RESTRICTED  
 
GPA/ACC/AUS/15  
10 February 2016  
(16-0886)  Page: 1/7  
Committee on Government Procurement  Original: English  
 
  ACCESSION OF AUSTRALIA TO THE AGREEMENT ON GOVERNMENT PROCUREMENT 
COMMUNICATION FROM THE EUROPEAN UNION 
The following communication, dated 10 February 2016, is being circulated at the request of the 
Delegation of the European Union. 
  
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INITIAL ASSESSMENT OF AUSTRALIA'S FIRST MARKET ACCESS OFFER 
On 8 September 2015, Australia submitted its initial market access offer for accession to the GPA. 
The European Union (the EU) congratulates Australia for submitting its first market access offer. 
The EU has the following remarks seeking further improvements in Australia's offer and requests 
for further clarifications. This note is based on the information obtained during a bilateral discussion with Australia at last GPA meeting in September 2015 and on the replies received from 
Australia to a first set of questions by the Commission (Australia's replies were circulated to GPA 
Parties on 5 January 2016 in GPA/ACC/AUS/9).  
1  GENERAL 
The EU considers that the offer submitted by Australia to GPA is a good offer, comparable to 
Australia's commitments in Australia/Japan FTA ("JAEPA"). However, the EU considers that some modifications are necessary. The coverage of Annexes 2 and 3 needs to be improved with the 
addition, respectively, of lower level entities and of "Government business enterprises" ("GBEs"), 
in particular in the utilities sectors.  
The notes should be limited to what is strictly necessary and fully justified, while in most cases 
Australia simply referred to the existence of similar or identical notes in pre-existing free trade agreements. Some general notes with substantial carve-out (such as, for example, on motor 
vehicles) should be eliminated. 
 In addition, the legislation in States and territories providing for "Buy Local" requirements (such as programmes in Northern Territory, Western Australia, Tasmania and a new trend in Victoria) and 
various preferential treatment programmes (such as in South Australia, Queensland and New 
South Wales) should be fully aligned with GPA provisions.  
The EU also requests Australia to provide an estimation of the value of its offer compared to the 
value of the Australian public procurement market.  
2  ANNEX 1 - CENTRAL GOVERNMENT ENTITIES 
Thresholds 
GPA/EU level. 
 GPA/ACC/AUS/15 
- 2 - 
  Entities 
Australia submitted a positive list of 65 Commonw ealth (federal) entities subject to the federal 
government procurement framework (i.e. the Publ ic Government performance and Accountability 
Act and the Commonwealth Procurement Rules). 
 
The list is shorter than the one submitted in TPP (67 entities) and in JAEPA (69). The EU supports 
other GPA Parties' request to Australia to offer th e two entities that Australia has offered in TPP, 
namely: 
 
 The Australian Transportation Safety Bureau and 
 The Old Parliament House. 
The EU also asks Australia about the likelihood/po ssibility of covering other central agencies or 
entities such as, for example, the Reserve Bank of Australia.  
Notes 
Note 1.: Australia explained that subordinate entiti es do not exist but divisions that have functions 
falling within an entity are covered. The EU requests Australia to make this more explicit in the 
market offer and to specify for each Department the covered divisions, as this would increase legal 
certainty for EU companies.  Note 2.: The EU requests Australia to cover the Australian Government Solicitor as this is a 
substantial entity (320 lawyers and offices in every capital city). In the case where some specific 
services provided by the Australian Government Solicitor were sensitive, the EU invites Australia to consider an exception strictly limited to such specific services . 
 
Note 3.a.: Australia claims in its reply to the EU that any procurement made under the defence 
exception must be documented and justified. The EU requests Australia to confirm whether this 
information is publicly available. 
 The EU considers that Note 3.a. should be re duced. Australia requests a broad exemption for 
security purposes for procurement by the Department of Defence; however this applies also in 
relation to some goods that are not necessarily for military use, for ex. electric wires, water 
sewage or motor vehicles. The EU requests Australia to cover them, in consideration of the economic importance of the contracts by the department of Defence (according to the Australian 
reply to checklists, the contracts for vehicles by department of Defence are among the largest 
category of expenditures at Commonwealth level).  
Note 3.b.: Australia should specify clearly what is covered by exemption in 3.b., in particular for 
letters ii. and iii. 
 Note 3.d.: The EU considers that Australia should  limit the scope of this Note. The EU requests 
more information on the Australian industry capab ility (AIC) program, on the rationale for it and 
on what kind of concrete measures it lead s to in favour of Australian companies. 
 
