Procurement policy changes effective soon

31 July 2019

The Queensland Government will introduce three significant changes to their procurement policy from Thursday, 1 August. If you currently tender for or perform state government work, you need to be aware of the changes.

Prequalification Contractor Performance System

The Department of Housing & Public Work’s Prequalification (PQC) contractor performance reporting system has been finalised after consultation with Master Builders and the industry in general and will be in place from 1 August.

We support the system broadly, which is designed to provide good performers with more opportunities to work on state government building projects; and poor performers with less opportunity.

The performance reports will be used to determine ongoing registration for prequalified building contractors and help to identify where contractors are not performing to a satisfactory standard, or where they are excelling.

The system incorporates a score or ranking based on a contractor’s performance in areas such as contract administration, industrial relations, subcontractor management and health and safety. It is designed to encourage contractors to perform well and increase their chances of future selection for tender opportunities.

What you need to do

No action is required by building contractors, but if you regularly tender for Queensland Government work, be aware the new system will be in place and that you will be rated on your performance.

Ethical Supplier Mandate

Despite opposition from Master Builders, the Minister has also introduced the Ethical Supplier Mandate – a scheme of supplier demerit points and sanctions that will apply to building, construction and maintenance contracts that commence after 1 August 2019.

The scheme will impact suppliers that repeatedly breach contractual obligations, policies or laws (industrial relations and safety), unless their conduct is due to an honest mistake, oversight, or accident.

Demerits will be issued to suppliers on a sliding scale for minor, moderate and major compliance issues as set out in the Ethical Supplier Mandate guide.

Contractors may be sanctioned if they reach 20 demerits within a 12-month period. Sanctions affect access to future contracts (not current contracts); however, where a supplier is sanctioned and has an existing contract with government, extension options under that contract will not be exercised.

Appeals process

Suppliers suspected of “unethical behaviour” will have the opportunity to respond to all allegations and actions before a decision is made. An appeals process will also be available to suppliers. Information on a supplier's demerits and sanctions will not be made public.

Ethical Supplier Threshold

Further to the demerit scheme, the government has further complicated the process by introducing an Ethical Supplier Threshold, which relates to correct payment of employees. Breaching any one of these things means 20 demerit points and the sanctions referred to above can apply.

Suppliers/contractors can be sanctioned if they have:

  • contravened a civil remedy provision of Chapter 2 or Chapter 3 of the Fair Work Act 2009, or committed an offence against the Fair Work Act
  • contravened a civil remedy provision of Chapter 2, 3, 4, 5, or 7 of the Industrial Relations Act, or committed an offence against the Industrial Relations Act, or failed to pay employment related levies, or other payments, established under Queensland legislation
  • failed to make superannuation contributions on behalf of employees in accordance with law
  • purported to treat employees as independent contractors, where they are not
  • required persons who would otherwise be employees to provide an Australian Business Number so that they could be treated as independent contractors
  • engaged persons on unpaid work trials or as unpaid interns, where they should be treated as employees
  • entered into an arrangement for the provision of labour hire services with a person who is not licensed under the Labour Hire Licensing Act 2017, or a supplier who is an unlicensed provider under the Act
  • paid employees wages below those provided for in an applicable modern award.

It applies to any conduct of a supplier engaged after 1 August 2019, so this means it is not retrospective.

What you need to do

No action is required by building contractors, but if you regularly tender for Queensland Government work, be aware the new system will be in place and that demerit points may apply for non-compliance with laws and policies that commonly apply to your business.

In addition to all of this, contractors participating in state government work already have to contend with:

  • The Queensland Procurement Policy: the Buy Local policy and the Best Practice Principles (for projects exceeding $100m+ anything declared); and
  • Supplier Code of Conduct – high level code roping in all of the state government’s suppliers

More information on the policy changes is available on the Department of Housing & Public Works’ website.

For member-exclusive assistance, contact us.

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