The Commonwealth Procurement Rules (CPRs) are changing!

Written by: Brett Lyndon – The Pro Forum Community of Practice

The current version of the CPRs came into effect in December 2020. That was in the middle of the pandemic! As we’re now starting to move on and into a post-pandemic phase, maybe the Department of Finance decided it’s time to release new a version of the CPRs. Whatever the reason for the latest release, let’s have a look at what is changing.

On 1 July 2022, the new version of the CPRs will come into effect, and departments will need to start considering how these new rules will impact them and the procurements they conduct.

Paragraph 4.9

Paragraph 4.9 now states that Non-Corporate Commonwealth Entities (NCCEs) and Corporate Commonwealth Entities (CCEs) must comply with procurement-connected policies (PCPs) where the policy indicates that it is applicable to the procurement process and to the entity. So, implementing PCPs into procurement activities in not optional anymore, but mandatory for all government bodies.

Paragraph 5.5(d)

Personally, I find the new paragraph 5.5(d) to be an interesting one and something that departments will need to implement carefully if they choose to use it. It requires procurement officials to consider the disaggregation of large projects into smaller packages, where appropriate, to maximise competition. So, officials can break the procurement up into smaller parcels to increase competition and Small-Medium Enterprise (SME) engagement, however, they will need to be careful that it is not done in a manner that avoids extensive contract reporting. Just to be safe, I would recommend, if the procurement is to be broken into pieces, officials should ensure wherever practical and as much as possible, that different suppliers are engaged.

Paragraph 5.8

While Paragraph 5.8 removes the $1 million threshold in the Supplier Pay On-Time or Pay Interest Policy. This will necessitate a re-write of the related Resource Management Guide, RMG 417. Be sure to consider this in contract development and financial management of contracts moving forward.

Paragraph 8.4

A new sub-paragraph has been added to paragraph 8.4 that will change the way departments assess tenders and manage risk. This new paragraph states suppliers do not need to take out insurance until a contract is awarded to limit insurance imposts in contracts. It embeds the principle of risk sharing by better reflecting the actual risk in contractual liability. To me, this means entities can no longer request high insurance levels be maintained and that insurance requirements must truly reflect the level of risk the entity will be exposed to. The principle of risk sharing, rather than risk transfer, may challenge some organisations and may force a re-think into how the organisation manages its risks. It also means the tenderers cannot be required to hold the relevant insurance until the contract is due to be awarded and, by implication, cannot be excluded from tender evaluation simply because they do not hold the requested level of insurance.

Item 17 of Appendix A: Exemptions

There is also a slight change to item 17 of Appendix A: Exemptions, that allows Defence to procure up to $500,000 of goods and services from SMEs if the Indigenous Procurement Policy applies to the procurement. All other entities are still restricted to $200,000.

Now, whilst these changes commence on 1 July 2022, they are NOT retrospective. Entities are encouraged to start considering the changes in any new procurements undertaken before these changes start. The exception is Exemption 17, which CANNOT commence until 1 July 2022.