 Does the AIC programme provide for a mandatory target for Australian companies' 
participation to procurement by Department of Defence or does it only encourage participation by Australian companies? 
 For projects above a certain value, an AIC plan must be submitted; or in cases in which 
this AIC plan is not mandatory "details of local work must be provided". Does this mean that a company must be able to prove that it employs people in Australia as a criterion for participation/award of a bid? 
 As part of AIC, Priority Industry Capabiliti es (PICs) are defined as "elements of broader 
industry capabilities that confer an essential strategic advantage by being resident in Australia, which, if not available, would undermine the Defence self-reliance and 
Australian Defence Force operational capability." Would a foreign company (not GPA/ACC/AUS/15 
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  established in Australia) be able to participate to procurement projects in the sectors 
where PICs apply? 
3  ANNEX 2 - SUB-CENTRA L GOVERNMENT ENTITIES 
Thresholds 
355,000 SDR (as the United States and Canada) which is higher than EU thresholds under GPA 
(200,000 SDR). We request Australia to lower its thresholds to the level of the EU ones.  
Entities 
The entities' offer is limited to government entities of States and Territories. The list of covered 
entities for each State/Territory is similar to th ose in JAEPA when agency reorganisation is taken 
into account. 
 
i. Lower sub-central levels such as cities are not covered. There are around 570 local 
governments in Australia, including large ones such as the Sydney and Brisbane City 
Councils. The EU requests Australia to consider an appropriate coverage of lower 
levels such as cities. 
ii. The EU would also like to receive confirmation as to whether universities and 
hospitals are covered, if not, the EU requests that Australia covers universities and 
hospitals. 
iii. Utilities, railways and other transport related areas (such as road construction and 
ports) fall under the responsibilities of States and Territories. However, only a limited 
number of entities (mainly transport) are offered in Annex 2. The EU requests 
Australia to offer, in Annex 2 or 3, the main entities (including public undertakings) operating in the utilities sectors such as water, electricity, transport, railways, 
airports and ports. 
iv. Some replies by Australia indicate that these entities operate on a commercial basis, 
or that they are privatised. Australia should  clarify further, for those entities that 
Australia claims are privatised and therefor e cannot be covered, the criteria used to 
claim that they are privatised but some of them still operate in monopolistic markets. Given these entities' close association with State governments, Australia should provide more details on how the procuremen t policies of such entities work, for 
example the legal basis that ensures they do not discriminate. 
Specific to States/territories 
Australian Capital Territory 
In addition to what is requested under 2., the EU requests Australia to cover water supplies such 
as Iconwater.  
The explanation concerning the exemption for utilities service does not fully clarify the rationale for 
such exemption, which appears to be very broad. Australia should explain further.  New South Wales 
Australia did not provide a sufficient explanation as to why more than 140 agencies are on the 
website of NSW but only 39 are offered. We would ask Australia to provide an estimate of the value of the procurement of the non-covered entities, so that we can evaluate how significant the 
exclusion is. In addition to what is requested under 2., the EU requests, in particular, that 
Australia covers ports such as for example, the Sidney Port and the Port Authority of New South Wales; and water such as Hunter Water Corporation, NSW Water and Sidney Water Corporation. 
 
N o t e  2 :  A s  t o  t h e  T r a n s p o r t  f o r  N S W ' s  e x c e p t i o n ,  A u s t r a l i a  c l a i m s  i t  r e f e r s  t o  l e g a c y  p r o j e c t s  
commenced under the Transport Construction Authority and the Country Rail Infrastructure GPA/ACC/AUS/15 
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  Authority. However, the exception is broadly formulated. Transport Construction Authority was 
responsible for railway projects in the city of  Sydney and Country Rail Infrastructure was 
responsible for the management of the railway network in rural New South Wales. We would ask Australia for more information as to which contracts are intended to be excluded, also the new 
ones concerning railway networks? Australia should specify which percentage of the procurement 
of Transport for NSW would be interested by the exemption.  
Northern Territory 
In addition to what is requested under 2., the EU  requests, in particular, that Australia covers 
water and electricity companies such as Power Water Corporation and ports such as the Darwin Port Corporation. In addition we would like to request that the Department of Infrastructure and 
the Department of Transport are covered. 
 Note 1: Any agency in NT can use the services of  Charles Darwin University. As the core outcomes 
of the partnership between NT and Charles Darwin University are very broad (research, education, 
training), the EU requests Australia that the scope of this carve out is further limited.  
Queensland 
The Queensland's list includes "Entities declared to be departments pursuant to section 14 of the 
Public Service Act 2008" which we understand correspond to the entities in the check list. Australia should provide the full list of the currently covered entities that is laid down in the checklist. 
 
