Commonwealth entities should be audited to ensure they are acting ethically and in compliance with the Commonwealth Procurement Rules, a Senate inquiry has recommended.
The employment references committee has also called for the Commonwealth Procurement Rules to preclude tenderers from entering a contract with entities that have been penalised on more than one occasion for non-compliance with employee entitlement laws.
The Labor and Greens majority committee said its inquiry into the exploitation of cleaners working in retail chains for contracting or subcontracting companies “also received evidence of similar behaviour in the public sector.”
It examined the Department of Finance’s contract arrangements with property service provider Broadspectrum for various facilities management. Broadspectrum had subcontracted to a number of companies for the provision of cleaning services to Commonwealth office buildings.
The committee heard that under the arrangements there were some job losses and some cleaners “suffered a pay cut of 6 per cent and lost substantial hours of work.”
The committee’s majority report recommended the Department of Finance “immediately renegotiate” the contract with Broadspectrum to account for the cleaners’ previous working conditions.
Under the CPRs, finance department officials must consider various factors to ensure that procurement achieves value for money, including ethical considerations, the committee noted.
While the department included contractual obligations requiring ethical behaviour on the part of Broadspectrum and its subcontractors, the committee said it saw no evidence that officials sought to understand the conditions of the cleaners who would be impacted by the new contract.
“In this regard the committee considers that the Department of Finance has shown a total disregard for the ethical responsibility it holds in its role of ‘price maker’, demonstrating no care for the welfare of those individuals performing the cleaning services and no desire to balance those considerations against other factors required by the CPRs such as efficiency,” said the committee’s report.
“This is despite the obligation in the CPRs for officials to make reasonable enquires before determining if the procurement achieves value for money.”
The committee said it was concerning that the Department of Finance “has prioritised efficiency over its ethical duty to low-paid workers.”
Cleaners receiving full entitlements
However, in a dissenting report, Coalition committee members said that cleaners performing work in departmental buildings “are receiving their full entitlements under the relevant modern award and are paid at rates higher than that prescribed in the award.”
They said:
“The deed under which the services are provided makes clear that Broadspectrum is responsible for due diligence in relation to its subcontractors and ensuring that they comply with all laws, including the Fair Work Act.”
The Coalition members said it was disappointing that the Labor Senators “constituted this inquiry as a political exercise.”
‘Ultra-competitive contracting’
The majority report said the case was a clear example of the negative impacts of “fragmented employment chains and ultra‑competitive contracting arrangements.”
“The committee is of the strong opinion that the government should be a leader in ethical procurement and contracting,” it said.
Just as the Federal Government and Commonwealth agencies have an obligation to behave as ‘model litigants’, the committee said the Commonwealth should also have an obligation to behave as a ‘model procurer’.
Government News sought comment from the Department of Finance and Broadspectrum but neither provided a response by deadline.
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