Procurement shake-up: What it means for SME’s engaging with the Department of Defence?

By Mark MacLennan

9 September 2019

Overview

• The Commonwealth Procurement Rules (CPRs) have been updated to clarify domestic obligations under relevant Trans-Pacific partnerships and World Trade Agreements.
• Since 20 April 2019, Small and Medium Enterprises (SMEs) are now included to ensure fair competition when contracting with the Australian Government.
• SMEs should be aware of the anti-discrimination policies which are targeted at removing barriers when engaging in business with the Government, in particular the Department of Defence (ADF).
• The ADF have created templates in order to align with the governing CPRs.
• This is likely to affect the tender process by SMEs in conducting business.

Issues for SMEs

Previously, SMEs were disadvantaged to the extent that barriers to entry such as costly preparation of submissions were inhibiting their access to contracts. According to the updated CPRs, the Government’s established practices for procurement has altered. Understanding the new rules means a streamlined process for suppliers wanting to tender for Government contracts.

The Government’s Solution

The Government Procurement (Judicial Review) Act 2018 (Cth) ensured that time was spent re-moulding the existing CPRs to include SMEs. Other important changes included: narrowing of the definition of ‘procurement’ in order to align with Australia’s international obligations and clarity for the applications of the exemptions.

Engaging in business with the ADF

The Department of Defence released a new procurement policy on 1 July 2019, assumedly to align with the new requirements under the CPRs. The Australian Standard for Defence Contracting suite of tendering templates (ASDEFCON) are used to satisfy the CPRs for procurement of goods and services by the Defence Force. This framework differs from that of the general finance scheme with a specific Defence procurement manual assisting the conformation to the CPRs.

It is important that SMEs are up-to-date with new ASDEFCON templates as they are the tool used by the ADF when processing tenders. The changes are likely to affect:

• the competitive nature of tendering process;
• SMEs capability to pursue Government contracts; and
• sheer volume of SMEs engaging in business with ADF and other Commonwealth entities [1]

Without further assistance from the courts, the true impact upon SMEs and all those working closely with the Government has yet to be determined.

If you have any questions about the changes to CPRs or if you would like to discuss the ASDEFCON process in more detail, please contact Bennett + Co’s Defence and Aerospace team.

Footnote

[1] See Department of Finance ‘Commonwealth Procurement Rules’ (20 April 2019) sections 5.6, 5.7. <https://www.finance.gov.au/sites/default/files/CPRs%20-%2020%20April%202019.pdf>

Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.