Policy guidance for ICT contract capped term and value policy
This guide outlines the Australian Government’s ICT Contract Capped Term and Value Policy.
The ICT Contract Capped Term and Value Policy limits how long an initial government ICT contract can be. It also limits the financial value of the contract.
The policy encourages competition by making sure that businesses of all sizes have an opportunity to bid for smaller components of larger projects. By shortening contract lengths, agencies will also be able to bring in new and innovative technology and services earlier.
Who is this policy for?
Non-corporate Commonwealth entities (NCCEs) must apply this policy for all contracts signed after 23 August 2017.
We encourage all corporate Commonwealth entities (CCEs) subject to the PGPA Act 2013 to apply this policy voluntarily, as well as other government agencies.
The policy came into effect on 23 August 2017 and covers:
- the value — how much a contract is worth
- the term — how long a contract lasts
Under this policy, an ICT contract’s whole-of-life value must not be more than $100 million, exclusive of GST. A whole-of-life cost includes the cost of the initial contract plus all extensions to that contract.
Under this policy, ICT contracts must also meet the following conditions:
- A contract’s initial term cannot be longer than 3 years.
- Each extension to the contract cannot be longer than the initial term.
- There is no limit to the number of extensions available, but the whole-of-life value must not be more than $100 million, exclusive of GST.
A contract has an initial term and can include extension options. Under the policy, initial terms can be for up to 3 years and each extension to that contract cannot exceed the length of its initial term.
You must review the contractor’s performance and/or deliverables in accordance with the contract before extending the contract. These reviews are to make sure you can identify issues earlier, adapt to new advances in technology and identify early if a project is at risk of failure.
How this policy affects existing contracts
Contracts in their initial term
If you signed a contract before 23 August 2017, and do not need to modify the contract, it is not affected by this policy.
Contracts being extended
The policy comes into effect on signing. This means if you signed a contract before 23 August 2017 with automatic extension options, you can extend it under the same terms and conditions. We strongly recommend that you review the contractor’s performance and/or deliverables in accordance with the contract first.
If you need to modify or re-sign the contract for the extension, then your new contract must comply with this policy. The total value of the initial term and extensions cannot exceed $100 million, exclusive of GST.
Changing a contract
If you want to change the scope of an existing contract, please email us so we can check all proposed changes meet policy requirements. Changes may include adding a new service or changing the spending commitment.
Where this policy does not apply
Sections 2.6 and 4.9 of the Commonwealth Procurement Rules outline the conditions where contracts are automatically exempt from this policy.
For example, if you have entered a contract under a whole-of-government ICT coordinated procurement arrangement, the contract is deemed to comply with this policy.
Exemptions to this policy
Exemptions to the Policy can be jointly granted by the entity’s portfolio minister and the Minister Assisting the Prime Minister for Digital Transformation.
If you are seeking an exemption to the policy, contact us and we can help you to prepare your case for why you need an alternative arrangement, and how you can still meet the intent of the policy.
Contact us if you plan to change the scope of an existing contract. Will will check that the proposed changes meet all policy requirements.
You can email a question to us at firstname.lastname@example.org