The Financial Management and Accountability Act 1997 (FMA Act) and its associated Regulations, the Financial Management and Accountability Regulations (FMA Regulations) apply to Departments of State, Departments of the Parliament and agencies prescribed by the FMA Regulations.
Section 44 of the FMA Act requires Chief Executives to promote the efficient, effective, economical and ethical use of the Commonwealth resources for which they are responsible.
Regulation 7(1) of the FMA Regulations16 provides for the Minister for Finance and Deregulation to issue Commonwealth Procurement Guidelines (CPGs). The CPGs establish the core procurement policy framework for agencies subject to the FMA Act. Regulation 7(2) of the FMA Regulations provides that an official performing duties in relation to procurement, must act in accordance with the CPGs. Other FMA Regulations are also relevant to contract development and management:
• FMA Regulation 6 allows Chief Executives to issue instructions (CEIs) on procurement that focus on the entity's needs. CEIs provide primary operational instructions to acquiring entity officials and are aimed at assisting the officials in carrying out their duties in accordance with legislation and policies in the context of the entity's circumstances and needs;
• FMA Regulation 8 requires that a person must not enter into a contract, agreement or arrangement involving public money unless a spending proposal has been approved under Regulation 9 and, if necessary, in accordance with Regulation 10;
• FMA Regulation 9 requires any persons approving proposals to spend public money to ensure the expenditure is a proper use of Commonwealth resources within the meaning given by subsection 44(3)17 of the FMA Act;
• FMA Regulation 10 requires written authorisation from the Finance Minister (or delegate) for a proposal to spend public money where there is not sufficient available funds in the current appropriation18; and
• FMA Regulation 12 requires approval for expenditure to be documented as soon as possible after the approval is given.
The Commonwealth Authorities and Companies Act 1997 (CAC Act) and associated regulations and Ministerial Orders establish the financial framework for the corporate governance, financial management, reporting, accountability and audit operations of the Australian Government statutory authorities and corporate entities, incorporated under the Corporations Act 2001 , in which the Australian Government has a controlling interest. These CAC Act obligations are in addition to the requirements of the Corporations Law. Many CAC Act bodies are established under specific Commonwealth legislation and their operational activities are regulated by that legislation in conjunction with other relevant Commonwealth statutes.
The CAC Act applies to Australian Government bodies that are legal entities (such as bodies corporate) that:
• are a separate legal entity from the Commonwealth;
• are established for a public purpose by legislation; and
• hold money on their own account.
In the context of procurement and contracting, CAC Act bodies are generally not subject to the CPGs. However, CAC Act bodies listed in the CAC Regulations as subject to section 47A of the CAC Act (relevant CAC Act bodies) can be directed by the Finance Minister to apply the CPGs, and the Minister has done so through the Finance Minister's (CAC Act Procurement) Directions 2009.
In circumstances where the CPGs are not a requirement, these and other policies can provide useful guidance to all CAC Act bodies on conducting procurement activities.
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16 The FMA Regulations contain a section, Part Four, which relates to commitments to spend public money. Further guidance is set out in Finance Circular No. 2011/01 Commitments to spend public money (FMA Regulations 7 to 12).
17 Subsection 44(3) of the FMA Act defines proper use to mean efficient, effective, economical and ethical use that is not inconsistent with the policies of the Commonwealth.
18 FMA Regulation 10A provides that Regulation 10 does not apply to contingent liabilities assessed as remote and non-material.