Commercial Notes

No. 10
23 June 2004

This issue

Australia – United States Free Trade Agreement
Government procurement under the FTA
The FTA and the Copyright Act


Susan Reye

Susan Reye Senior General Counsel
Australian Government Solicitor
T 02 6253 7110 F 02 6253 7317

On 18 May 2004, the Australia – United States Free Trade Agreement (FTA) was signed in Washington by Australia and the United States. This is the outcome of negotiations between the two countries undertaken since November 2002.

Once the FTA enters into force, the Australian and United States governments will be bound to observe the terms of the agreement as a matter of international law. This will involve amendments to legislation, changes to policies and administrative processes.

The FTA does not directly create legal rights or obligations as a matter of Australian law. Changes to the law as a result of the FTA will depend on legislative amendments. This issue of Commercial notes describes measures set out in the FTA chapters on government procurement and intellectual property rights and discusses the likely implications for clients.

Entry into force and implementation

The agreement did not take legal effect immediately upon signature. Article 23.4.1 provides that the FTA will enter into force 60 days after the parties to the agreement notify each other that their respective internal requirements for entry into force have been fulfilled, or such other date as the parties may agree.

Australian practice is to table treaties in Parliament, and for them to be considered by the Joint Standing Committee on Treaties (JSCOT). In addition, the FTA is being considered by a Senate Select Committee. Formal parliamentary approval of the FTA is not required.

However, it will be necessary, before the FTA enters into force, to ensure that Australian legislation is consistent with, and allows Australia to comply with its obligations under, the FTA. It will be necessary for parliament to enact some amendments to existing legislation, and a Bill for this purpose has been introduced. Some subsidiary legislation will also need to be amended.

In the United States, the Congress must consider and approve the agreement, and pass any necessary legislation.

After these processes have been completed in both countries, the governments will notify each other, probably by an exchange of diplomatic notes, and the FTA will enter into force sixty days later. The FTA is not expected to enter into force before 1 January 2005.

What is covered?

The FTA comprises 23 chapters, several annexes and a range of side letters (exchanges of letters). Important chapters include: Pharmaceutical Benefits Scheme, Agriculture, Textiles and Apparel, Customs Administration, Telecommunications, Government Procurement, Electronic Commerce, and Intellectual Property Rights.

Under Article 1.2.15, the FTA covers both citizens and permanent residents of Australia and the United States, unless specified otherwise. It covers activity throughout Australia, except for the Australian Antarctic Territory. For the United States, the FTA covers activity in the 50 states, the District of Columbia and Puerto Rico (Annex 1-A). Either country can terminate the FTA by writing to the other providing six months notice of the termination (Article 23.4.2).

Text of the FTA can be viewed at:

Susan Reye is a Senior General Counsel practising in the areas of international law, statutory interpretation, administrative law and constitutional law. In particular, she has advised on many matters involving interpretation of treaties and the implementation of international obligations by legislation. She was General Counsel to the Department of the Environment and Heritage from 1996 to 2003, advising on key national and international environmental law issues. She has also worked as an international lawyer in the Department of Foreign Affairs and Trade, the Office of International Law in the Attorney-General’s Department, and at the OECD.



Harry Dunstall

Harry Dunstall Senior Executive Lawyer
T 02 6253 7066 F 02 6253 7301

Chapter 15 of the FTA sets out the measures that Australia has agreed with the United States will govern the conduct of their respective government procurement activities.

Once the FTA is implemented, the Australian Government will be required to ensure that (most of) its departments and agencies comply with the measures when conducting procurement covered by Chapter 15. 1

This note describes the range of measures set out in the Chapter 15. It can be expected that there will be a range of amendments to the Commonwealth Procurement Guidelines and other government policies to reflect these requirements.

Existing procurement framework

The measures in Chapter 15 will be integrated into the existing Commonwealth procurement framework. For FMA departments and agencies,2 this framework 3 includes:

  • the Financial Management and Accountability Act 1997 (FMA)
  • the Financial Management and Accountability Regulations 1997 (FMAR)
  • the Commonwealth Procurement Guidelines (CPGs) as issued by the Minister for Finance and Administration under the FMAR
  • agency Chief Executive Instructions (CEIs), and
  • the general law of tendering (discussed below).

In general terms, this framework requires agencies and their officials to conduct their procurement activities efficiently, effectively and ethically. The integration of the measures will mainly occur through revision of the CPGs.

