New Commonwealth Procurement Rules (CPRs) mark a strategic shift in how Commonwealth entities engage with the market.
Applying to new procurements by relevant Commonwealth entities from 17 November 2025, the changes aim to strengthen access for Australian businesses (particularly Small and Medium Enterprises (SMEs)) while introducing key procedural and compliance updates that legal, procurement and tendering teams must act upon.
These updates apply to new approaches to market released on or after 17 November 2025, making it critical for entities to review and align their procurement practices without delay.
Key changes to procurement practices:
Ethical conduct now a value for money (VFM) consideration: Ethical conduct is now expressly included as a factor in assessing VFM (paragraph 4.5(c)). The Commonwealth's increased focus on suppliers' ethical conduct is also reflected in the move of provisions dealing with ethical procurement from Division 2 to Division 1 (paragraph 6.6), making it clear that these considerations must be applied to all procurements regardless of value.
Threshold increased for the first time in 20 years: The general procurement threshold for the application of the requirements of Division 2 of the CPRs to non-corporate Commonwealth entities (and a small sub-set of corporate Commonwealth entities) has been increased to $125,000 from $80,000 (paragraph 9.7). The more general requirements of Division 1 of the CPRs will continue to apply to all procurements above and below this threshold.
New negotiation rules: For procurements to which Division 2 of the CPRs applies, entities can only conduct negotiations where the intention to negotiate has been indicated in the approach to market documentation, or where no single tenderer has been assessed as providing best value for money in accordance with the evaluation criteria (paragraph 10.18). If negotiations are conducted, a common deadline must be provided for remaining participating tenderers to submit revised tenders (paragraph 10.19).
Prioritisation of Australian businesses: Non-corporate Commonwealth entities must invite only Australian businesses (as defined in the CPRs) to submit tenders for procurements between $10,000 to $125,000 (non-construction) and $10,000 to $7.5 million (construction services) (paragraph 5.4(a)).
This limitation is subject to compliance with the requirements under Indigenous Procurement Policy (IPP) first, where relevant, and does not apply to procurements from standing offers.
Exceptions apply where no submission was received or represents VFM or where the responsible official has determined that approaching Australian businesses is not appropriate in the circumstances (paragraph 5.4(b) and (c)).
Prioritisation of SMEs: For procurements under $125,000 from the Management Advisory Services Panel, People Panel or standing offers managed by the Digital Transformation Agency (DTA), non-corporate Commonwealth entities must invite only SMEs on the relevant standing offer to tender (paragraph 5.5).
With respect to standing offers managed by the DTA, this limitation is subject to compliance with the requirements under the IPP first.
Exceptions apply where no submission was received or represents VFM, the relevant standing offer does not include an SME or where an official has determined that approaching an SME is not appropriate (paragraph 5.5(b) and (c)).
Prepare for 17 November 2025: Act early and plan your transition
With the revised CPRs taking effect on 17 November 2025, now is the time to review procurement frameworks, update documentation, and ensure compliance with new thresholds, negotiation protocols, and VFM criteria. Early action will help mitigate risk and maintain procurement compliance under the new rules.
Suppliers to Commonwealth entities should be prepared to have to demonstrate ethical conduct in tenders from 17 November to ensure their tenders remain competitive and able to be assessed as VFM.
Australian businesses and SMEs should be aware of the increased opportunities afforded to them under the new CPRs, and should plan accordingly.
If your team requires assistance preparing for these updates, please do not hesitate to contact us.
