As the 2022 Federal election has now been called, we enter the caretaker period during which the Commonwealth government is restricted to administrative matters only. What does this mean for procurement?
Caretaker conventions are important rules to consider as these can limit certain actions and decisions to be taken in the scope of procurements. Caretaker conventions are in place to validate the rights of the opposition as a potential future government. Caretaker conventions recognize that, in the absence of the House of Representatives, there is no body of review for decisions made by the Executive. Subsequently, rules must be followed to prevent exploitation of these circumstances, managing probity and best practice procedures.
How does this affect the procurement process? Ultimately, major policy decisions through the implementation of contracts and procurements are to be avoided during this period. However, this does not stop or prevent “routine” procurement activity to be undertaken as normal. The concept of a policy being “major” is subjective and can often be a cause of concern. The conventions state that, in making this decision, the decision maker should have regard to:
- the significance of a decision from a policy and resourcing perspective; and
- whether the policy is a matter of contention between the government and the opposition.
The significance of the procurement is the most considerable factor of deciding whether it falls under a “major” policy decision restriction. “Routine” procurements that implement no policy change, which cannot be contested or form the cause of debate from opposition governments, should be followed as per usual. If a decision following a “significant” procurement must be made, the consultation of the appropriate opposition spokesperson should be made, to reach bipartisan agreement. A “significant” procurement may be defined using the same guidelines as those that outline a “significant policy”, as being a matter of contention.
Risks need to be identified and then managed in cases where major contracts are signed even before the caretaker period, as these are often subject to controversy, for example the East West Link in Victoria. This contract did not receive bipartisan support. When the opposition government was then elected after the procurement process, this contract was negotiated and then terminated, resulting in consequences down the supply chain.
Under section 5.1 of the Guidance on Caretaker Conventions, it states that when determining whether a contract qualifies as “major”, agencies should consider: the dollar value of the commitment; whether the commitment is a routine matter of administration; whether the commitment implements or entrenches a policy, program or administrative structure which is politically contentious; and if the commitment requires ministerial approval. Section 5.2 outlines the instructions for circumstances when it is not possible to defer the commitment until after the caretaker period, which in rare cases does occur.
As routine procurements are followed, it is even more important during this time, that the approach to market documentation includes an acknowledgement by tenderers of the right of the relevant departments or agency right to terminate the procurement at any time, for any reason. This manages the risk of newly elected government and the possibility of government to withdraw from procurements it does not wish to proceed with.