Commonwealth Procurement Rules (commencing 17 November 2025): What suppliers need to know

The Department of Finance has announced changes to the Commonwealth Procurement Rules (CPRs) that will commence on 17 November 2025. The updated CPRs introduce several practical changes that materially affect suppliers — especially Australian businesses and small and medium enterprises (SMEs).

Key changes

1. Increased procurement threshold

The CPRs require non-corporate Commonwealth entities (NCEs) and prescribed corporate Commonwealth entities (CCEs) to conduct an open approach to market when the expected value of a procurement is at or above the relevant ‘procurement threshold’ (CPR 9.7). The updated CPRs increase the threshold from $80,000 to $125,000 for non-construction procurements conducted by NCEs and some prescribed CCEs.

The procurement threshold for non-construction procurements by other prescribed CCEs remains at $400,000. The procurement threshold for construction services by both NCEs and prescribed CCEs remains at $7.5 million. The procurement thresholds include GST.

Why it matters: For entities, the increased procurement threshold reduces administrative effort and allows faster, more streamlined sourcing for lower-value procurements. For suppliers, however, the impact may be mixed: while the increased threshold will support the prioritisation of Australian businesses (discussed below), suppliers may find fewer openly advertised opportunities on AusTender. This makes it more important for suppliers to maintain strong visibility and relationships with procuring entities.

2. More opportunity for Australian businesses

NCEs must only invite Australian businesses to make submissions for procurements with an expected value between $10,000 and the procurement threshold, unless the procurement is from a standing offer (CPR 5.4). The updated CPRs include a new definition of ‘Australian business’, which now means:

•  a business, including any parent business, that:

– has 50% or more Australian ownership, or is principally traded on an Australian equities market; and

– is an Australian resident for tax purposes; and

• is a business that has its principal place of business in Australia.

For the purpose of paragraph 5.4 only, an Australian business also includes a New Zealand business.

Why it matters: Many lower value opportunities that were previously open to international suppliers will be restricted to Australian businesses, shifting competition in favour of domestic suppliers. Suppliers should clarify whether they meet the updated definition and update capability statements accordingly.

3. Increased opportunity for Australian and New Zealand SMEs under standing offer arrangements

NCEs must only invite submissions from SMEs for procurements with an expected value below $125,000 from the Management Advisory Services Panel, the People Panel, or any standing offer managed by the Digital Transformation Agency (CPR 5.5). The updated CPRs define an SME as ‘an Australian business or New Zealand business with fewer than 200 full-time equivalent employees.’

Why it matters: Australian and New Zealand SMEs on these panels will receive an exclusive first look for many lower-value contracts — a clear commercial advantage for those suppliers. Government intervention often results in market restructuring. Accordingly, SMEs and non-SMEs may look to establish strategic or subcontracting partnerships to increase competitiveness and market access, respectively. Additionally, non-SME suppliers may consider restructuring their operations.

4. Accountability from Commonwealth Government officials

Despite the changes outlined above, the updated CPRs permit NCEs to determine that approaching an Australian business or SME is not appropriate for a procurement (CPRs 5.4(c) and 5.5(c)). However, the decision must be documented. NCEs may otherwise only invite submissions from suppliers other than Australian businesses or SMEs if there are no submissions, if no submissions represent value for money, or if requirements under the Indigenous Procurement Policy must be satisfied before an Australian business or SME is approached.

Why it matters: Although NCEs retain discretion not to approach Australian businesses or SMEs, they must justify and record that decision. This creates an auditable trail that can be scrutinised internally, by the ANAO, or through procurement complaints. For suppliers, this means greater confidence that exemptions will be applied properly. It may also give Australian businesses and SMEs clearer grounds to lodge a complaint if they believe opportunities were improperly directed to non-qualifying suppliers.

5. Ethical conduct a factor in value-for-money assessments and increased compliance assurance‍

The updated CPRs specify ethical conduct as a factor that must be considered when assessing value for money (CPR 4.5(c)). Additionally, officials must make reasonable enquiries that the procurement is carried out considering relevant regulations and/or regulatory frameworks, including tenderer’s practices regarding labour regulations, workplace health and safety, and environmental impacts (CPR 6.6).

Why it matters: Environmental, social and governance (ESG) practices, supply-chain transparency, and compliance assurance are no longer optional differentiators — they will be routinely assessed and will affect the outcome of procurement processes.

6. Negotiations with tenderers‍

The updated CPRs clarify the circumstances in which negotiations may be conducted (CPR 10.18). Additionally, where negotiations are conducted, relevant entities must ensure that any elimination of a tenderer participating in negotiations is carried out in accordance with the essential requirements and evaluation criteria specified in the approach to market and request documentation, and provide a common deadline for the remaining participating tenderers to submit any revised tenders.

Why it matters: The new requirements aim to ensure that tenderers are treated fairly during negotiations and ensure the probity of the procurement process.

‍Practical next steps for suppliers

1. Confirm whether you qualify as an Australian business and an SME under the CPR definitions, and update capability statements and supplier information for the purposes of relevant panels. Seek advice if you consider that restructuring may be necessary.

2. Strengthen and document ESG and compliance practices to ensure evidence can be provided when participating in future procurement processes.