Finance Circular
No. 2013/05
Commonwealth Property Management Framework
Lease Endorsement Process for FMA Act Agencies
Key points
This circular:

Outlines the Government’s decision on 2 April 2013 requiring all Financial Management
and Accountability Act 1997 (FMA Act) agencies to seek the endorsement of the Secretary
of the Department of Finance and Deregulation (Finance Secretary) prior to entering into
property leases subject to the Commonwealth Property Management Framework (Property
Framework).

Provides guidance on the process for seeking the endorsement of the Finance Secretary
prior to entering into a property lease with a whole-of-life cost exceeding $30 million
(or $100 million for the Department of Defence).

Takes effect from 8 August 2013.

Is available on the Finance website at http://www.finance.gov.au/publications/financecirculars/index.html .
New Lease Commitments for Property
1. Under the Property Framework the decision to lease property should be based on a
cost-benefit analysis, using whole-of-life costs and is to be undertaken in consultation with
the Department of Finance and Deregulation (Finance).
2. The Government recently agreed that all FMA Act agencies must seek the endorsement of
the Finance Secretary prior to entering into a property lease with a whole-of-life cost
exceeding $30 million (or $100 million for the Department of Defence):
a) This lease endorsement process is intended to assist agencies to evaluate the most
appropriate property outcome, from the agency and especially the
whole-of-Australian-Government perspectives, prior to entering into a new lease
commitment on behalf of the Commonwealth.
b) Consideration of the whole-of-Australian-Government perspective is to include
consideration of existing Commonwealth owned and leased property, that may be
suitable for the agency, prior to entering into a new commitment.
3. The thresholds, which determine whether a transaction (including leases) is subject to the
Property Framework cost-benefit analysis process, are:
a) Non-Defence: greater than $30 million over whole-of-life (full term including
extension options but excluding fit-out); and
b) Defence: greater than $100 million over whole-of-life (full term including extension
options but excluding fit-out).
Finance Circular 2013/05
Department of Finance and Deregulation
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4. For the purposes of this lease endorsement process, a lease refers to a legal agreement made
between the lessee and a lessor which grants possession of a premises for a fixed period in
exchange for the payment of rent. This can relate to land, buildings or other assets where
access is granted via a lease, memorandum of understanding between agencies or license for
use for a defined period and is used for the purpose of carrying out the functions of an
agency.
Endorsement Process for Leases Subject to the Property Framework
5. Where an agency identifies a property transaction that is subject to the Property Framework
cost-benefit analysis process, it should prepare a cost-benefit analysis of the options in
consultation with Finance. During this process agencies will engage with Property and
Construction Division (PCD) and their respective Budget Group Agency Advice Unit (AAU) in
Finance, to develop the preferred option.
6. Where the preferred option involves a new lease commitment, the agency is to seek formal
endorsement from the Finance Secretary with the assistance of PCD and their respective
AAU. A flowchart detailing the lease endorsement process is provided at Attachment A.
7. When seeking the endorsement of the Finance Secretary for a proposed lease, agencies
should outline the outcome of the cost-benefit analysis including the key parameters of the
lease, why it was selected as the preferred option, and include a brief discussion of other
options considered including the whole-of-Australian-Government option through a
whole-of-life cost-benefit analysis.
8. Where the proposed lease option is endorsed by the Finance Secretary, the agency may
proceed with this transaction. If the cost-benefit analysis or preferred solution presented
does not meet the requirements of the Property Framework (which includes consideration
of the whole-of-Australian-Government outcome), the Finance Secretary may request that
the proposal be amended or that alternative options be considered.
9. Where the Finance Secretary’s endorsement is not provided, a recommendation will be
provided to the agency to reconsider its cost-benefit analysis with the whole-of-AustralianGovernment perspective appropriately considered. Once this has been included, the agency
can then re-submit its cost-benefit analysis to the Finance Secretary.
10. Agencies should note that the Finance Secretary’s endorsement of a property decision does
not constitute funding support for the property lease proposal and the final decision rests
with the agency. If the preferred solution requires additional funding, this will need to be
sought through the Budget process consistent with the Budget Process Operational Rules.
Agencies should also still have regard to any other regulatory requirements. It is not
