Procurement suppliers face new Commonwealth scrutiny in ABCC deal

By Harley Dennett

November 30, 2016

Commonwealth contract bidders will soon have to provide evidence of employment practices, standards compliance and environmental impact.

The changes also include new procurement impact analysis previously described by Finance Minister Mathias Cormann as “a waste of money” and public servants doing work for no reason.

To secure Senator Nick Xenophon’s vote on the Australian Building and Construction Commission legislation, the government has agreed to three new procurement requirements:

  • for a procurement above $4 million, there will be a requirement to consider the economic benefit of the procurement to the Australian economy;
  • reasonable enquiries will be expected to made into a prospective supplier’s employment practices, occupational health and safety and environmental impact; and
  • where a standard is applicable, tender responses must demonstrate the capability to meet the Australian or international standards and reasonable steps must be taken to check for evidence of compliance.

Xenophon says these changes will make a very real difference for Australian industry and jobs. “The changes passed last night avoid another Rossi Boots debacle where Australian jobs were needlessly exported overseas,” he said in a statement Wednesday morning.

Xenophon’s changes can all be found throughout section 10 of the updated CPRs that will take effect in March 2017.

The changes regarding consideration of “value for money and broader benefits to the Australian economy” for procurements over $4 million are contained in s10.30 while s10.31 adds that:

“The policy operates within the context of relevant national and international agreements and procurement policies to which Australia is a signatory, including free trade agreements and the Australia and New Zealand Government Procurement Agreement.”

The new s10.10 concerns the application of Australian standards:

“Where an Australian standard is applicable for goods or services being procured, tender responses must demonstrate the capability to meet the Australian standard, and contracts must contain evidence of the applicable standards (see paragraph 10.37).”

Going down to s10.37, procurement officers are advised they must also make “reasonable enquiries” in these circumstances by gathering to “evidence of relevant certifications” and “periodic auditing of compliance by an independent assessor”.

Another change, found in s10.18 is a small concession to the labour movement, which fears the return of the ABCC. It demands “reasonable enquiries” to ensure tenderers comply with any “relevant regulations and/or regulatory frameworks” with specific mention of labour regulations including ethical employment practices, occupational, health and safety and environmental impacts.

‘Wouldn’t lead to any practical consequences’

The minister and the senator have often sparred over protecting local manufacturing though the government’s $59 billion spend, with the Xenophon recently changing tactic to focus on securing information for his campaign.

The way federal public servants collect data on Commonwealth procurement “doesn’t tell us much at all” about local sourcing, Xenophon complained at Estimates last month. “$60 billion a year of taxpayers’ money procuring goods and services and you cannot tell me how much of that relates to locally sourced goods and services made here or provided here in Australia.”

The government says over 94% Commonwealth contracts reported in 2015-16 were Australian sourced or delivered. A lack of distinction between those two categories is behind Xenophon’s push.

The government has consistently resisted, until last night, any additional information requirements to the procurement process. Cormann explained during the last estimates that international agreements prevent discrimination against non-locally supplied goods and services:

“It would be an inappropriate diversion of taxpayer resources to essentially track the level of detail that you are suggesting the Australian government should track — and, in the end, for what purpose, because we are not actually able to discriminate between suppliers on the basis that you are suggesting we might want to discriminate.

“We would be collecting information for esoteric purposes, but not for an actual purpose that would lead to any practical consequences.”

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