Minor changes to the Commonwealth Authorities and Companies Act 1997 (CAC Act) will be put in place to extend the procurement framework to the agencies listed in Chapter 15 of the FTA and governed under that Act.

An important feature of Chapter 15, as it operates within the FTA, is that the Australian Government is answerable for the measures it has put in place to ensure compliance by agencies with the FTA.

The responsibility of individual agencies will be to ensure that they comply with the measures as they are implemented by the Australian Government through the CPGs and related policy instruments.

Key messages

The key messages for agencies arising from Chapter 15 of the FTA are:

  • Many of the measures are consistent with the existing procurement framework applicable to agencies, and reflect current policy and practice in how agencies conduct their procurement. However, there will be some changes.
  • Agencies will be required to approach their procurement activities in a more structured, planned and careful way, including publishing an annual procurement plan.
  • There is a presumption that agencies will use an open tender process for the conduct of their procurement activities.
  • The ability of agencies to use other than open tendering processes will be more circumscribed under the measures.
  • In particular, agencies will not be able to issue a restricted tender based simply on their knowledge of the market.
  • Agencies will be more limited in their ability to include industry development requirements in tender documents.
  • Technical standards will need to reflect international standards where they are available.
  • Agencies may not be able to award contracts to tenderers that do not conform to ‘essential requirements’ at the time that tenders are opened.
  • Agencies may be required to include more information in tender documents about how tender evaluation will be undertaken.
  • Agencies will be required to include details of their method of procurement in gazettal notices of contracts.

Scope and coverage of the measures

What government procurement is covered

The measures in Chapter 15 apply to ‘covered procurement’. In general terms, all procurement contracts above a certain value that are entered into by Commonwealth departments and agencies (i.e. most FMA and non-GBE CAC agencies 4) will be covered by the measures, unless the agreement specifically excludes the procurement.5

General procurement exclusions

Chapter 15 does provide for a number of exclusions from the measures. For example, the measures will not apply to the extent that the activities being undertaken by a department or agency relate to:

  • the procurement of motor vehicles
  • grant, funding, cooperative and sponsorship agreements

    Example: The Cooperative Research Centre (CRC) Program undertaken through AusIndustry would not be covered by the measures.

  • procurement undertaken to provide foreign aid

    Example: Procurement undertaken by AusAID or other agencies for the purposes of providing aid or assistance to other countries would not be covered by the measures.

  • the procurement of research and development services

    Example: Procurement of R&D services by CSIRO and DSTO would not be covered by the measures.

  • the procurement of goods and services (including construction) for use outside Australia

    Example: All construction, upgrade and maintenance work undertaken by the Overseas Property Office of the Department of Foreign Affairs and Trade for Australian embassies, high commissions and missions around the world would not be covered by the measures.

Specific exception for Defence procurement

There are also significant exceptions for the Department of Defence in that the measures do not apply to the procurement of major capital equipment, other military equipment and systems and certain other Defence supplies (Annex 15-A, Section 1, note 3(a)).6

In addition, the procurement of goods and services by or on behalf of the Defence Intelligence Organisation, Defence Signals Directorate and Defence Imagery and Geospatial Organisation, are also specifically exempted from the Chapter 15 measures (Annex 15-A, Section 1, note 3(c)).

The reservation by Australia of the right to maintain the Australian Industry Involvement and successor programs is also significant for Defence
(Annex 15-A, Section 1, note 3(d)). The Australian Industry Capability (AIC) program is an important element of Defence’s capital acquisition and through life support contracting requirements.

Value of procurement contracts

Even if the above exceptions do not apply, the measures will apply only to contracts above a certain value:

For the procurement of general goods and services, the thresholds are:

  • for FMA agencies: A$81,800
  • for CAC bodies: A$409,000.

For the procurement of construction services, the threshold for both FMA agencies and CAC bodies is about A$9.4 million. The thresholds are subject to increases under a particular formula to be applied every two years (Annex 15-A, Section 8).

In addition, when calculating the value of a procurement, an agency or body cannot bypass these thresholds by splitting up a proposed procurement into separate procurements. The value of the total procurement must be considered.

Similarly, it must take into account any options under the contract when calculating the contract value. It seems that these options would include both options to extend the contract, and options to procure further supplies under the contract – whether or not the options are exercised.

And finally, there is a catch-all provision to the effect that if the total estimated maximum value of a procurement over its entire duration is not known then the procurement will be taken to be covered by the measures in the chapter.

