Commonwealth Procurement Rules: key updates to be aware of
Increased thresholds, Australian business prioritisation, and new ethical considerations in procurement assessments are among updates to the Commonwealth Procurement Rules (CPRs).
The CPRs establish the principles and requirements governing the procurement of goods and services by Australian Government entities. They ensure public procurement is fair, transparent, and delivers value for taxpayer money. The CPRs apply to non-corporate Commonwealth Entities and prescribed corporate Commonwealth Entities (collectively, 'relevant entities').
The Department of Finance updated the CPRs with effect from 17 November 2025. Access the new CPRs and a full table of the changes.
We highlight key changes that relevant entities must be aware of when undertaking Commonwealth procurements.
Key changes
Increased procurement threshold
The threshold for open approaches to market and the application of the Division 2 requirements (Additional rules) for non-corporate Commonwealth entities (other than for procurement of construction services) has increased from $80,000 to $125,000 (CPR 9.7).
This means more procurements won’t reach the open tender requirement, enabling quicker, more streamlined processes and fostering greater opportunity for local businesses. Division 1 will still continue to apply to all procurements, regardless of their value.
The thresholds for prescribed corporate Commonwealth entities and for procurements of construction services remain unchanged at $400,000 and $7.5 million respectively.
New CPR 3.7 also clarifies that all thresholds and values under the CPRs are inclusive of GST.
Australian business prioritisation
For procurements valued at $10,000 or more, but below the relevant threshold, and not involving a standing offer, non-Corporate Commonwealth entities must invite only ‘Australian Businesses’ to submit proposals (CPR 5.4).
An ‘Australian Business’ is now defined as a business with 50 per cent or more Australian ownership, tax residency, and principal place of business. For the purposes of CPR 5.4, this definition will also apply to New Zealand businesses for procurements below the relevant threshold.
An official responsible for a procurement may determine that an Australian business is not appropriate for the procurement and that CPR 5.4 does not apply; however, the basis for this decision must be documented.
Small and medium enterprises
For procurements valued under $125,000 and sourced from the Management Advisory Services Panel, the People Panel, or standing offers managed by the Digital Transformation Agency, non-corporate Commonwealth entities must invite only small and medium enterprises (SMEs) to submit proposals (CPR 5.5).
An SME is defined as an Australian or New Zealand business with fewer than 200 full-time equivalent employees, including those employed by associated entities.
Ethical considerations
The new CPRs mandate that relevant entities explicitly consider potential suppliers' ethical conduct when assessing value for money in procurements (CPR 4.5(c)). This critical requirement now applies to all procurements, irrespective of value, underscoring the Commonwealth's strengthened focus on integrity and ethical practices in its procurement activities.
Negotiation practices
A relevant entity may negotiate with tenderers if it has stated its intent to do so in the request documentation, or if no single tenderer offers the best value for money after evaluation (CPR 10.18).
If a relevant entity engages in negotiations, any elimination of a tenderer must follow the specified requirements and criteria, and all remaining participants must be given the same deadline to submit revised tenders (CPR 10.19).
Preparing for the new CPRs
To ensure compliance with the newly updated CPRs, relevant entities should consider:
- reviewing and updating internal procurement policies, procedures, templates, and guidance materials to align with the new CPRs, especially Australian Business and SME prioritisation rules;
- conducting targeted training for procurement staff and key stakeholders on the updated rules, focusing on practical implications and compliance requirements;
- strengthening documentation practices to clearly record decisions, especially regarding exemptions for Australian Business prioritisation and ethical assessments, as required by the CPRs; and
- monitoring for ongoing guidance and updates from the Department of Finance and other relevant agencies regarding CPR implementation.
This article was prepared with the assistance of Evan Lianos, Law Graduate.
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