A protest against lockdown took place in Melbourne © WILLIAM WEST/AFP via Getty Images
A protest against lockdown took place in Melbourne © WILLIAM WEST/AFP via Getty Images

Public sector should collaborate with suppliers during coronavirus

11 May 2020

The Australian government has published new guidance for departments and agencies to work collaboratively with suppliers during the coronavirus pandemic.

“The Covid-19 disruption has had an adverse effect on the supply of equipment, materials and services required to carry out normal business processes for the government and the economy more broadly,” said finance minister Mathias Cormann.

“To ensure they are making appropriate arrangements with suppliers impacted by the coronavirus health crisis, the Department of Finance have set the expectations for engagement by government agencies.”

The guidance, in a Procurement Policy Note (PPN), includes relaxing or waiving contractual rights where “appropriate to address Covid-19 circumstances”, generally avoiding exercising of termination rights or liquidated damages, and making revised payment arrangements.

The government said it expected agencies to pay suppliers quicker than the maximum 20 days allowed under official payment terms.

It aims to make payments of electronic invoices within five days where suppliers and agencies have adopted e-invoicing consistent with international standards.

“Small invoices under $10,000 should be paid immediately by card payment systems. This will assist businesses with their cash flow and support jobs,” said the department.

Cormann said that the Department of Finance and the Department of Defence had established a procurement hub to assist agencies with specific Covid-19-related procurement activities by providing advice, technical solutions and “resources where required”.

The PPN said approaches to the market should be evaluated on a case-by-case basis taking into account the impact of Covid-19 on potential tenderers and their ability to deliver.

Those preparing to approach the market should consider how the virus may impact plans in the immediate future and timelines.

Agencies should bring forward procurements that are less “reliant on substantial material supply” and they shold use a Request for Information on AusTender to understand the market’s capability before formally launching a tender process.

“It is likely that many suppliers will struggle to meet their contractual obligations with Commonwealth entities and this may put their financial viability, ability to retain staff and their supply chains at risk,” said the note.

“Many suppliers may not be able to fulfil their contracts due to action taken elsewhere in the public sector and restrictions that are now in place. We expect entities to support suppliers at risk where possible so they are better able to cope with the current crises.”

Australia’s Commonwealth Procurement Rules have mechanisms that allow agencies to adopt more streamlined processes to engage suppliers urgently, the note said.

It said that contract variations could include minor changes such as frequency and timing of delivery, targets and performance indicators.

“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,” said the note.

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