Example: Standing offer agreements under which goods or services may be purchased from one or more suppliers over the period of the standing offer would generally be covered by the measures set out in the chapter, irrespective of the extent to which orders are actually placed under the standing offer. (Standing offer agreements will also be discussed in the context of ‘multi-use lists.)

The main measures

WTO obligations

Chapter 15 contains the usual ‘national treatment’ and ‘non-discrimination’ provisions consistent with the WTO Agreement.7 These provisions mean that the Commonwealth cannot:

  • treat US suppliers any less favourably than Australian suppliers
  • treat a local supplier any less favourably than other local suppliers simply because of the extent of its foreign ownership, or discriminate against that supplier simply because it may offer US goods or services.

Overarching obligations of fairness and transparency

Like the CPGs, Chapter 15 requires procurement to be undertaken in a way that is fair and transparent. Consistently with this requirement, agencies will be encouraged to publish annual procurement plans as soon as possible each financial year (Article 15.4.3). The plans should include the subject matter of each procurement planned to be undertaken during the year as well as the estimated dates for release of the respective tender documents.

Chapter 15 recognises that that the Commonwealth may use open, selective or limited tendering procedures to undertake its procurement.

However, the clear preference expressed in the chapter is for open tenders to be undertaken. It is only in certain circumstances that selective or limited tendering may be used. Accordingly, agencies will need to be more rigorous in developing their procurement strategies to ensure that they meet the pre-conditions set out in the chapter for using selective or limited tendering.

Selective tendering 8

In relation to selective tendering, the chapter indicates that tenders should be invited from the maximum number of domestic and US suppliers consistent with the efficient operation of the procurement system (Article 15.7.6). The concept of selective tendering differs from how Commonwealth agencies might otherwise conduct a restricted tender process.

A selective tender process must be undertaken in accordance with particular procedures, that is:

  • ‘a multi-use list’9
  • a list of suppliers that have responded to a notice inviting applications for participation, or to an expression of interest (EOI), or
  • a list of suppliers that comply with particular licensing or other legal requirements that exist independently of the procurement process.

    Example: A tender process for the procurement of telecommunications services which requires tenderers to hold a carrier licence under the Telecommunications Act 1997.

In the case of a notice inviting applications for participation, or an EOI, it is still possible for agencies to shortlist out of that initial stage. However, the notice or EOI document must specify the relevant requirements and evaluation criteria for shortlisting.

Accordingly, unless a multi-use list is used, it would appear that in most circumstances agencies will need to conduct an initial EOI or similar process before undertaking the selective tendering process. An agency would not be complying with the selective tendering pre-conditions if it were to simply issue a restricted tender based on its knowledge of the market, even if the agency considered that based on this knowledge there were only a certain number of suppliers capable of meeting a particular requirement.

Limited tendering

Agencies may, however, be able to undertake a ‘limited tendering’ process as long as this is not used for the purpose of ‘avoiding competition or [protecting] domestic suppliers or in a manner that discriminates against [US] suppliers’ (Article 15.8).

An agency may choose not to comply with the Chapter 15 measures and conduct a limited tendering process by contacting a supplier or suppliers of their choice, but only in certain circumstances, including:

  • where a tender process has already been undertaken and either no tenders were submitted or no tenders met the requirements
  • where particular goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute goods or services exist, e.g. due to absence of competition for technical reasons

    Example: This would cover a situation where an agency might require specific technology or access to intellectual property where there is only one supplier of that technology with the rights to the relevant intellectual property.

  • where an existing supplier is in place and the agency requires additional goods and services relating to those already supplied

    Example: This would cover a situation where an agency has procured particular equipment that requires spares and the spares can only be sourced from the OEM (original equipment manufacturer).

  • where new construction services are required consisting of the repetition of similar construction services and the initial contract was let following an open or selective tendering process
  • for purchases under ‘exceptionally advantageous conditions that only arise in the very short term’, e.g. unusual disposals or unsolicited proposals
  • ‘insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseen by the procuring entity’ the goods and services could not be obtained in time under the tendering procedures otherwise set out in Chapter 15.

    While agencies may think the ‘extreme urgency’ option provides a ‘get out’ clause to enable their procurement to be undertaken on a sole or restricted source basis, we expect that such procurement would be closely scrutinised.

