Procurement Ethical Standards
Treasurer's Instructions 1101 (goods and services) and 1201 (building and construction/roads and bridges) set out the ethical standards that must be met in relation to procurement.
These ethical standards are:
- all business must be conducted in the best interests of the State, avoiding any situation which may impinge, or might be deemed to impinge, on impartiality;
- public money must be spent efficiently and effectively and in accordance with Government policies;
- agencies must purchase without favour or prejudice and maximise value in all transactions;
- agencies must maintain confidentiality in all dealings; and
- Government buyers must decline gifts, gratuities, or any other benefits which may influence, or might be perceived to influence, equity or impartiality in procurement decisions. Requirements are contained in the whole-of-government Gifts, Benefits and Hospitality Policy which can be located on the Department of Premier and Cabinet website here.
Non-acceptance of gifts
In addition to the above whole-of-government policy, each agency may have its own internal policies in relation to gifts. Agency officers should be aware of those policies before commencing procurement activity.
Procurement Code of Conduct
The Instructions also set out a Code of Conduct for government buyers. The Code of Conduct states that all Government buyers must:
- ensure that all potential suppliers are provided with identical information upon which to base tenders and quotations and are given equal opportunity to meet the requirements;
- establish and maintain procedures to ensure that fair and equal consideration is given to all tenders and quotations received;
- offer a prompt and courteous response to all reasonable requests for advice and information from potential or existing suppliers;
- promote fair and open competition and seek value for money for the Government;
- be equitable in the treatment of all suppliers;
- seek to minimise the cost to suppliers of participation in the procurement process;
- protect confidential information;
- deal honestly with suppliers;
- keep accurate records to justify the process and any decisions made;
- complete a conflict of interest declaration and take steps to avoid involvement in any procurement activity where any conflict of interest (actual or perceived) may arise; and
- abstain from soliciting or accepting remuneration or other benefits from a supplier for the discharge of official duties.
Agencies must also ensure that the procurement process meets public sector probity requirements, that value for money is obtained and that the separation of roles and responsibilities between the contractor and agency staff is maintained for the duration of any contract.
Conflicts of Interest
In relation to conflicts of interest, Agencies are required to develop and maintain a process for the recording of declarations. Records kept must include details of the action taken to manage the conflict of interest and be auditable. Information to assist agencies in establishing a suitable process is contained in the publication Recording Conflict of Interest Declarations - Guidelines for Agencies.
Procurement documentation - record keeping
Detailed records should be kept throughout the purchasing process for every procurement. For a low value/low risk purchase this may simply mean maintaining records of all suppliers approached and their responses including documented advice from suppliers who have declined to submit a quote.
For complex purchases records should include information on:
- the reason for the procurement;
- the procurement method chosen;
- tenders/quotations called and received;
- evaluation criteria and weightings;
- decision-making processes;
- decisions made and the reasoning behind the decisions; and
- any necessary authorisations.
Where free trade agreements impact on a procurement, those FTA agreements require the procurement documentation to be retained for a minimum of three years.
The Probity Guidelines are applicable to both goods and services, and building and construction procurement. The Guidelines provide guidance to agencies on probity issues arising from procurement and contracting processes, including an outline of the five essential principles to promote probity.
Requiring suppliers to act ethically etc
Agencies must require suppliers, with whom they do business, to act ethically and in accordance with relevant industrial relations and occupational health and safety legislation.
Additional requirements in relation to construction projects - Code of Tendering, Code of Ethics and the National Code of Practice for the Construction Industry
Australian Standard AS 4120-1994 Code of Tendering
The Australian Standard Code of Tendering AS 4120-1994 is a statement of ethics that underpins best practice tendering procedures. A copy of the Code is available from SAI Global.
For building and construction/roads and bridges procurement valued at $10 000 or more, pursuant to the Treasurer's Instructions agencies must -
- require suppliers to comply with the Code; and
- ensure that representatives (consultants etc.) and agency officers act in accordance with clause 6 of the Code
Australian Standard AS 4121-1994 Code of Ethics and Procedures for the Selection of Consultants
In accordance with the PPM - Best Practice for the Engagement of Consultants, for procurement of consultancy services for construction (including for roads and bridges) agencies are to adhere to the Australian Standard AS 4121-1994 Code of Ethics and Procedures for the Selection of Consultants. A copy of the Code is available from SAI Global.
National Code of Practice for the Construction Industry and the Tasmanian Annexure to the Code
Treasurer's Instruction 1201 requires that for all building and construction or roads and bridges procurement valued at $10 000 or more, agencies must ensure that all suppliers comply with the National Code of Practice for the Construction Industry, 1997 edition, and the Tasmanian Annexure to the National Code of Practice for the Construction Industry.
The National Code of Practice expresses the principles which Commonwealth, state and territory governments agree should underpin the future development of the construction industry in Australia. The Tasmanian Annexure details Tasmanian specific requirements including compliance and sanction mechanisms.
Compliance with the Code is enforced through conditions of tender and extends to all subcontractors, consultants and suppliers engaged by the successful tenderer. The Crown Solicitor's Request for Tender Building and Construction templates contain relevant wording requiring tenderer compliance with the Code and Annexure.
The National Code of Practice for the Construction Industry is available from the Australasian Procurement and Construction Council (APCC) website.
