Digital Sourcing Contract Limits and Reviews Policy

The Digital Sourcing Contract Limits and Reviews Policy replaces the ICT Contract Capped Term and Value Policy and is effective 1 February 2020.

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Application

Effective 1 February 2020 all Non-corporate Commonwealth entities (NCEs) (as defined by the Public Governance, Performance and Accountability Act 2013) must apply this policy.

This policy replaces the ICT Contract Capped Term and Value Policy, which was in effect from 23 August 2017.

Corporate Commonwealth entities are encouraged to apply this policy.

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Aim

This policy provides agencies with a modern approach to structuring contracts that reduces risk, drives competitive outcomes and increases flexibility. This helps improve sourcing outcomes through responsible monitoring of contract performance, greater access to a diverse range of sellers and the flexibility to invest in emerging solutions.

It has 3 principles:

  1. Risk: de-risk large digital (including ICT) programs by breaking them down into manageable contracts (work orders).
  2. Competition: increase market access for business of all sizes by creating smaller, more focused packages of work.
  3. Flexibility: enable changes to strategic direction and allow earlier access to emerging technologies through regular reviews of performance and deliverables.
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Implementation

For digital contracts and work orders signed from 1 February 2020 onwards, all of the following rules apply:

  1. They must not exceed $100 million (ex GST whole-of-life cost), including all extensions.
  2. They must not exceed 3 years initial term.
  3. Each individual extension option must not exceed 3 years.
  4. Extension options can only be exercised after a review of the contractor’s performance and deliverables.

You should design your program to comply with the policy from the start, as it may be harder to retrofit your program to meet the policy requirements afterwards.

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Exemptions

Automatic Exemptions

Automatic exemptions to the policy apply where the procurement is:

  1. for purchases from mandatory categories of a Digital Mandatory whole-of-Government panel; and/or
  2. subject to section 2.6 of the Commonwealth Procurement Rules. Where this exemption is applied, you must notify the DTA via sourcing@dta.gov.au.

Joint-Ministerial Exemption

An exemption from this policy can be granted jointly by the requesting NCE’s portfolio minister and the Minister for Government Services.

The requesting NCE must demonstrate a special need for an alternative arrangement and their exemption request must be premised on a genuine intent to meet the policy requirements. They must also include evidence to support any claims. For further information on this process, contact us at sourcing@dta.gov.au.

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Guidance

Our guidance provides helpful advice on structuring contracts under the policy.

For example, our guidance provides information on using a Master Services Agreement (MSA) to meet the policy when undertaking a large project. An MSA may be established where multiple contracts (work orders) will be covered under common terms and conditions. These arrangements are designed for large projects and may not be suitable for your needs.

Digital Sourcing Journey

Prior to applying this policy you should consider the Digital Sourcing Consider First Policy and the Digital Sourcing Fair Criteria Policy. The Digital Sourcing Consider First Policy applies during the identification of business needs and prior to a decision to invest. The Digital Sourcing Fair Criteria policy applies when scoping proposed solutions and drafting requirements

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Get in touch

You can send your feedback, comments or questions to sourcing@dta.gov.au