Multi-use lists

Chapter 15 also governs the use of ‘multi-use lists’ (Article 15.7.4)10 An agency will be able to establish a multi-use list provided that it publishes annually or otherwise makes available electronically a notice inviting interested suppliers to apply for inclusion on the list. The notice must set out the conditions for participation11 and how they will be verified by the agency.

The extent to which the term ‘multi-use list’ would cover agency standing offer panel agreements, often entered into following a formal tender process, is not clear. Standing offer panels have been established by agencies for the supply of a broad range of different goods and services, e.g. ranging from the supply of stationery to the provision of legal services. Standing offer panels are a useful mechanism to ensure an agency can meet its ongoing requirements for the provision of day-to-day goods and services. Depending on the nature of the panel, their duration is often for around three years with options for extension. The reason for this is that once the panel is set up following a competitive tender process, the agency wishes to leverage the efficiency and effectiveness benefits that a panel brings. Retesting the market on an annual basis is unlikely to leverage any greater benefits that would outweigh the time, cost and resources of conducting the process.

It seems likely that the concept of a ‘multi-use list’ is directed at things like the Endorsed Supplier Arrangement, rather than individual standing offer panels – even if the particular panel includes numerous suppliers. However, it is expected that the Department of Finance and Administration will provide guidance as to whether particular kinds of panel arrangements will constitute a multi-use list. If standing offer panels come within the definition, then much of the benefit of having a panel will be negated.

Many measures are ‘business as usual’

Although the measures in Chapter 15 will apply to most procurement activities undertaken by Australian Government agencies, many of the measures are broadly consistent with the way the government already undertakes – or should undertake – its procurement activities (i.e. consistently with probity requirements). Many of the measures are consistent with the CPGs and Finance Procurement Guidance and are reflected in the usual conditions of tender used by most agencies. For example:

  • The closing time for tenders must be consistent for all tenderers.
  • The tender documents must be provided promptly to all suppliers who request them and must contain all information necessary to enable suppliers to prepare and submit responsive tenders.
  • Agencies must promptly reply to any reasonable request for information about a procurement, however in doing so they must not give an unfair advantage to one supplier over others.
  • If an agency modifies the evaluation criteria or technical requirements or otherwise amends or reissues any documentation, it must notify this to all known suppliers participating in the process and allow suppliers sufficient time to modify and resubmit their tenders if required.
  • Tenders must be received and opened under procedures that guarantee fairness and impartiality – agencies must treat tenders in confidence, and in particular shall not provide information to one or more suppliers if that would prejudice fair competition.
  • In relation to late tenders, agencies must not penalise a tenderer if it is received after the closing time solely because of mishandling on the part of the agency.
  • If an agency permits one tenderer to rectify an unintentional error during the evaluation process, the agency must provide the same opportunities to all tenderers.12

The measures also deal with the minimum time periods tenderers can be given to submit their tenders. The starting point is a 30 day minimum period, however this can be reduced for the procurement of commercial goods and services13 or for electronic procurement.14

All these requirements would normally be complied with by agencies who are undertaking procurement activities in accordance with best practice and probity requirements. The difference is that changes to the CPGs to reflect the FTA are likely to make these requirements mandatory.

Content of the tender documents

Chapter 15 also gives guidance about what should be included in the tender documents. Again, this is broadly consistent with the approach normally adopted by Australian Government agencies when drafting their tender documents. So, for instance, the tender documents must include:

  • a complete description of the nature, scope and quantity of the goods and services and requirements to be fulfilled, including any technical specifications
  • any conditions for participation, including financial guarantees or information to be submitted
  • all evaluation criteria, and
  • ‘any other terms and conditions relevant to the evaluation of tenders’.

In relation to the last requirement on that list, it is not entirely clear as to the extent to which the entire evaluation methodology will need to be included in the tender documents, e.g. weightings, scoring system, use of evaluation tools, etc. It is arguable that much more detail about the evaluation methodology may have to be included in the tender documents, rather than simply incorporating the detail in the tender evaluation plan (which is not provided to tenderers).

This requirement may also mean that it will be difficult in the future to rely on reserved rights to consider matters other than those that are expressly set out in the evaluation criteria or methodology in the tender document.

Conduct of tender evaluation

Chapter 15 also provides guidance as to how tender processes should be undertaken. Again, many of the measures are broadly consistent with existing best practice in conducting Commonwealth tender processes.

