Ethical supplier mandate and ethical supplier threshold
The Queensland Government is committed to doing business with suppliers who deliver genuine, quality, secure ongoing jobs with fair pay and safe working conditions for Queenslanders.
The Ethical Supplier Mandate will benefit suppliers as well as workers and the broader Queensland community by:
- ensuring suppliers are treated fairly and not exposed to undercutting and unjust competition
- making Queensland workplaces fairer and safer
- ensuring that Queensland taxpayers' money is used to build the local economy and support quality Queensland jobs.
The Mandate will ensure that businesses supplying to Government uphold their social, economic and environmental commitments as made in tenders and contracts, or required by policies or laws. The Mandate will hold non-compliant, unethical suppliers to account.
When will the Ethical Supplier Mandate apply?
The Mandate is being implemented in phases within budget sector agencies. The following categories commenced:
- 1 August 2019 for Building, Construction and Maintenance suppliers
- 1 October 2019 for Transport, Infrastructure and Services suppliers.
Suppliers in other categories of spend, and suppliers to government owned corporations and statutory bodies, may start to notice references to the Ethical Supplier Mandate in tenders and contracts from 2020.
See the table below for more information.
|Budget sector agencies||Government owned corporations||Statutory bodies||Special purpose vehicles|
|Ethical Supplier Threshold||From 01/08/2019||From 01/08/2019||From 01/08/2019||From 01/08/2019|
|Ethical Supplier Mandate||Building, Construction and Maintenance category from 01/08/2019 Transport, Infrastructure and Services category from 01/10/2019 Other categories determined in 2020||Determined in 2020||Determined in 2020||Determined in 2020|
How the Ethical Supplier Mandate will work
The Mandate will only impact suppliers that repeatedly breach contractual obligations, policies or laws, unless their conduct is due to an honest mistake, oversight, or accident.
Demerits will be issued to suppliers on a sliding scale for minor, moderate and major compliance issues.
A supplier may be sanctioned if it breaches the Ethical Supplier Threshold or reaches 20 demerits within a 12-month period. Sanctions affect access to future contracts, not current contracts, however, where a supplier is sanctioned and has an existing contract with government, extension options under that contract will not be exercised.
Suppliers suspected of unethical behaviour will be offered procedural fairness through the opportunity to respond to all allegations and actions, at multiple stages in the process. An appeals process will also be available to suppliers, where they feel unjustly sanctioned.
Information on a supplier's demerits and sanctions will not be made public.
On 1 July 2018, a compliance unit was established to audit and handle complaints about supplier compliance under the Buy Queensland approach. This unit will now also administer the Ethical Supplier Mandate and Ethical Supplier Threshold.
Email the compliance team at firstname.lastname@example.org or phone 1300 105 030.
Watch a recording from one of our live information sessions
Presenter: So, good morning, everyone, good morning also to a number of participants who are viewing this session by webcast. So welcome to you across the state. Today's session is being webcast and it's also being recorded, and so there will be an opportunity to view that later through the link that's being provided. My name is Peter Lacey, I’m Acting Executive Director for the Office of the Chief Adviser Procurement. With me is Sharon Bailey, who is the Chief Adviser Procurement.
We're here to talk to you today about two new government initiatives, the Ethical Supplier Mandate and Ethical Supplier Threshold. Before we begin, I’d like to acknowledge the Traditional Owners of the land on which we meet and pay my respects to Elders past, present and emerging.
For those who are viewing the session online, please be aware that there's a speech bubble in your screen. If you are online, click send and we will put the question to the group when we come to that part of the presentation. We have a brief presentation and then we will have an opportunity for questions. If you can hold your questions till the end of the presentation that would be great. I think without further ado I might introduce Sharon and we will go ahead with the presentation.
Thank you, Peter. Welcome, everybody. Thank you for coming along today. I know there has been a range of information out there and you may have already seen some of this. The idea today is to be quite interactive, the presentation will really just focus and set the parameters of that, give you some broader information. As I said, you may already have, which then allows us then to have an interactive session with questions. As Peter said, we will take questions from the audience but also questions from those people who are viewing this through the live stream. So thank you. Now I will just make sure I can work the technology which is always the tricky part. Terrific.
This morning we're here to talk about the Ethical Supplier Mandate and Ethical Supplier Threshold. They are two parts of the Buy Queensland approach, the most recent two parts of the Buy Queensland approach. It's being presented from Housing and Public Works and Office of The Chief Adviser because we look after the Queensland Procurement Policy Compliance Unit which will have responsibility for identification of breaches under these new initiatives. When this was being consulted and developed it was also called the supplier demerit scheme so you might know it from that incarnation. The intention is to look at this from the positive side and set that expectation that the Queensland Government is only interested in doing business with ethical suppliers. You all know better than I do the risk of procuring from people who are not ethical, who don't meet their commitment and the risk that brings to the Queensland Government and our customers. This is the final part of the Buy Queensland approach which really is about the sanctions that exist for not complying with what’s been set out.
