Does the Australian Government have any rules buyers need to follow to select a supplier?
Yes, Australian Government organisations have procurement rules they must follow. These are contained in the Public Governance Performance and Accountability Act 2013 (the PGPA Act), the PGPA Rule 2014 and the Commonwealth Procurement Rules(CPRs). The PGPA Act and PGPA Rule provide the general legal framework that Australian Government officials must follow when undertaking a procurement. The CPRs provide detailed instructions to officials from relevant Australian Government organisations undertaking procurements.
What is in the Commonwealth Procurement Rules?
The Commonwealth Procurement Rules (CPRs) set out the Australian Government’s policies and expectations and provides detailed instructions to Australian Government buyers undertaking procurement.
The CPRs have two divisions. Division 1 contains the rules that apply to all procurements conducted by relevant Australian Government organisations.
The core focus of Division 1 is achieving value for money. The CPRs require relevant Australian Government organisations to conduct their procurements in a way that:
- encourages competition and is non-discriminatory
- uses public resources in an efficient, effective, economical and ethical manner
- provides accountability and transparency
- manages procurement risk
- is conducted in a method appropriate to its value.
Division 2 contains additional rules that apply to procurements valued above $80,000 (with some exceptions). For some Australian Government organisations, the threshold above which these additional rules apply is $400,000. For procurement of construction services, the threshold is $7.5 million. The Australian Government buyer will take the relevant thresholds for their organisation into account when approaching the market.
Procurements valued at or above this procurement threshold are generally conducted by open tender, unless there is a specific exemption, as outlined in the CPRs.
The CPRs are available on the Department of Finance website. The information available on the Selling to Government website will also give you an understanding of the obligations that apply to relevant Australian Government organisations as outlined in the CPRs.
Do all Australian Government organisations need to comply with the Commonwealth Procurement Rules?
No.
The CPRs apply for relevant Australian Government organisations.
This includes:
- non-corporate Commonwealth entities (a Commonwealth entity that is not a body corporate, as defined in the Public Governance Performance and Accountability Act 2013)
- specific Corporate Commonwealth entities (a Commonwealth entity that is a body corporate, and is identified as ‘prescribed Corporate Commonwealth entities’ listed in the Public Governance and Accountability Rule 2014).
These organisations must comply with the CPRs when performing duties relating to procurement.
Commonwealth Companies (companies that the Commonwealth controls) and non-prescribed Corporate Commonwealth Entities are not covered by the CPRs.
A current list of Australian Government organisations, including information on which organisations are subject to the CPRs, is available on the Department of Finance website.
What is value for money?
When purchasing goods and services, Australian Government buyers must be satisfied that they are achieving value for money.
Price is not the sole factor when achieving value for money .
When assessing value for money, Australian Government buyers must consider the relevant financial and non-financial costs and benefits of each response including, but not limited to:
- the quality of the goods and services
- fitness for purpose of the proposal
- the potential supplier’s relevant experience and performance history
- flexibility of the proposal (including innovation and adaptability over the lifecycle of the procurement)
- environmental sustainability of the proposed goods and services (such as energy efficiency, climate change impact, environmental impact, circularity of the goods and services and use of recycled materials)
- whole-of-life costs.
How do Australian Government buyers consider environmental sustainability and climate change impacts when determining value for money?
Australian Government buyers need to consider environmental sustainability and climate change impacts when assessing value for money.
The Australian Government’s Sustainable Procurement Guide provides buyers with step-by-step guidance for achieving environmental outcomes from any procurement.
The Environmentally Sustainable Procurement Policy further strengthens Australian Government purchasing within certain categories. It applies to the following procurements from 1 July 2024:
- construction Services at or above $7.5 million.
From 1 July 2025, additional categories covered by the Environmentally Sustainable Procurement Policy include:
- furniture, fittings and equipment purchases at or above $1 million
- ICT purchases at or above $1 million
- textile and uniform purchases at or above $1 million.
If you provide goods and/or services in any of these specified categories, you will be subject to the requirements of the Policy.
You can find further information on the Sustainable Procurement website.
How do Australian Government buyers consider whole-of-life costs when determining value for money?
When considering whole-of-life costs, Australian Government buyers may consider factors such as:
- initial purchase price
- maintenance and operating costs
- transitioning out costs
- licensing costs
- cost of any additional features procured after an initial procurement
- consumable costs
- decommissioning, remediation, and disposal costs.
Do Australian Government buyers ever consider broader benefits to the Australian economy when they are making purchasing decisions?
Yes.
For procurements valued above $1 million (or $7.5 million for construction services), Australian Government buyers must consider the economic benefit of the procurement to the Australian economy.
This is in addition to requirements to assess whether a purchase is value for money.