Key features include:

  • Agencies must not use technical specifications or a conformity assessment procedure to create unnecessary obstacles to trade between Australia and the United States.
  • Consistently with the approach now being adopted by agencies, technical specifications should be specified where appropriate in terms of ‘performance and functional requirements’ (i.e. Function and Performance Specifications or FPSs) rather than by design or descriptive characteristics.
  • Further, the technical specifications should be based on international standards where they exist. Current practice under the CPGs is to base performance standards on Australian standards where they exist, although these are increasingly being harmonised with international standards.
  • Interestingly from a probity perspective, Chapter 15 expressly acknowledges that an agency may allow a supplier that is engaged to provide design or consulting services to subsequently participate in procurements related to such services, so long as it would not give the supplier an unfair advantage over other suppliers.
  • Agencies must limit any conditions for participation15 in the procurement process to those that ensure the supplier has the ‘legal, commercial, technical and financial abilities to fulfil the requirements of the procurement’.

One particular condition for participation dealt with in the chapter is a condition based on ‘relevant prior experience’ – such a condition may be imposed by an agency, but only where this is ‘essential to meet the requirements of the procurement’.

Accordingly, while prior experience of a tenderer may be an acceptable criterion as part of the overall tender evaluation, it would seem that agencies may not be able to use prior experience (or past performance) as a mandatory screening criteria to exclude a tenderer from further participation in the process, unless such experience is essential for the purposes of the particular procurement.

Australian industry involvement

On its face, Chapter 15 could have major implications for Australia’s industry development program, as currently reflected in the CPGs. This is because, in the future, an agency will not be permitted to ‘seek, take account of, impose or enforce’ offsets in its procurements (Article 15.2.5)16 Accordingly, Australia will need to revise its current industry development policy, and in particular the requirement for agencies to develop model industry development criteria for inclusion in major procurements.

However, the operation of this article is circumscribed in a couple of respects. First, Australia has expressly reserved the right to maintain the Australian Industry Involvement and successor programs for Defence procurement (Annex 15-A, Section 1, note 3(d)).

Second, Australia’s small and medium enterprise (SME) policy is preserved because of a reservation that Chapter 15 does not apply to any form of preference to benefit SMEs (see Annex 15-A, Section 7). Accordingly, agencies’ ‘model industry development criteria’ may need to be limited to the extent of SME participation in a tenderer’s tender.

Given the restriction on ‘offsets’, it may therefore be difficult for agencies (and government) to take account of regional policy considerations in the future when evaluating and awarding tenders.

Contract award issues

Chapter 15 also deals with the process of awarding of contracts (Article 15.9).

Conforming to essential requirements

In particular it provides that a tenderer cannot be awarded a contract unless at the ‘time of opening’, the tender ‘conforms to the essential requirements of the tender documentation’.

This raises a few issues. First, it would seem to require agencies – to avoid any uncertainty on this issue – to specify the essential requirements of the RFT. We have seen numerous Commonwealth tender documents that have a general provision permitting the Commonwealth to exclude tenderers from further consideration that do not meet ‘essential requirements’. However, there is often nothing in the conditions of tender or statement of work as to what actually comprises the essential requirements.

Agencies may also need to update their conditions of tender to make ‘conformance’ or compliance’ with essential requirements a mandatory criterion.
Second, it is not clear how such a measure will operate in the context of a condition of tender that reserves the right to accept a non-complying tender. Certainly agencies will need to be careful about what they specify as mandatory or ‘essential’ criteria – particularly as there are usually very few mandatory criteria in a procurement process because most things are comparative rather than pass/fail.

Third, the requirement is for conformance ‘at the time of opening’ of tenders. This may make it difficult for agencies to seek clarification of tenders or provision of information that may have been inadvertently omitted from a tender, to facilitate a tenderer’s compliance with an essential requirement.

Lowest price or best value

Chapter 15 also requires a procuring entity to award the contract to the tenderer who the procuring entity has determined, in accordance with the essential requirements and the specified evaluation criteria, satisfies the conditions of participation, is fully capable of undertaking the contract and whose tender is the lowest price or the best value or the most advantageous. This is broadly consistent with Commonwealth policy as reflected in the CPGs that tenders should be awarded on the basis of best value for money and that lowest price is not necessarily the sole determinant of this.