intended that agencies be forced into a property commitment through this endorsement
process but rather that the whole-of-Australian-Government perspective is appropriately
considered.
Exceptions to the Lease Endorsement Process
11. In cases where the agency is landlord and tenant, the lease endorsement process does not
apply to the leases within the landlord’s portfolio.
12. In cases where an urgent or unforseen event occurs, it may be appropriate for an agency to
seek exemption from the lease endorsement process. If an agency is considering a request
for exemption, it should contact Finance to outline the event and the reason for the
exemption. It is envisaged that exemptions will be rare and apply largely to overseas leases.
Exemptions will not be granted on the grounds that an agency has failed to plan for the time
required to seek the Finance Secretary’s endorsement.
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Department of Finance and Deregulation
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Assistance with Seeking the Finance Secretary’s Endorsement
13. To assist agencies to present the preferred solution to the Finance Secretary, Finance has
developed a cost-benefit analysis template for property which agencies may wish to
complete to support the preferred option. Agencies will also have access to a standard
correspondence template to assist them in seeking endorsement from the Finance Secretary.
Copies of the templates can be obtained by emailing propertyframework@finance.gov.au.
Frequently Asked Questions
14. Why has the Government agreed to incorporate this new process into the Property
Framework?
The amendments to the Property Framework facilitate consideration of agency and
whole-of-Australian-Government property options to promote the best use of existing
resources.
15. When should funding be sought for a new lease?
A new lease should not be entered into before the necessary funding is sought (if any).
Agencies should also ensure they have obtained the endorsement of the Finance Secretary
before entering into a new lease.
16. When should an agency seek FMA Act Regulation 9/10 approval during the property
lease transaction?
Before a Regulation 9/10 delegate can approve a property transaction under the FMA Act,
agencies must ensure that the Finance Secretary has endorsed the proposed leasing solution
and that sufficient approved funds are available to the agency to meet future obligations.
17. What is the timeframe for seeking the Finance Secretary’s endorsement?
Agencies should initially allow for two weeks of consultation with PCD in Finance when
conducting their cost-benefit analysis. This time will allow Finance to review the costbenefit analysis to ensure it complies with the Property Framework and provide guidance on
any whole-of-Australian-Government outcomes that should be considered.
Once the cost-benefit analysis is complete, agencies should then allow for three weeks from
the date of seeking the Finance Secretary’s endorsement to the date that they receive a
formal response.
18. How can an agency ensure that the whole-of-Australian-Government perspective has
been appropriately considered?
As a first priority, agencies should consult with Finance to examine the suitability of any
existing, vacant space in the Commonwealth’s owned or leased estate for their property
needs. To assist in this process, Finance has set up an accommodation register on Govdex
which is a website aimed at supporting collaboration across agencies. Collaboration on
property issues is also supported through the Property Framework Inter-Departmental
Committees and Senior Property Officers’ Forum.
19. What assistance can Finance offer with leasing?
In cases where suitable vacant space has been found in the Commonwealth’s leased or
owned portfolio, Finance has developed sub-leasing and lease assignment guidance
documents and memoranda of understanding to facilitate inter-government leasing
arrangements. For space outside this portfolio, the Commonwealth National Lease and
supporting guidance is available to FMA Act agencies entering into a lease as a tenant as well
as assistance with general negotiation strategy.
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Department of Finance and Deregulation
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Contact
20. The cost-benefit analysis model, the cost-benefit analysis report template and associated
guidance is available by emailing propertyframework@finance.gov.au.
21. Further information on the Property Framework can be found on the Finance website:
http://www.finance.gov.au/property/property/property-management-framework.html.
22. Further information on the Public Works Committee can be found on the Finance website:
http://www.finance.gov.au/property/public-works-committee/index.html.
Simon Teschendorf
Assistant Secretary
Property Framework Branch
Business, Procurement and Asset Management Group
8 August 2013
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Department of Finance and Deregulation
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Department of Finance and Deregulation
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