In addition to what requested under 2., the EU requests that Australia covers entities operating in water, energy, ports (and that are not privatised) mentioned in Australia's replies. Those are for 
example, (for water) Sunwater Limited and Seqw ater, (for energy) Energex and Ergon energy,(for 
railways) Queensland Rail and (for ports): Far North Queensland Ports Corporation Ltd, Ports North, Gladstone Ports Corporation Ltd, North Queensland Bulk Ports Corporation Ltd and Port of 
Townsville Ltd. 
 In addition, TransLink is an agency of the Department of Transport and Main Roads to coordinate and integrate bus, ferry and rail services. The EU considers that Australia should cover this. 
 
Note 1: The exception appears to be too broad and should be limited. The EU asks Australia 
whether they can consider limiting it to the procurement of health and education services etc. and 
not to any contract by agencies in those fields. 
 In addition, Australia claims that Queensland does not have Buy Local policies but indicated a 
"Charter for local content". According to the information on the website, the Chart provides 
"opportunities" for local businesses in some important cases. The Chart applies to some strategically significant procurement as determin ed by the procuring government agency, or in 
cases where Queensland Government grants more  than $2.5 million and in case of large 
infrastructure projects where funding of over  $20 million is provided by the Commonwealth 
through the Queensland Government.  
 What does this mean concretely? Are foreign enterprises not allowed to bid for those 
abovementioned cases? 
Australia should clarify which advantages are given to local businesses and how can this be 
compatible with GPA. 
 South Australia 
In addition to what is requested under 2., the EU requests in particular Australia to cover the main 
entities in the fields of: water such as SA Water,  energy such as Renewables SA, railways such as 
National Rail Corporation and ports that are not privatised.  
The EU invites Australia to clarify if Flinders port is the owner of the port or the contractual 
operator and if this could be covered, and if Adelaide Metro is covered. The EU understands that this is covered; in that case Australia should specify this clearly. 
 GPA/ACC/AUS/15 
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  Tasmania 
In addition to what requested under 2., the EU requests in particular Australia to cover the main 
entities in particular in the fields of water (such as Tasmanian Irrigation PTY, Taswater) or electricity (such as Hydro Tasmania) or airports/ports (Tasmanian Ports Corporation PTY, Metro 
Tasmania PTY), railways (Tasmanian Railways PTY and TasRail) or transport (TT-Line company). 
We understand that Tasmania Tourism has been offe red in TPP and therefore the EU asks Australia 
to cover it. 
 
The EU requests more information in particular about Tasmania's Buy local policy which appears to be among the most stringent ones. For procurement valued at more than A$50000 but below A$250 000, agencies must seek at least one quotation from a Tasmanian business where local 
capability exists. For procurements valued at A$250 000 or more, at least one tender from a 
Tasmanian business is required.  
 What happens if there is no Tasmanian business available? Is it allowed to have a 
procurement process with the exclusive participation of foreign companies? 
 How does Australia intend to make this compatible with GPA provisions? 
Victoria 
In addition to what is requested under 2., the EU requests Australia to cover the main entities in 
the fields of water (such as Melbourne Water and Barwon Water) or airports/ports (such as Port of Hasting Development Authority and Port of Melbourne Corporation) or transport/railways (Public 
Transport Victoria, VicRoads and VicTrack). 
 The EU would like to obtain more information on the change in Victoria's Industry Participation 
Policy, which introduced mandatory local requirements: for certain transport projects there is a 
100% local steel requirement; the government will set a level of local content requirements on a 
case by case basis for "strategic projects"—to be noted that the thresholds for definition of 
strategic projects has been lowered under Victoria Industry Participation Policy to A$50 million as 
of July 2015.  
 How does Australia intend to make this compatible with GPA obligations?  
Western Australia 
In addition to what is requested under 2., the EU requests in particular Australia to cover the main 
entities in the fields of water (Water Corporation, Aqwest) airports/ports (for example Mid West 
Ports authority), electricity (Western Power, Synergy and Horizon) and transport (such as 
Metropolitan Redevelopment Authority).  
Department of Transport is not listed, but its two subordinated agencies (Main Roads and the 
Public Transport Authority) which appear to have responsibility for construction and operational matters are listed. The EU requests Australia to cover the Department of Transport.  
As there is no clear reasoning for asking the reservations for multi-supplier list which seems to be 
incompatible with GPA, the EU requests Western Australia to change its law to make it compatible with GPA or, eventually, to ask for some temporary measures. 
 