The Tasmanian Annexure to the National Code of Practice for the Construction Industry is available here.
Procedures on how to manage Code matters are available here.
Australian Government funded work requirements
Subject to contribution thresholds, where the Australian Government provides funding to Tasmanian agencies for building and construction projects, additional requirements which are not mandated in the Treasurer's Instructions may be imposed by the Australian Government through mechanisms such as funding agreements, grants and programme funding arrangements.
Agencies are bound by these funding arrangements to meet their responsibilities and, as such, should ensure that systems are in place to administer the obligations outlined below. Where it is found that an agency has been in breach of their responsibilities, the Australian Government will respond to address concerns.
Australian Government's Building Code 2016
The Code for the Tendering and Performance of Building Work 2016 (the Building Code 2016) is established under the Building and Construction (Improving Productivity) Act 2016 and sets out the Australian Government's expected standards for building industry participants involved in Australian Government funded construction projects. The Building Code 2016 replaces the former Building Code 2013 and commenced on 2 December 2016.
Only building contractors who are compliant with the Code can tender for and enter into head contracts for building work funded directly or indirectly by the Commonwealth Government, subject to certain conditions. The Code also places obligations on the funding recipients (ie agencies), when certain thresholds of funding are met, to ensure key aspects of the Code are applied when procuring building works. These obligations will generally be imposed through the funding agreement between the Commonwealth and the agency/State.
Responsibilities of funding
Agencies should be familiar with the Building
Code 2016 requirements. Information on the obligations of
agencies that are procuring building works funded by the Commonwealth is
contained on the Australian Building and Construction website (see specifically the section
on funding entities and recipients/how to ensure responsibilities are met).
The Office of the Crown Solicitor has amended the pro forma RFT for Building and Construction (Commonwealth Funded Work version) to include the model clauses referred to in the website above. However, it is an agency responsibility to ensure that all the other necessary obligations are met, including where appropriate, inclusion of information relating to the Code in tender advertisements.
The ABCC has developed an EOI/Tender Process Checklist for use by agencies to assist in ensuring its procurement processes are consistent with the Building Code 2016.
Transitional information - 2013 and 2016 Building Codes
For procurements commenced and completed (ie with contracts entered into) prior to 2 December 2016, the former Building Code 2013 applies. Further information on transitional requirements is set out on the ABCC website (link above). Given obligations in relation to the Codes are encapsulated in funding agreements, the Office of the Crown Solicitor should be consulted if you require assistance beyond the information on the ABCC website.
The Building Code 2016 is available from the Australian Government's legislation website. Further information on the Australian Government's requirements and the Code itself are available from the ABCC website.
Australian Government's Building Code 2013
The Australian Government's Building Code 2013 establishes a set of supplier industry standards for all building contractors and building industry participants involved in Commonwealth funded construction projects. The Building Code 2013 - Supporting Guidelines for Commonwealth Funded Entities set out the Australian Government's procurement obligations placed on agencies in relation to the Building Code for projects directly or indirectly funded by the Australian Government.
The Building Code, issued under the Fair Work (Building Industry) Act 2012, came into effect on 1 February 2013 replacing the Australian Government Implementation Guidelines for the National Code of Practice for the Construction Industry.
While the Building Code is applied prospectively and in most circumstances existing contracts for Australian Government funded work established prior to the 1 February 2013 should not change, any new tenders and contracts for such projects should reflect the obligation to comply with the Building Code. Further, where a head contractor enters into arrangements with new subcontractors for such projects on or after 1 February 2013, the subcontractors will need to comply with the Code.
Where compliance with the Building Code is specifically required under a funding agreement or arrangement with the Australian Government, agencies must apply the requirements of the Building Code 2013 - Supporting Guidelines for Commonwealth Funded Entities to the maximum practicable extent to the building and construction work for which the Australian Government's contribution to the project is:
- at least $5 million and the funding represents at least 50 per cent of the total construction project value; or
- $10 million or more, irrespective of the proportion the Australian Government funding represents of the total construction project value.
The Building Code is available from the ComLaw website and the Supporting Guidelines is available from the Department of Employment website.
Australian Government building and construction industry WHS Accreditation Scheme
The Australian Government Building and Construction WHS Accreditation Scheme requires agencies to ensure that only builders who are accredited under the Scheme can enter into head contracts for building work. It applies to both building work directly funded by the Australian Government and also building work that is indirectly funded by the Australian Government - such as through funding arrangements with States and territories.
Where compliance with the Accreditation Scheme is specifically required under a formal funding agreement or arrangement, agencies must apply the requirements of the Scheme and only engage appropriately accredited builders.
As at September 2017, the Scheme is to be applied according to the following values:
- building work is directly funded by the Australian Government and the contract value is $4 million or more (GST inclusive).
- building work is indirectly funded by the Australian Government through a funding agreement, grant or program etc where:
- a head contract includes building work of $4 million or more (GST inclusive); AND
- the value of the Australian Government contribution is at least $6 million (including GST) and it represents at least 50 per cent of the total construction project value; or
- the Australian Government contribution is $10 million or more (including GST), irrespective of the proportion of the Australian Government funding.
Information on the Australian Government Building and Construction WHS Accreditation Scheme is available on the Office of the Federal Safety Commission website.