Achieving value for money policy guide

Indigenous AffairsEconomic DevelopmentIndigenous Procurement Policy
Monday, 26 November 2018
Publication author(s):
Department of the Prime Minister and Cabinet
Publication abstract:

Exemption no. 17 allows direct sourcing from an Indigenous business with at least 50 per cent ownership regardless of the value of the procurement. Division 1 of the CPRs still applies including the requirement to achieve value for money.

Exemption no. 17 in Appendix A of the Commonwealth Procurement Rules

Exemption no. 17 allows direct sourcing from an Indigenous business with at least 50 per cent ownership regardless of the value of the procurement. Division 1 of the CPRs still applies including the requirement to achieve value for money.

Achieving value for money is the core rule that Commonwealth officials need to satisfy when conducting any procurement. Value for money is defined in Paragraph 4.5 of the CPRs and applies to all procurements conducted under the IPP. The CPRs require procurement officials to consider the relevant financial and non-financial costs and benefits of each submission including but not limited to:

  1. The quality of the goods and services.
  2. Fitness for purpose of the proposal.
  3. The relevant experience and performance history of the potential supplier.
  4. Flexibility of the proposal (including innovation and adaptability over the lifecycle of the procurement).
  5. Environmental sustainability of the proposed goods and services (such as energy efficiency and environmental impact).
  6. Whole of life costs (such as maintenance, licensing, consumables and disposal).

Value for money not demonstrated

If value for money is not demonstrated a contract must not be awarded.

Demonstrating value for money if only one Indigenous business is approached

If only one suitable Indigenous business is identified, officials responsible for procurement must be satisfied, after reasonable enquiries, that the procurement achieves a value-for-money outcome. For example, the procurement officer could compare the quote received to recent comparable contracts undertaken by their department or contracts reported on AusTender.

Multiple suppliers identified

Where more than one Indigenous business is identified as able to deliver the goods or services, a limited tender will need to be undertaken in a manner commensurate with the scale, scope and risk of the procurement, taking into account value-for-money considerations as listed in paragraph 4.5 of the CPRs

The Department of Finance is responsible for advice on the Commonwealth Procurement Framework, including the CPRs. For questions relating to the IPP please contact indigenousprocurement@pmc.gov.au

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