So, what is the Ethical Supplier Mandate? The mandate as I said is all about ensuring that only responsible suppliers contract with the Queensland Government. It has been - it is being - introduced in a phased manner. It began on 1 August with the Building, Construction and Maintenance category of spend. It will - we will continue to look at it and review it and then come 1 October it will apply to the Transport and Infrastructure category. We will then have a review in early next year to go to Cabinet by 30 June which will look at how we roll it out to other categories. But we're very aware this is something that is quite new and we are the first really in the country to do something that is this comprehensive. Western Australia had a scheme but it's not quite as comprehensive as this one. The idea is to do it in a phased way to take a very responsible approach and to tweak the scheme as we go so that we're doing this and achieving exactly what we set out to do. Importantly, the Mandate doesn't impose an ethical burden on ethical suppliers. So, the administrative burden really is internal to government.
It's important that we are clear this is about people who are repeatedly and wilfully breaching arrangements. It's not about mistakes, it's not about oversights. This is really about applying to those people who repeatedly and wilfully breach conditions. And people will say and our Minister will say he was regularly getting feedback from suppliers who would say, look, we know you're contracting with X supplier. We know that they're not meeting their local benefits test. We know that they're saying they are employing apprentices and trainees and they're not meeting those commitments and yet you're still continuing to contract with them. They might burn one department and then move on to another department. So how is government going to respond to that? Partly through this Ethical Supplier Mandate and the Threshold is how we're seeking to ensure that we really do only contract with ethical suppliers. And noting that the majority of our suppliers are ethical, this will not apply retrospectively.
So, it's really important to be clear that this is about applying from contracts that began after 1 August in the Building, Construction and Maintenance categories. So yes, contracts that commenced after 1 August. It's not retrospective. Similarly, in the Transport and Infrastructure category it will be contracts that commence after 1 October. So yes, importantly, not retrospective. Demerits will be determined on a case-by-case basis. You will see on the screen there that we have a scale of points. Two for a minor breach. Five for a moderate breach. 10 for a major breach and when people reach 20 over a period of 12 months, similar to a driver's licence sort of scheme, there is the sanction. That sanction is being suspended for 12 months from supplying to the Queensland Government.
Demerits will expire a year from the date they are issued and sanctions will apply where businesses as I said are repeatedly behaving in an unethical manner. Partly of that suspension if a contract has an option to extend, and a sanction has been put in place, then that option to extend will not be actioned.
There are a number of points where there is procedural fairness in this. One of the pieces of feedback that we had when we were talking with suppliers and with government agencies when we went out to talk about this was it's really important to have procedural fairness. We will work you through that a little as the presentation goes. But effectively when an allegation is made there is an opportunity for someone to respond to that allegation. But before an allegation is made it will be up to an agency to determine what that behaviour actually constitutes an allegation. If it is an allegation that you would entertain, then there will be an opportunity to respond to that. Similarly, if there is a sanction, there are demerit points issued there is an opportunity to respond to that. If a sanction it's assumed there is an opportunity to respond there. And then there is an opportunity to appeal. A number of points where there is procedural fairness. The appeals process will be available to all suppliers. So, you may well have seen this already. These are the categories of compliance that are in the mandate. That's quite a detailed slide, that's part of the mandate and is available up on the web.
You will see that as you go through. But you will see that a variety of categories that fall under the mandate. None of these are particularly complex, I would say. Largely, the mandate is about people complying with the law, complying with their contractual obligations and complying with the policies in place across that. For example, the Indigenous Procurement Policy. If people as part of the negotiations have signed up to and have been assessed as meeting the Indigenous Procurement Policy it's important that they do it. So, a lot of the Ethical Supplier Mandate is really about abiding by the law. It's not a complex thing. That is part of contractual obligations anyhow. What we're really talking about now is just putting some I guess sanctions in place when we see that that's not happening.
So, the Ethical Supplier Threshold. People may not have had a lot to do with the Ethical Supplier Threshold. This arose out of the wages inquiry- the wage theft enquiry that parliament conducted last year and it's really about saying we want to do business with people who pay their people appropriately. Different to the Mandate, it is actually a condition of supply. As the name indicates it's a Threshold. It's a do not pass go. Do not collect $200. It's one of those mandatory conditions for entering into supply with the Queensland Government. We will have that contract clause as we go forward about people basically saying that they do this up front.
Again it applies to all suppliers to the Queensland Government. It's different from the Mandate in that it isn't a staged roll out. It applies from contracts that start from 1 August for all categories. It applies to all government bodies that are under the Queensland Procurement Policy. So that includes government-owned corporations, statutory bodies et cetera. A breach of the Ethical Supplier Threshold results in the application of 20 demerits. Again, it's that Threshold condition. It's an immediate sanction.
