Buying Right by John Sheridan

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Slide Notes

This presentation was given to the GovProcure 2016 Conference in Sydney on 7 Dec 16. It provides an update on a range of current and enduring Australian Government procurement issues as seen from my role within the Department of Finance as the Australian Government Procurement Coordinator.

Buying Right

Published on Dec 06, 2016

Australian Government Procurement Update

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PRESENTATION OUTLINE

BUYING RIGHT

A COMMONWEALTH PROCUREMENT UPDATE

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SCOPE

CPR Changes
Parliamentary Enquiry
ICT Procurement TF
Contracting Suite
AusTender Responsive Design
DS4P
Service Catalogue
Coordinated Procurements
GovCMS

This slide shows the scope of the presentation.

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2015-16 STATISTICS

$56.9 billion
70338 contracts
SME: $13.7b, 24%; 41737, 61%
Small: $5.5b, 10%; 22883, 33%

Before beginning the presentation proper, I will set the scene by discussing the latest statistics on Australian Government Procurement in 2015-16. These may be found in more detail on the Finance website and on the Technology and Procurement blog, later today.

2015-16 was typical of recent years - about 70,000 contracts above $10,000 for a total of a little less than $60 billion. SMEs and small businesses were again well represented.

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NEW RULES

RECENT AMENDMENTS TO THE CPRS

Despite the interest it engenders in we true believers, it is undoubtedly a fact that government procurement rarely makes the front pages of the main stream media. Even in more specialist online channels, one has to be a search expert to get regular updates on this topic.

You can imagine then the excitement we felt to be in the thick of the debate last week as potential changes in the procurement rules became important in the detailed workings of Parliament. And, before you could say 'value for money is the core rule', we had changes tabled in the Senate. We were beside ourselves! The euphoria soon passed and as no one appears to want two Departments of Finance, we had to stop being beside ourselves and get on with working out the details of implementation.

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10.10
Where an Australian standard is applicable for goods or services being procured, tender responses must demonstrate the capability to meet the Australian standard, and contracts must contain evidence of the applicable standards (see paragraph 10.37).

The first change reinforces the importance of the use of standards in procurement, requiring proof of capability to meet the standard, both during the tender process and in the contract and subsequent implementation.

The CPRs have contained references to standards for some time, both Australian and international. It's important to note that international standards does not mean standards of other countries but properly developed international standards established by bodies like the ISO and IEC. Australia is a major contributor to these bodies and there is very rarely any contradiction between this type of standard and those of Australia.

A good example is the work currently being finalised to develop an Australian standard on Accessibility in ICT Public Procurement. Led by Standards Australia, this work will soon see the direct text adoption of the European standard EN 301 549 by Australia. It will provide a reference for procurement officials in all jurisdictions and has been supported by consumer organisations, suppliers, and government.

10.18
Officials must make reasonable enquiries that the procurement is carried out considering relevant regulations and/or regulatory frameworks, including, but not limited to:
A. Labour regulations, including employment regulations;
B. Occupational health and safety; and
C. Environmental impacts

10.18 expands the matters of which procurement officials must be aware when conducting a procurement. Importantly, this does not contradict free trade agreements but reinforces the existing need for procurement to be conducted ethically.

10.30
In addition to the considerations at paragraph 4.4, for procurements above $4 million, Commonwealth officials are required to consider the economic benefit of the procurement to the Australian economy.

The changes are all in division 2 of the CPRs. This means they apply to non-construction procurements above $80,000 and construction procurements above $7.5m. There are exemptions to this filter, covered in Appendix A, and which haven't changed.

10.30 covers non-construction procurements above $4m and all construction procurements under Div 2 (as these must be $7.5m at least). There are about 1100 such procurements annually of which about 150 are construction.

Economic benefit will often be different from tenderer to renderer depending on a range of factors. We are working to provide guidance for procurement officials on how to conduct this analysis. We expect to provide draft clauses and templates to include in approaches to market in time to meet the March 2017 effective date.

10.31
The policy operates within the context of relevant national and international agreements and procurement policies to which Australia is a signatory, including free trade agreements and the Australia and New Zealand Government Procurement Agreement.

10.31 reinforces the applicability of and the coherence of these changes with our existing FTAs.

10.37
Where applying a standard (Australian, or in its absence, international) for goods or services, relevant entities must make reasonable enquiries to determine compliance with that standard:
a. this includes gathering evidence of relevant certifications; and
b. periodic auditing of compliance by an independent assessor.

Historically, Division 2 and specifically Chapter 10, has been written to reflect the order in which procurement officials go about the business of conducting a procurement. Consequently, 10.37, the new last clause of 10, requires officials to check evidence of compliance with standards in awarding a contract and in the performance of the work under the contract.

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Untitled Slide

Our politicians are clearly taking these issues seriously as they have agreed to a new joint select committee to review government procurement and report by May next year. This slide shows an extract of the terms of reference of the committee. I anticipate it will begin detailed work in the new year.

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Untitled Slide

The Government has already demonstrated its interests in ICT procurement particularly by establishing a task force to review the subject. The Task Force has issued a consultation paper which is available on the PM&C website.

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CCS PLUS

Contracts up to $1m
Consultation: 28 respondents, 190 comments
Most comments: Fraud (Civil Law (Wrongs) Act 2002; Liability Cap
Consistent with Small Business and Unfair Contract Terms Act 2015
Roll out early 2017

Following the success of the CCS with which compliance is mandated for non-ICT contracts up to $200,000, the Belcher review recommended expanding the suite to cover contracts up to $1m. We have been working steadily on doing this, including a lot of public consultation. The new suite will be released in early 2017. Although not required by legislation, we have ensured that the new suite is consistent with the UCTA laws.

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