Governments must use procurement ‘muscle’ responsibly

Major Australian engineering and design firms are calling on Australian governments to adopt a new policy for ethical and fair dealings with private contractors.

The association for consulting firms in the built environment has produced a framework outlining how governments can work better with industry, as several states roll out major infrastructure agendas.

Consult Australia, which represents consulting firms in the built and natural environment sectors including major firms such as Aecom, Arcadis and Aurecon, says the new principles would ensure governments behave ethically and fairly in their dealings with suppliers.

The 14 principles cover a range of areas including contracts, fairness and risk allocation, working relationships, tendering, briefs and payment.

“We hear a lot about industry muscle but government has muscle too, through its size, stability and tremendous purchasing power,” says CEO Megan Motto.

The association argues the issue is particularly pertinent as several governments currently invest heavily in various civil and social infrastructure.

While there has been a plethora of procurement reviews by Commonwealth and state governments and the Productivity Commission in recent years, successive governments have failed to address the recommendations these inquiries have consistently put forward, Ms Motto said.

Megan Motto

“We believe we’re at a point where our desire for infrastructure development, knowing it’s something that keeps cities liveable and drives our economy, means we have to start cutting through and embedding some of these principles for efficiency,” she told Government News.

She pointed to the limited use of standard contracts currently as a key issue impacting private suppliers and contractors.

“I would suggest there is well in excess of 1,000 contract forms floating around and our industry somehow has to deal with that,” she said.

“Small businesses are particular affected as they don’t have in-house legal counsel to look at bespoke contracts and understand the risk allocation and obligations.”

Other issues raised by suppliers were contracting out legislative provisions and setting unreasonable limits of liability, she said.

“We believe these things are untenable and unreasonable, and they don’t make for a collaborative, sustainable industry.”

A 2015 report by Consult Australia highlighted taxpayers could save 5.4 per cent on the cost of projects if government and industry worked better together, she said.

“While we do not wish to give such feedback, its important governments are aware of what is taking place. At the moment there is a wall of silence: industry cannot talk to government through fear of being out of favour for future work,” she said.

The 14 principles draw on the various recent reviews into procurement, the Commonwealth’s own “model litigant policy” and the extensive work Consult Australia has previously undertaken independently.

“The key point is that if we’re looking to have more efficient infrastructure provision and more innovation in the sector then we have to do things in a different way in the future; that means we need much better partnership through the supply chain, which requires all sides to work as model parties,” said Ms Motto.

Access the 14 principles here

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