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Commonwealth procurement changes to address COVID-19 – Government, Public Sector


Australia:

Commonwealth procurement changes to address COVID-19


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On 11 May 2020, the Department of Finance released the
COVID-19 – Procurement Policy Note
(Procurement
Note
) to assist Commonwealth entities who
are undertaking procurements in the current COVID-19 environment or
dealing with affected suppliers.

Approaching the market

Under the Procurement Note, Commonwealth entities should
consider current approaches to the market on a case-by-case basis
having regard to the impact of COVID-19 on potential tenderers and
their ability to deliver on an entity’s requirements.

Entities considering a tender process should first consider:

  • how COVID-19 may impact plans in the immediate future

  • appropriate timelines depending on the nature of the
    market

  • the amount of time potential suppliers require to put in
    submissions

  • the potential to structure procurements into practical
    achievable deliverables

  • bringing forward procurements that are less reliant on
    substantial material supply.

Entities could also consider undertaking an initial Request for
Information or Invitation to Register process to test the market
before undertaking a full tender process.

Procurement methods

The Procurement Note highlights the following two procurement
methods under the
Commonwealth Procurement Rules
(CPRs) that may
be beneficial during COVID-19:

  • Paragraph 2.6 of the CPRs which allows
    procuring entities to apply any measures deemed appropriate,
    including a streamlined procurement process, for a range of
    circumstances – including to protect human health

  • Paragraph 10.3b of the CPRs
    which allows entities to use a streamlined process
    due to reasons of extreme urgency because of unforeseen events
    where the goods and services could not be obtained in time under an
    open tender.

As always, entities will need to satisfy themselves that the
procurement method adopted will achieve the overarching obligation
of value for money.

Contractual issues

The Procurement Note also provides the following guidance to
Commonwealth entities on contractual issues due to COVID-19:

  • relationships with suppliers should be maintained and issues
    approached in a collaborative manner

  • where appropriate and possible, agencies should work with
    suppliers to ensure business continuity is maintained by providing
    relief, for example:

    • agreeing that termination rights will not be exercised or
      liquidated damages will not be claimed

    • varying the contract including minor changes to contract
      requirements, frequency and timing of delivery, targets and
      performance indicators

    • waiving specified requirements to address the COVID-19
      circumstances.

Any changes to the terms of a contract should be limited to the
specific circumstances of the situation, and considered on a
case-by-case basis.

There should also be consideration as to how these changes are
documented which may be determined by the contract itself, or may
need to be through a Deed of Variation.

Supplier payments

The Procurement Note further encourages Commonwealth entities
to:

  • pay all suppliers as quickly as possible to maintain cash
    flow

  • reduce maximum payment terms under the Commonwealth payment
    policy,
    Supplier Pay On-Time or Pay Interest Policy
    , and otherwise
    comply with all its obligations under that Policy

  • consider other payment arrangements to assist suppliers during
    this time including:

    • payments against revised or extended milestones

    • interim payments

    • payments on order

    • payment in advance or prepayment (if necessary).

Conclusion

The Procurement Note recognises the significant impact COVID-19
is having on businesses of all sizes, including suppliers to the
Commonwealth, and reflects the Commonwealth’s commitment to
supporting at risk suppliers where possible so they are able to
resume normal service delivery and fulfil their contractual
obligations post COVID-19.

Commonwealth procuring entities can contact the Department of
Finance via procurementagencyadvice@finance.gov.au
for further information, or can consider seeking legal advice on
contractual matters where appropriate.

This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader’s
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
individuals listed.

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