In general terms, economic benefits to the Australian economy result when the goods or services being procured:
- make better use of Australian resources that would otherwise be under-utilised (for example employing people who would otherwise be under or unemployed, using spare industrial capacity, or freeing Australian Government funds for other spending);
- otherwise increase productivity (for example by adopting new know-how or innovation, or enabling more people to acquire in-demand skills, or ensuring that resources are allocated to sectors in which Australia has a comparative advantage); or
- provides broader benefits that support the development and sustainment of industry capabilities.
An increase in productivity-enhancing technology development and adoption can also deliver economic benefit.
When the relevant thresholds are met, requirements to demonstrate broader benefits to the Australian Government will be outlined in Approach to Market (ATM) documentation.
There are many ways that you as a business can demonstrate providing an economic benefit to the Australian economy. Some examples include, but are not limited to:
- providing skills and training that benefit Australian communities
- employing workers, apprentices and / or trainees in Australia
- generating environmental benefits
- contributing to positive social outcomes in Australian communities, such as:
- engaging unemployed people
- engaging Indigenous businesses
- using goods and services from a business that provides services of persons with a disability
- engaging small and medium enterprises in delivering goods and services, either directly or as a subcontractor or a supplier
- sharing knowledge, skills, and technology with small and medium enterprises
- developing and adopting innovative products or practices that benefit Australian communities
- creating export opportunities for Australian goods and services
- developing Australian industry capabilities or industrial capacity.
Are there any other rules that must be followed?
Australian Government buyers also need to apply various procurement connected policies that place minimum requirements on officials and businesses in specific circumstances. Further information on these polices, where they are relevant to you as a business, is included in the below sections of the Frequently Asked Questions page of this website:
The CPRs are a common set of rules that Australian Government organisations apply in a manner consistent with the business needs of each individual organisation.
Do I have to pay anything to get selected for an Australian Government contract?
Absolutely not.
Australian Government officials are required to buy goods and services in an ethical, accountable, and transparent manner. They must not seek or accept gifts or other favours from potential suppliers and must follow procedures and protocols designed to ensure a fair and consistent approach to procurement activities.
Likewise, potential suppliers should not approach government officials in a way that might be interpreted as an attempt to improperly influence purchasing decisions. This will usually mean that typical private sector practices such as providing complimentary entertainment or giving gifts to potential government clients is highly discouraged.
Officials and suppliers should aim to always conduct business on the basis of mutual trust and respect.
Are there costs associated with responding to an ATM or working with the Australian Government?
It will take time and effort for you to develop and submit a tender response to any ATM. There may also be compliance costs associated with ensuring that you meet any mandatory minimum requirements, such as holding relevant licenses or meeting minimum standards, as outlined in the tender documentation. You are also likely to be required to demonstrate that you have appropriate insurances prior to entering into a contract with the Australian Government.
Given the time and effort involved in preparing a response to an ATM, and meeting any minimum requirements, it is good practice to ensure that you are sufficiently prepared and understand the process, and common requirements, before an opportunity you are interested in tendering for is published.
Detailed information on responding to an ATM, and further information on minimum requirements is available in the following sections of this website:
How will my response to the ATM be assessed?
Your response will be evaluated against the advertised evaluation criteria. The tender response that offers the best combination of meeting the evaluation criteria and price considerations will be identified as best value for money and selected as the preferred supplier.
Will I know the criteria to be used to evaluate my tender?
Yes.
You must be advised of the criteria that will be used to evaluate your response. This information will be in the approach to market (ATM) documentation.
More information on evaluation criteria, and how to appropriately frame your response, is included in the Responding to an approach to market section of this website.
Does the Australian Government have to select the cheapest response?
No.
It is very important to understand that Australian Government organisations are required to select their suppliers based on a range of value for money considerations rather than just selecting the cheapest option. There is no obligation to choose the cheapest response.
Value for money includes the price, as well as other factors such as total costs of ownership (e.g., repairs and maintenance, end of life disposal costs), quality and suitability of the goods and services for the purpose, track record and experience of the supplier, innovation and flexibility of the proposal and environmental sustainability of the goods and services.
Is my response confidential? Are my design ideas at risk?
The Australian Government takes its responsibilities of confidentiality and probity very seriously. All Australian Government organisations treat tender responses with the utmost confidentiality.
You can be assured that your response will not be discussed with or provided to anyone who does not have a direct and work related need to know about it. This is usually only the client and any members of a tender evaluation panel, the delegate who signs off on the contract, plus any administrative staff that may be involved in tasks such as downloading or printing your response.
Your design ideas are not at risk. Your ideas always remain your intellectual property, and if you are unsuccessful in winning the contract, the Australian Government will not obtain any rights over your intellectual property.
If you are successful in winning the contract, you need to be aware of the terms of that contract. The contract may grant various types of licence to the Australian Government according to the terms contained in the contract sent out with approach to market documents.
If intellectual property rights are of concern for your business, you may want to obtain legal advice before entering into any contracts, and ideally before investing the time and effort associated with putting in a response.
How do I respond to an approach to market?
The Responding to an approach to market section of this website sets out the process of responding to an ATM.
