policy framework.

A key feature of the new CPGs is the emphasis on maintaining appropriate documentation during each phase of a procurement process. Examples include the Annual Procurement Plan that must be published on AusTender by 1 July each year, through to various reporting obligations. Documentation relating to a procurement must be retained for three years, or longer if required by legislation or other reasons. The Archives Act 1983 and the Freedom of Information Act 1982 are also relevant.

A smooth procurement process can be assisted if request documentation (preferably including an attached draft contract):

Transparency of agencies’ use of confidential contract provisions is achieved in chapter 7 of the CPGs by requiring FMA agencies to: