Express law No. 41

14 August 2006

Clarification of the Commonwealth Procurement Guidelines

The Department of Finance and Administration has released
Finance Circular 2006/02, which clarifies certain elements
of the Commonwealth Procurement Guidelines (CPGs).


The circular is the product of a review of the current
CPGs, which came into operation on 1 January 2005. The
circular states that it is to be read 'in conjunction
with the CPGs'. Like the CPGs, the circular applies
to all departments and agencies subject to the Financial
Management Accountability Act 1997 (FMA Act) and to relevant
CAC Act bodies. (Relevant CAC Act bodies are those bodies
listed in Schedule 1 of the Commonwealth Authorities and
Companies Regulations 1997.)

The circular at a glance

Scope of procurement

The circular clarifies that the CPGs only apply to circumstances
where there is a proposal to spend public money on the
acquisition of property or services. This means that, amongst
other things, the CPGs do not apply to investment activities
and sales by tender.

The circular also provides that the CPGs have no application
to the disposal of public property. Rather, the management
of disposals falls within the responsibilities of an agency's
Chief Executive under s 44 of the FMA Act (promoting efficient,
effective and ethical use of Commonwealth resources).

Measures to protect security, health and national treasures

Paragraph 8.2 of the CPGs provides that Chief Executives
are not prevented from applying measures to protect security,
health and national treasures by anything in Division 2
(the Mandatory Procurement Procedures). The circular states
that para 8.2 should now be treated as also having application
to Division 1 of the CPGs (the Procurement Policy Framework).

Value for money

The circular promotes the following measures to support
the obligation of an agency to achieve value for money:

  • the use of written contracts to manage procurement
  • regular review of contracts
  • the inclusion of a clear end-date and/or termination
    provision in any contract.

Management of confidential information (FMA Act agencies

The circular highlights the need for agencies to consider
on a case-by-case basis the inclusion in a contract of
the model provisions to protect confidentiality maintained
by Finance, and provides some guidelines on when such provisions
should be used.

Time limits

The circular clarifies how the time limits for potential
suppliers to prepare and lodge a submission in response
to an approach to the market (paragraphs 8.32 and 8.33
of the CPGs) should be applied.

Conditions for direct sourcing

One of the conditions under which an agency may conduct
a covered procurement using direct sourcing is where, in
response to an approach to the market, 'no submissions
were received' (sub-paragraph 8.65(a)(i) of the CPGs).
The circular provides that this condition is intended to
include circumstances where no submissions were received
which represented 'value for money'.


Paragraph 7.21 of the CPGs requires that, to the extent
practicable, request documentation be available for download
from AusTender. The circular clarifies that this requirement
is not diminished by the operation of paragraph 8.21, which
requires that, where practicable, request documentation
be distributed electronically.

Other publications to read in conjunction with the CPGs

The following Finance Circulars should also be read in
conjunction with the CPGs:

  • Finance Circular 2005/12, which provides guidance
    on the definition of the procurement of construction
    services as used in the CPGs and the treatment of leases
  • Finance Circular 2005/14, which defines contracts
    for labour hire and exempts them from the Mandatory Procurement
    Procedures in the CPGs.

Further, an agency's Chief Executive Instructions
will contain agency-specific information about spending
public money on the acquisition of property and services.

Where can Finance Circular 2006/02 be found?

The circular has been issued to all CFOs of FMA Act agencies
and relevant CAC Act bodies. It is available, along with
the other circulars noted above, here
on Finance's website

For further information please contact:


John Scala

03 9242 1321


Harry Dunstall
Peter Kidd

02 6253 7066
02 6253 7210


Simon Konecny

02 9581 7585


Paul Lang

03 9242 1322


Robert Claybourn

07 3360 5767


Lee-Sai Choo

08 9268 1137

Adelaide and Darwin

Mary Hannigan

08 8205 4287


Peter Bowen

03 6620 5474

Important: The material in Express law is provided
to clients as an early, interim view for general information
only, and further analysis on the matter may be prepared
by AGS. The material 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 this message.