Commonwealth Procurement and the Fair Work Principles – what you need to know

January 2010

Introduction

Through a joint media release in July 2009 the Minister for Finance and Deregulation (Finance) and the Minister for Employment and Workplace Relations (DEEWR) announced the Fair Work Principles.

The Fair Work Principles support the Fair Work Act and its objective of promoting ‘fair, cooperative and productive workplaces’.

From 1 January 2010 all tender documents released to the market in relation to a ‘covered procurement’ must contain clauses regarding Tenderer compliance with the Fair Work Principles. These are in addition to other requirements under the Commonwealth Procurement Guidelines (CPGs) that Agencies do not enter into contracts with Tenderers who have had a judicial decision against them (not including decisions under appeal) relating to employee entitlements and have not paid the claim (for further information see The new CPGs - what you need to know).

The changes

In conducting a covered procurement, the Fair Work Principles require Commonwealth Entities to:

Inform Tenderers of the application of the Fair Work Principles in the request documentation and direct Tenderers to: www.deewr.gov.au/fairworkprinciples for further information;
Request a declaration from Tenderers in their Submission that, where the Tenderer has an enterprise agreement made under the Fair Work Act on or after 1 January 2010, the agreement includes ‘genuine dispute resolution procedures’;
Request Tenderers to provide confirmation in their Submission that they:
- Have consultation arrangements which encourage cooperation and engagement of employees and management; and
- Understand and respect their employees’ rights in relation to freedom of association and the right to representation at work, including that the Tenderer allows its employees to be able to make a free and informed choice about whether to join a union and be represented at work.

Specific provisions

The Fair Work Principles also contain specific provisions relating to cleaning, textile, clothing and footwear procurements (including procurements for building management services). The Fair Work Principles require:

Clothing and footwear manufacturers to be seeking accreditation or already be accredited, with the Homeworkers’ Code of Practice prior to Contract;
An undertaking from Tenderers in their Submission that they:
- Provide their employees with the appropriate training, supervision, equipment and materials to enable them to perform their job safely and efficiently;
- Provide their employees with a written duty schedule at each site listing specific tasks to be completed;
- Set fair and reasonable workloads for all employees and provide adequate staff to achieve the required performance levels; and
- Acknowledge and support freedom of association and representation of employees.

The Fair Work Principles ‘User Guide’ contains model statements and clauses covering each of these new requirements for use by Commonwealth Entities in tender documents and procurement contracts (click here for more information).

Value for money

Although value for money remains the core procurement objective, Commonwealth entities may now also give preference to Tenderers who have a demonstrated commitment to supporting apprenticeships and education and training in the workplace.

Where the National Code of Practice for the Construction Industry also applies, this is in addition to giving preference to those Tenderers who have a demonstrated commitment to adding and/or retaining trainees and apprentices, increasing the participation of women in all aspects of the industry and promoting employment and training opportunities for Indigenous Australians in regions where significant Indigenous populations exists (see bulletin New Requirements for Evaluating Construction Tenders).

Commonwealth entities should now consider including these policies, along with price and any identified risk factors, in the value for money stage of the tender evaluation process. For the first stage of a two-stage procurement process, these factors could be considered after the scored assessment of submissions, before any shortlist of preferred tenderers is confirmed.

When do the Fair Work Principles apply?

The Fair Work Principles will only apply where expressions of interest or tenders are called for after 1 January 2010, and do not apply to expressions of interest or tenders released before this time.

What you need to do

As a result of the changes, Commonwealth Entities undertaking covered procurements will need to:

Modify any ITR, RFT, Evaluation Plan and Contract templates to include the new model clauses, declarations and evaluation criteria;
Consider modifying any ITR, RFT and Evaluation Plan templates to include consideration of broader Commonwealth employment policy objectives as part of the value for money assessment. DEEWR encourages Commonwealth entities to discuss their proposed approach with DEEWR prior to finalising their tender documentation; and
Ensure updated templates are used in any covered procurement released to the market or after 1 January 2010.

The Sparke Helmore Government team can advise on how these changes will affect your upcoming procurement activities, and assist in modifying procurement templates so they comply with the new requirements.

For more information, please contact:

Colin Webeck | Partner
Sparke Helmore Lawyers | Canberra
p: 02 6263 6310
e: colin.webeck@sparke.com.au

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