Tenderer notification and debriefing

Agencies must promptly inform tenderers of contract award decisions and offer debriefings for unsuccessful tenderers. Again, this is broadly consistent with current Commonwealth procurement policy and practice. It would seem that this measure would not require tenderers to be informed of the outcomes of the tender process until the contract has been signed with the successful tenderer (i.e. assuming contract signature equates to ‘contract award’, although Chapter 15 is not entirely clear on this point).

There appears to be some inconsistency in Chapter 15 in relation to whether debriefings need to be in writing or whether they can be given orally. The requirement to give reasons to an unsuccessful tenderer in Article 15.9.8 is not expressed to be in writing, and accordingly it would seem that either oral or written debriefings would meet the requirement. By contrast, if a supplier’s application for participation in a procurement is rejected, or the supplier is not included in a multi-use list or is subsequently removed from the list, the supplier must be ‘promptly’ informed with a ‘written explanation of the reasons for its decision’. These requirements, although apparently inconsistent, should be seen in the context of the underlying philosophy of the chapter that participation in tender processes is the key outcome.


Consistently with existing gazettal requirements, agencies must publish a notice of each contract awarded no later than 60 days after the contract is signed. To comply with the chapter, the notice must now include information about the procurement method used for the contract.

Scrutiny of decisions

To ensure that Australia and the United States can monitor each other in their respective procurement processes, either party can obtain information from the other on the tender and evaluation procedures used in the conduct of a particular procurement to demonstrate that it was conducted fairly, impartially and in accordance with the requirements of Chapter 15.

Agencies will therefore be required to maintain records and reports of their tendering procedures and retain these for at least three years after contract award.

Challenges to tender processes

Chapter 15 requires each party to have criminal or administrative penalties to sanction unethical conduct of officials undertaking the procurement, e.g. soliciting bribes or other benefits as well as for persons offering a pecuniary benefit or advantage (Article 15.10). Australia would already generally comply with these requirements, e.g. under the Crimes Act 1914, Public Service Act 1999, and the Criminal Code Act 1995.

However, Chapter 15 also requires both Australia and the United States to have mechanisms in place whereby unsuccessful tenderers who complain about the conduct of a tender process can obtain timely and impartial consideration of their complaint, including that each party must have at least one impartial administrative or judicial authority that is independent from its procuring entities to receive and review challenges that suppliers submit in accordance with domestic law (Article 15.11).
While on the face of this requirement, Australia would be required to put in place merits or judicial review arrangements for supplier challenges to tender processes, a side letter between Australia and the United States confirms that Australia’s existing public law of tendering is sufficient to comply with this requirement.

As agencies would be aware, the Commonwealth is subject to an obligation to act fairly in the conduct of its tender processes and its processes may be challenged in a court, e.g. for breach of process contract,17 or lack of procedural fairness, or under the law of estoppel or misrepresentation.

In the context of procedural fairness, the signing of the FTA could give rise to an issue about the extent to which tenderers ‘legitimate expectations’ have been fulfilled. If a particular tendering procedure gives rise to a legitimate expectation that the procurement process will be conducted according to that procedure, it may be possible for a tenderer to challenge the process if the procedure is not followed. If a Commonwealth procurement is covered by Chapter 15 of the FTA, then a tenderer may be able to argue that it had a ‘legitimate expectation’ that the process would be undertaken in accordance with the measures.

Similarly, depending on how the measures are implemented under the Commonwealth’s financial management and accountability framework, the revised framework may give rise to a legitimate expectation that Commonwealth procurement processes will be conducted according to those measures.

In any event, unsuccessful tenderers may complain to review bodies other than courts, such as the Commonwealth Ombudsman. The Australian National Audit Office also provides a review mechanism by way of performance audits of agency procurement processes.


While the FTA is consistent with many existing policies and practices in relation to Commonwealth procurement, it is clear that there will need to be a number of changes to the Commonwealth procurement guidelines and potentially to agency CEIs (for FMA agencies) and applicable procurement policies (for CAC agencies) to ensure that they are consistent with the FTA.

Harry Dunstall is a Senior Executive Lawyer practising principally in the area of Commonwealth procurement of goods and services. He provides strategic, legal and probity advice to agencies in their procurement activities and contracting policy generally. The author gratefully acknowledges the kind assistance of the Department of Finance and Administration for comments on an earlier draft of this article. However, all views expressed in the article are the responsibility of the Australian Government Solicitor.


