Probity in Action – the new COVID-19 Procurement Policy Note
The COVID-19 pandemic has required Commonwealth entities to act swiftly but defensibly in undertaking procurement activities and managing contracts.
The Department of Finance has released the 'COVID-19 Procurement Policy Note' (Policy Note), which provides guidance on undertaking procurements in the current COVID-19 environment and dealing with COVID-19 related contract management issues.
Our top tips for putting the Policy Note into practice are outlined below.
Approaching the market
Procurement planning is always important, no matter how urgently the procurement is being implemented.
In the time you have available, consider:
- the market’s capability and capacity to respond to any approach to market documentation
- potential supply chain issues and the impact on procurement and delivery timelines
- the reasonableness of timeframes for tenderers to respond.
If you have time, consider undertaking market-sounding activities to understand market capability in the current circumstances, and to raise awareness of the upcoming approach to market.
Make sure you keep approach to market documentation as simple and clear as possible, and keep mandatory requirements as minimal as possible.
It is even more important in urgent procurements that a clear audit trail is kept, to ensure there continues to be transparency despite the urgency. The extent of the recordkeeping should be commensurate with the nature of the procurement.
The Commonwealth Procurement Rules (CPRs) permit rapid procurements of goods and services in certain circumstances. However, procuring entities must still ensure that value for money is achieved.
At all times, procuring entities have obligations under the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) to ensure the effective, ethical, economical and efficient use of public resources. In a previous article we considered options for procuring in urgency when the pandemic first hit.
The Australian National Audit Office (ANAO) has made a number of observations on how to discharge PGPA Act duties in circumstances of urgency (see 'Insights from the Australian Government's COVID-19 Response (28 May 2021) and 'COVID-19 Procurements and Deployment of the National Medical Stockpile (27 May 2021)').
Based on those observations, practical steps you can take to discharge your PGPA Act duties in the context of an urgent procurement include:
We are all in the pandemic together. Consistent with this, the Policy Note contains the following guidance around contract administration.
It is important to be collaborative and sensible when dealing with suppliers.
Commonwealth entities should:
- work with suppliers where appropriate to ensure business continuity is maintained
- consider whether there are alternate options before enforcing a contractual right such as a right to terminate or seek liquidated damages.
It is important that Commonwealth entities pay suppliers as quickly as possible so suppliers can maintain cash flow. Entities are still expected to verify receipt of goods and services, including resolving disputed invoices to enable prompt payment.
The Commonwealth Pay on Time or Pay Interest Policy imposes maximum timeframes for paying suppliers. During the pandemic, entities are expected to remain within those maximum payment timeframes.
Entities may also want to consider other payment arrangements to help suppliers during this time where the PGPA Act permits them to do so (e.g. payments against revised milestones, payments in order, and interim payments).
Given these expectations, where appropriate procuring entities could include provisions in the contracts released with approach to market documentation that allow for these types of alternate payment options.
Other points to note
The CPRs will be updated effective on 1 July 2022. A number of the changes to the CPRs are consistent with the Policy Note’s focus on managing the relationship between Commonwealth entities and their suppliers as a critical focal point in the facilitation of a smooth and timely return to normal service delivery during the pandemic. For example, non-corporate Commonwealth entities will be required to make all payments to suppliers within the maximum payment terms in the Commonwealth Pay on Time or Pay Interest Policy, regardless of the value of the contract, following acknowledgement of the satisfactory delivery of goods and services and the receipt of a correctly rendered invoice (updated Rule 5.8).
The updated CPRs recognise that many suppliers face risks to their financial viability, ability to retain staff, and their supply chains. As such, compliance with the expectations in the Policy Note will leave entities in good standing to continue as normal once the new CPRs come into force.
During the pandemic, focus on the urgent while remembering the important.
The Policy Note provides practical tips on how entities can undertake procurements and contract management activities in a sensible way during the pandemic.
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