Complying with International Agreements (Direction 2.1 and Instructions 2.1 and 2.2)

Direction 2.1 and Instruction 2.1 explain the rules to apply when a procurement needs to comply with International Agreements. Instruction 2.2 explains the rules to apply under the Australia New Zealand Government Procurement Agreement.

Complying with International Agreements (Direction 2.1)

Effective date: 1 July 2018

Objective:  To define requirements for Agencies to understand obligations under the Australia New Zealand Government Procurement Agreement

Principles

Value for money and probity are procurement principles that are specifically relevant to International Agreements.

Of particular relevance to this Direction are the following construction procurement principles:

  • ensuring appropriate competition and contestability when undertaking Public Construction Procurement; and
  • undertaking Public Construction Procurement in accordance with the relevant legislation, policy, guidance and mandatory requirements of these Directions.

2.1 Complying with International Agreements

Effective date: 1 July 2018

If the requirements of an International Agreement apply to an Agency when undertaking Public Construction Procurement, the Agency must ensure that it complies with the additional requirements set out in Instruction 2.1.

Each agency is responsible for ensuring that it confirms whether Instruction 2.1 applies to the engagement of a supplier to perform Works or Construction Services.

Complying with International Agreements (Instruction 2.1)

Effective date: 1 July 2018

Objective: To define requirements for Agencies to understand obligations under International Agreements

2.1.1 When International Agreements apply

(a) Subject to paragraph 2.1.2, the requirements of International Agreements apply to the Agencies listed in Attachment 1 to this Instruction 2.1 if:

(i) the Agency is acquiring or obtaining Works or Construction Services, by any procurement delivery method; and

(ii) the expected value of the goods or services being procured is estimated, as at the date of issue of the Tender Notice, to exceed:

1. in the case of Works, $9,247,000 (inclusive of GST); and

2. in the case of any other goods or services, including Construction Services, $657,000 (inclusive of GST).

(b) For the purposes of this Instruction, to determine the 'expected value' of the goods or services, Agencies must:

(i) consider the maximum value (inclusive of GST) of the proposed contract, including any options, extensions, renewals or other mechanisms that may be executed over the life of the contract;

(ii) include the following amounts:

1. all forms of remuneration, including any premiums, fees, commission, interest, allowances and other revenue streams provided for in the proposed contract;

2. the value of the goods or services being procured, including the value of any options in the proposed contract to include additional goods or services or extend the term of the agreement; and

3. any taxes or charges;

(iii) not divide the procurement of goods or services into separate parts solely for the purpose of avoiding the thresholds set out in this Instruction; and

(iv) where it is not possible to determine the amounts payable over the entire duration of the proposed contract, treat the expected value as being above the relevant thresholds set out in this Instruction.

2.1.2 When International Agreements do not apply

The requirements of International Agreements do not apply:

(a) if the Agency is acquiring or obtaining the Works or Construction Services:

(i) on behalf of an Agency that is not listed in Attachment 1 to Instruction 2.1, or any government entity of the Commonwealth or another state or territory of Australia that is not a 'covered entity' for the purposes of an applicable International Agreement, or of local government;

(ii) from another government entity, including another Agency, any government entity of the Commonwealth, another state or territory of Australia, or local government;

(iii) with funds received from grants or sponsorship payments from a person other than an Agency listed in Attachment 1 to Instruction 2.1, or any other person, including any government entity of the Commonwealth or another state or territory of Australia that is not a 'covered entity' for the purposes of an applicable International Agreement, or local government;

(iv) with funds received from international grants, loans or other assistance, when the provision of such assistance is subject to conditions inconsistent with the requirements in Attachment 2 of Instruction 2.1; and

(v) where those Works or Construction Services constitute research and development services, but not to the inputs to research and development undertaken by an Agency;
(b) to the extent reasonably necessary to:

(i) protect public morals, order or safety;

(ii) protect human, animal or plant life or health (including by environmental measures); or

(iii) to protect intellectual property;

(c) to a reasonable extent relating to the goods or services of persons with disabilities, philanthropic or not-for-profit institutions, or of prison labour;

(d) to the extent that small and medium businesses are given preference;

(e) to the extent that action is taken to protect national treasures of artistic, historic or archaeological value;

(f) to the extent that action is taken for the health and welfare of indigenous people; or

(g) to the extent that action is taken for the economic and social advancement of indigenous people.

For the purposes of this Instruction 2.1.2, to determine whether or not a government entity of the Commonwealth or another state or territory is a 'covered entity', Agencies will need to refer to the Schedules of relevant International Agreements.

2.1.3 Requirements of International Agreements

Where International Agreements apply, Agencies must follow the requirements of Attachment 2 to Instruction 2.1.

Instruction 2.2 Complying with the Australia New Zealand Government Procurement Agreement

Effective date: 1 July 2018

Objective: To define requirements for Agencies to understand obligations under the Australia New Zealand Government Procurement Agreement

2.2.1 When the Australia New Zealand Government Procurement Agreement applies

All Agencies must apply the provisions of the Australia New Zealand Government Procurement Agreement.

Subject to paragraph 2.2.2, the requirements of the Australia New Zealand Government Procurement Agreement apply to all procurement activity.

2.2.2 When the Australia New Zealand Government Procurement Agreement does not apply

The following classes of procurement are exempt from the Agreement:

(a) procurement conducted by Government bodies that trade in substantial competition with the private sector and would be placed at a significant commercial disadvantage if they were required to fully comply with all provisions of the Agreement;

(b) joint ventures with the private sector;

(c) internal procurement of goods and services by a government from its own Departments or public bodies is exempt from all provisions of the Agreement where no other supplier has been asked to tender. If, however, public tenders are called for goods or services, Works or Construction Services, the provisions of the Agreement apply irrespective of whether a government body submits a tender;

(d) where procurement specifications include proprietary items to ensure machinery or equipment integrity, the procurement specification is exempt from the provisions of paragraph 2.2.3 (b). Where such items are available from a number of sources or public tenders are called, all aspects of the procurement other than the specification are subject to the provisions of the Agreement;

(e) the urgent procurement of goods and services in the event of emergencies, such as natural disasters, periods of national security or UN peacekeeping operations;
(f) procurement of proprietary equipment of a work, health or safety nature specified in Industrial Agreements is exempt from the provisions of paragraph 2.2.3 (b) of this Instruction, only as they may relate to biased specifications;

(g) procurement supporting measures necessary to protect human, animal or plant life or health, including the protection of indigenous or endangered animal or plant life. Each country may impose quarantine requirements on imports, but such requirements must not be used as a means of arbitrary or unjustified discrimination, or a disguised restriction on trade; and

(h) procurement supporting measures in relation to the goods or services of persons with a disability, or of philanthropic or not-for-profit institutions.

2.2.3 Requirements of the Australia New Zealand Government Procurement Agreement

Subject to Instruction 2.2.2, the Australia New Zealand Government Procurement Agreement requires the following principles to be applied:

(a) purchasing bodies must treat all of Australia and New Zealand as a single market;

(b) no discrimination based on the origin of goods and services within that market;

(c) Australia and New Zealand tender participants must be able to compete on an ‘equal and transparent basis’;

(d) unsuccessful Australia and New Zealand tender participants are entitled to a debrief upon request; and

(e) value for money based on a whole of life costing must be the fundamental determinant of tender outcomes.
Tools resources and assistance

Tools resources and assistance

The Practitioners Toolkit includes key documents, guidance and information relating to the Ministerial Directions and Instructions.

For further information about the Ministerial Directions and Instructions for public construction procurement, please contact the Construction Policy Team.

Reviewed 02/07/2018
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