  1. Chapter 15 also applies to all Australian States, the ACT and NT, and to listed US States (Annex 15-A, Section 2).
  2. Departments and agencies under the Financial Management and Accountability Act 1997.
  3. For non FMA agencies, their procurement and financial management framework is governed by the Commonwealth Authorities and Companies Act 1997 (CAC Act).
  4. Authorities and companies under the CAC Act.
  5. The FMA agencies and CAC bodies covered by Chapter 15 are set out in Annex 15-A, Sections 1 and 3, respectively. The measures are also intended to apply to certain State and Territory agencies (see Annex 15-A, Section 2).
  6. This exception is for ‘essential security’ reasons, as permitted by Article 22.2 of the FTA.
  7. Marrakesh Agreement Establishing the World Trade Organization, 15 April 1994.
  8. ‘Selective tendering’ means a procurement method where the procuring entity determines the suppliers that it will invite to submit tenders (Article 15.15).
  9. A ‘multi-use list’ means a list of suppliers that a procuring entity has determined satisfy the conditions for participation in that list, and that the procuring entity intends to use more than once (Article 15.15).
  10. See note 9.
  11. ‘Conditions for participation’ means registration, qualification and other prerequisites for participation in a procurement (Article 15.15).
  12. Presumably, an agency will comply with this requirement if it has a condition of tender that indicates that the Commonwealth will consider permitting these rectifications and then applies that condition consistently.
  13. ‘Commercial goods and services’ means goods and services that are sold or offered for sale to, and customarily purchased by, non-governmental buyers for non-governmental purposes; it includes goods and services with modifications customary in the commercial marketplace, as well as minor modifications not customarily available in the commercial marketplace (Article 15.15).
  14. See Article 15.5.
  15. See note 11.
  16. ‘Offsets’ means any conditions or undertakings that require use of domestic content, domestic suppliers, the licensing of technology, technology transfer, investment, counter-trade or similar actions to encourage local development or to improve a Party’s balance of payments accounts (Article 15.15).
  17. The concept of a ‘pre-award’ or ‘process contract’ (that is, a preliminary contract governing the tender process) applying to government tenders was established in Australia in Hughes Aircraft v Airservices Australia (1997) 146 ALR 1.



Samantha Schrader

Samantha Schrader Senior Lawyer
Australian Government Solicitor
T 02 9581 7678 F 02 9581 7445

To facilitate the commercial outcomes of the FTA, Chapter 17 of the agreement proposes to reconcile the existing disparity between the intellectual property regimes of Australia and the United States. Where relevant, Chapter 17 confirms that certain outcomes require that only certain administrative processes be adopted to meet Australia’s obligations under the FTA. Other outcomes require legislative reform.

Intellectual property rights are complex, intangible assets subsisting within the products, services and marketing strategies of most vendors. A significant feature of the FTA is its recognition of the ubiquitous nature of these rights and their importance to the bilateral trade arrangements between the two countries.

This note outlines the major changes proposed to Australia’s copyright legislation from the copyright owner’s perspective.


Copyright is, arguably, the most complex of all intellectual property rights. Comprising a number of rights, it also covers a diverse range of subject matter such as literary works (including databases and computer software) artistic works (photographs, drawings), sound recordings and television broadcasts.

Protection is free and automatic under the Copyright Act 1968 (Cth) (‘the Act’) provided the relevant work is eligible for protection. Generally speaking, eligibility depends on originality and a recognised connection to Australia.
Under the Act copyright is typically protected for the author’s lifetime plus 50 years, although this varies depending on the type of work.1 Ownership of copyright usually vests in the author or creator of the work, subject to several exceptions. A significant exception is where the work is subject to ‘Crown Copyright’.2

The Australian Government is a significant owner and prolific user of copyright works. Its departments and agencies use, acquire and create copyright works in a diverse variety of ways when performing their various roles and functions. These include the creation and acquisition of reports, photographs, scientific research, educational material, parliamentary papers and website content.

Crown copyright provisions are contained in Part VII of the Act. Generally speaking, they give the Commonwealth additional rights in relation to ownership and use of certain copyright material

Major amendments to Copyright Act under the FTA

Extended term of protection

Article 17.4.4 of the FTA requires that Australia amend the Act to extend the typical term of copyright protection to life plus 70 years. Under the proposed change, the term of copyright protection under the Act will be 70 years from:

  • the date of death of author, for literary and artistic works, and
  • the date of publication, for sound recordings and films.

