Key facts: major government contracts and the caretaker period

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Introduction

On 28 March 2025, the government announced that the Australian federal election is to be held on 3 May 2025. This means that the government is now in a caretaker period.

During the caretaker period, the government is to avoid making significant decisions, such as entering into major contracts. What does this mean, and what are the relevant thresholds and considerations for entering into new contracts or arrangements with suppliers?

This briefing note is intended as a summary of key facts and threshold questions. Advice should be sought by officials regarding their specific circumstances before making any decision regarding the caretaker period and its impact on a contract or procurement process.

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The caretaker period: what and when

The caretaker period commences when the election is called and ends when the result of the election becomes clear or, if a new government is elected, when that new government is appointed by the Governor-General.

During the caretaker period, it is customary for the government to avoid making decisions that will bind the successive government or limit its freedom of action. Importantly, the government will avoid entering into 'major' contracts during the caretaker period. This can include new grants agreements.

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What is a ‘major contract’?

Whether a contract is considered ‘major’ depends on a number of factors:

• The value of the contract.
• Whether it is a routine matter of administration.
• Whether it implements or entrenches a policy, program or administrative structure which is politically contentious.
• Whether it requires ministerial approval.

(Refer guidance from the Department of the Prime Minister and Cabinet here.)

These factors are not codified in law, and there is no guarantee that they will be applied consistently between different Commonwealth entities or tender processes. Ultimately, the decision of whether a contract is considered ‘major’ lies with the Commonwealth entity responsible for the relevant contract, having regard to the considerations listed above.

Where the government determines it necessary to enter into a 'major' contract during the caretaker period, it will typically do the following:

• Discuss the contract and its implications with the Opposition spokesperson.
• As a minimum, require that the contract includes a clause allowing for it to be terminated if a new government is elected and decides not to proceed with the contract.

Note, contracts or grant funding agreements that have been committed to by the government prior to the caretaker period will not be affected.

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What you should do

If your agency or department is undertaking a procurement process that may be affected by the caretaker period, you should:

• Consider whether any resultant contract meets the definition of ‘major contract’, as set out above.
• Determine whether a commitment to enter into such contract has already been given (ie, prior to the caretaker period) or remains outstanding.
• Review tender conditions to ensure that sufficient protections exist for the Commonwealth in relation to delays or impacts to a procurement or tender process.
• Communicate with any tenderers or potential suppliers regarding any caretaker implications on their procurement process, including any expected delays to contract signature or other schedule impacts (including not to proceed in whole or part).

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Further information

If you have any questions about the caretaker period and how it might affect your organisation, please reach out to us on the details below.

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Authors: Rory Alexander; Veer Shrivastava.

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