Government Procurement In For a Shakeup

Governments lost some familiar techniques for building flexibility and freedom into the procurement process when the Australia-US Free Trade Agreement (FTA) came into effect on 1 January 2005.

SpeedLegal CEO Jamie Wodetzki warns that the days of releasing key tenders on a short fuse, thus giving vendors very little time to prepare and submit their bids in an attempt to favour preferred insiders will soon be gone.

"From now on, agencies are required to publish annual notices of their procurement plans, and tender response times must give vendors adequate time to prepare bids. This will vary according to the complexity of the project, but the general rule will be 30 days or more," he says.

Wodetzki says in 20-odd pages of new rules, Chapter 15 of the FTA requires changes to procurement process, documentation and reporting, at both Federal and State levels. For Commonwealth agencies, these changes are reflected in new Commonwealth Procurement Guidelines (CPGs). Any agency failing to implement the new CPGs can expect to shortly find itself dealing with the consequences of non-compliance.

Because the FTA is an attempt to level the playing field, and make government procurement more transparent, Wodetzki says rather than playing favourites with local vendors, governments will be required to treat Australian and US vendors the same, with new reporting requirements to back it up.

Meanwhile tender documentation will also come in for a shake-up, with agencies no longer free to issue rather vague evaluation criteria allowing them decide what really matters once all bids are in. Nor will those criteria any longer be allowed to include items like local industry participation, or a proven track record of working with a particular agency. From January 1 evaluation criteria must be exhaustively spelled out in the RFT, and things like local industry preference will not be allowed (with limited exceptions).

"Even a decision to abandon a tender is affected by the FTA," Wodetzki says. "Previously, most RFTs made it clear that an agency could stop at any time, without giving reasons. Now, an agency can only abandon a tender where it believes it is not in the public interest to go ahead. In most cases, this won't be a problem. But if a tender is stopped to avoid awarding a contract to an unpopular vendor, that decision would be wide open to challenge.

He says for the old hands of government procurement, getting to grips with the post-FTA rules ought to be pretty straightforward. But with many purchasing decisions devolved to line managers, the inexperienced or infrequent buyer of goods and services is now facing an increasingly complex compliance challenge.

"Suppose you're a branch manager, and you need a consultant to review and report on the delivery of some funding program. What do you do?

"Can you simply give the contract to a particular expert, or do you need to go out to tender? If a tender is required, does it have to be open, or can you restrict it to a panel of approved providers? Are your options better if the contract value is below a certain amount? Which RFT templates should you use, and how do you decide which optional clauses, schedules, etc, to include? What's the difference between 'descriptive' and 'functional' requirements, and which ones can you use in the project specification? Working through these issues is no picnic, especially if you're in a hurry," he says.

And he notes reporting on tenders and contracts will also become more complex. FMA regulations already require commonwealth agencies to report all contracts worth $2000 or more in the Gazette Publishing System. The Senate Order (also known as the "Murray Order") requires agencies to report various details of contracts worth $100,000 or more via their websites. Now, the FTA adds similar reporting for construction contracts worth around $9.4M and other contracts for goods or services worth around $82,000.

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