4  ANNEX 3 - OTHER ENTITIES 
Thresholds 
Corresponding to EU thresholds (400 000 SDR). 
 Entities 
The list is a rather standard list offered by Australia in FTAs. 
 GPA/ACC/AUS/15 
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  G B E s  s e e m  t o  b e  c o m p a r a b l e  t o  E U  p u b l i c  u n d e r t a k i n g s ,  t h a t  t h e  E U  o f f e r s  i n  A n n e x  3  i f  t h e y  
operate in utilities sectors of waters, electricity, port and airports, urban transport and railways, (definitional approach). The EU requests Australia to cover GBEs in utilities sectors. So in addition to GBEs at local level, mentioned under 2., Australia should offer central GBEs such as Australia 
Postal Corporation or Australia Rail Track Corporation. 
 The EU requests more information on GBEs procurement practices and how they ensure 
non-discrimination. 
 5  ANNEX 5 - SERVICES 
Services list is a positive one. The EU requests that some services categories such as 
telecommunications services, air transport services of passengers and freight, land transport are 
covered as EU offers those services.  
6  ANNEX 7 - GENERAL NOTES 
The EU requests Australia to substantially reduce the number and scope of the general 
reservations as follows: 
 
Note 1.a.: SMEs: the EU objects to the SMEs exemption. 
 The EU first requests clarification about the main measures covered within this exclusion. 
 
 Do the measures to favour SMEs contai n mandatory targets/quotas? What are the 
concrete measures put in place at central and at sub central measures? 
 The EU understands that there is an "Australian Industry participation plan" to 
"encourage" the participation of Australian SMEs and of New Zealand SMEs. For Commonwealth procurement above A$20 million, it is mandatory to produce a plan 
according to the Australian Industry particip ation plan. Does it mean that a bidder must 
produce this plan to be selected /awarded a tender? What is the concrete meaning of this "encouragement"? 
 If New Zealand's SMEs are treated as Australian SMEs, it must be clarified if this 
treatment could be extended to all GPA Parties. 
Notes 1.c.-d.: The EU invites Australia to clarif y what is the value of the procurement excluded. 
 
Note 1.e.: The EU requests the removal of the Note . If Australia wants the data to be stored in 
Australia, this should not be the subject of a gene ral reservation. (There is a contradiction between 
the request for exemption relating to procurement of storage and hosting of government data and 
the explanation by Australia in its reply to the EU, namely required flexibility for location of data 
storage and hosting services).  Note 1.g.: The EU requests the removal of the exception on motor vehicles. EU requests 
information as to the relevant Australian provisions referred to in the reply to the EU questions.  Note 1.i.: The EU would welcome more explanations on the necessity of this Note: if an entity is 
listed it should not be exempted by the GPA, even if it buys on behalf of non-covered entities. The 
examples provided in Australia's reply to the EU refer to cases where there is a need to aggregate demand to achieve better value. In this situation it would make even more sense that those 
contracts are open to international competition. 
 Note 2.: The EU considers that Articles III (security exceptions) and II (exceptions in case of 
international aid/international agreements) should be able to address the issues mentioned. 
 
Note 3.: states that "this agreement does not apply to procurement funded by grants and 
sponsorship payments" . If this refers to grants by private sectors, then the EU considers that it 
should be specified in the wording of the Note. 
 GPA/ACC/AUS/15 
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  Note 4.: refers to procurement as a result of unsolicited innovative proposal. It derives from 
Paragraph 10.3c of the Commonwealth Procurement Rules 2014, namely: 
 
"A relevant entity must only conduct a procurement at or above the relevant 
procurement threshold through limited tender in the following circumstances: for 
procurements made under exceptionally advantageous conditions that arise only in the very short term, such as from unusual di sposals, unsolicited innovative proposals, 
liquidation, bankruptcy, or receivership, and which are not routine procurement from 
regular suppliers;" 
Firstly, the EU would welcome any information on which kind of cases it has been applied to.  
 
Secondly, the EU wonders why such an exception is necessary and whether the limited tendering 
foreseen by the GPA text is not enough.  
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