These amendments extend protection in Australia by an additional 20 years and bring Australia into line with the corresponding US copyright legislation.3

Increased protection against infringement

Another prominent feature of Chapter 17 is the requirement to introduce a new copyright enforcement regime for Australian copyright owners in respect of the infringement of digital copies of their works.

Digital copyright infringement creates high-quality reproductions, is virtually instantaneous and is proliferated predominantly through facilities of third party service providers. These providers are referred to in the FTA as network/infrastructure providers (Optus/Telstra) or value added providers (internet service providers).

Article 17.11.29(a) of the FTA requires Australia to implement legal incentives for service providers to assist copyright owners in dealing with the infringement of their internet content. Such incentives require a more prescriptive approach to the detection and actioning of infringement activities than that contained in the existing provisions of the Act.

Article 17.11.29(a) will require amendment to the Act and is modelled on protections available to US copyright owners under the corresponding US legislation, The Digital Millennium Copyright Act (1988).

Of particular note is the creation of certain ‘safe harbour’ defences for service providers. These defences would essentially limit the liability of service providers in respect of third party infringement where the service provider has complied with the relevant requirements. In other words, where the facilities of a service provider are used by third parties for infringement activities, copyright owners can require the service provider to ‘take down’ allegedly infringing material from the relevant website:

  • in the event of receiving an ‘effective notification’ from the owner, or
  • upon otherwise obtaining ‘actual knowledge of the infringement or becoming aware of facts or circumstances from which the infringement was apparent’.

Non-compliant service providers would retain the risk of liability for third party infringement actions brought by copyright owners.

Additional damages for alleged copyright infringement on the internet

Under the Act, copyright owners may sue infringers for unauthorised use of their copyright works. Awards compensate owners for loss suffered by the infringement.
Additional damages are available in Australia where the infringement is particularly deliberate and flagrant.4 Notwithstanding this, it appears additional damages are not often awarded by courts in Australia.

Article 17.11(7) of the FTA proposes a more distinct alignment between the awards traditionally granted by Australian courts with those commonly handed down in US courts. In the United States, courts regularly dispense high damages awards to deter future infringers.

Under the FTA, the Australian Government is obliged to ensure awards of additional damages become a more frequent feature of successful infringement actions in Australia.


Copyright is a valuable intellectual property asset – it is also vulnerable to unauthorised duplication and dissemination on a global scale. The underlying principle of Chapter 17 of the FTA is the alignment of Australian copyright law with the more robust protections contained in the US copyright legislation. This is intended to increase vendor confidence in both countries by creating a familiar legislative environment for trade relations that facilitates the protection and enforcement of their intellectual property assets.

Amendments to Australia’s copyright legislation to implement the FTA will significantly advantage copyright owners (including the Commonwealth). Owners will be in a stronger position with respect to particular infringement activities as well as the amount of awards recoverable upon successful litigation. Conversely, the proposed extension of the term of copyright protection will impact on users (including government and educational institutions) as copyright owners will be able to demand licence fees for their works for an additional 20 years.

Samantha Schrader is a Senior Lawyer who specialises in information technology and intellectual property law with an emphasis on licensing, e-commerce and technology-related transactions. Prior to joining AGS, Samantha was an Associate in the technology group of Shaw Pittman LLP, a leading IT firm in the United States where she was involved in numerous US and international technology-related transactions.


  1. Section 33 Copyright Act 1968.
  2. Section 35(1) Copyright Act 1968.
  3. US Sonny Bono Copyright Term Extension Act (1988).
  4. Section 115 Copyright Act 1968.

AGS has a team of lawyers specialising in advising government agencies on the implications of the FTA. For further information on the articles in this issue or on other FTA issues, please contact the team coordinator, Harry Dunstall, or any of the lawyers listed below.

Harry Dunstall Senior Executive Lawyer
T 02 6253 7066 F 02 6253 7301



John Scala

02 6253 7223

Linda Richardson

02 6253 7207

Philip Crisp

02 6253 7159

Samantha Schrader

02 9581 7678



Litigation and dispute management

Simon Daley

02 9581 7490

Judy Pownall

02 9581 7451





Robert Orr QC

02 6253 7129

Susan Reye

02 6253 7110

ISSN 1443-9549 (Print)
ISSN 2204-6550 (Online)

The material in these notes is provided to AGS clients for general information only and should not be relied upon for the purpose of a particular matter. Please contact AGS before any action or decision is taken on the basis of any of the material in these notes.

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