So, there is quite, as you can imagine with this sort of thing, there is quite a legalistic definition of what does paying people appropriately mean. You can work it through. Largely it's about what is covered in legislation. So largely it's about meeting your requirements under legislation, making sure you are meeting all of the entitlements. The one thing that is not covered in legislation and it's that last point which talks about paying people at a level that is close to the appropriate award. A level above or at the current applicable modern award. That is to capture, there are a number of agreements that were actioned between 2006 and 2009, colloquially they are referred to as zombie agreements. That if people can still have those agreements in place but it's appropriate that they are paying people at an applicable modern award, which would be above what is outlined in those agreements.
So there we go. Why is it needed? A whole range of things -- with regard to feedback we have been receiving from suppliers, often times about the application of local benefits. We got a lot of feedback saying there are a number of suppliers who say they will provide local benefits but aren't. But also out of the wage theft inquiry these sorts of statistics were coming up. As I said, what it indicates is that while the majority of suppliers are ethical and do the right thing and want to pay their people appropriately, not everyone is -- and there is a small percentage of suppliers who are engaging in behaviour which is of high risk to the Queensland Government.
And hence we don't want to do business with those people.
So where are we up to? As I mentioned before with the Ethical Supplier Threshold, it came in from 1 August and applies to all categories of spend and to all government agencies and bodies that are subject to the Queensland Procurement Policy. In regard to the Ethical Supplier Mandate, it commenced on contracts that commenced after 1 August for the Building Construction and Maintenance category (from 1 August). And it will apply to the Transport and Infrastructure Category spend from 1 October.
As we go, we're collecting information about the roll out and I guess learning as we go and making sure that we tweak the scheme appropriately so we're implementing it in an appropriate way. Certainly, we have done a lot of work with people in the Building Construction and Maintenance category to make sure we have good contract clauses in place and that we're understanding their business. We have set up a number of working groups with industry to clarify particular points because as you can appreciate, in the drafting of some of these words in the Mandate, they tend to get a little legalistic and sometimes then there can be some confusion about how it actually applies in real life. We have had a number of working groups to sit down with industry and work that through. And I think they have been robust discussions, I would say, very robust discussions, but ultimately incredibly constructive and that we have developed very good guidance as we go on this and will continue to do this. As I said, we will review as we're implementing for the Building Construction and Maintenance category and then again continue to review as we roll out with the Transport and Infrastructure category. All of that feedback will then go into a larger review early next year to make sure that we're able to meet our commitment to have the review considered by Cabinet by 30 June. That will then help us shape how implementation rolls out to other categories and what it will mean for government-owned corporations and statutory bodies. So quite a measured approach there. We know this is something new and we want to get it right.
So who will be responsible for determining compliance? With the Ethical Supplier Mandate and the Ethical Supplier Threshold it really is, it starts with the procuring agencies. That is where appropriately because you have the contracts. It is only appropriate that that begin there. In terms of who will make demerit and sanction decisions, that will be through a Procurement Penalty and Sanctions Committee. That committee comprises of Deputy Director-General, Deputies Director-General, Directors General. I have to get my plurals correct. From across the 7 highest spend agencies and it will also have someone from the Office of Industrial Relations and from the Department of Aboriginal and Torres Strait Islander Partnerships on that. The Chief Adviser Procurement, which is me at this current point in time, will chair that Committee. I think we are very aware this is a serious thing to issue demerit points and then of course to issue a sanction. It's a very serious thing. We need to have procedural fairness as I have outlined but we need to have this considered appropriately at the right level. We have had a lot of, as you can imagine, we have had representations from industry and from industrial advocates about being on that Committee.
Our advice is at this stage that it is better that it is internal to government as a Committee and certainly that is how it should be at this point in time. And I think moving forward. And we have in the development of all of this been keeping Crown Law very busy as you would imagine. I imagine as we begin to get the Committee up and rolling and it's starting to consider demerits and ultimately sanctions we will continue to seek strong and clear legal advice on all of this. So as to how it will be detected there will be a number of ways whether it's through a contract management process, whether it is third party complaint or findings through audits. The Queensland Procurement Policy Compliance Unit also audits in regard to best practice principles, the training policy and now food and beverage audits. We're off to do everything. So that that may be another source of complaint.
So this comes up for people a lot. Who will be notified? Under the Mandate and Threshold, government buyers as I said will be responsible for using an online checking tool. That's a screen shot of what that looks like. It is important to note that when you enter something into that tool what you will get is possibly three responses. One, because you will be entering the ABN, or ABN not known. Two, no issues. Or three, please contact the Queensland Procurement Compliance Unit. So, we're very mindful of the need to keep this sort of information confidential and to have it appropriately used. So demerits and sanctions won't be publicly advertised, they won’t be publicly published. The idea would be if there is a question that would you talk to the Compliance Unit and find out about that. And it may well be that there is a sanction in place or it may well be that there is just a consideration going through and we would need to let you know about that. But certainly we're very mindful of acting fairly and justly. And it may well be that in a number of categories of spend that what a sanction means is that people are removed from the pre-prequalification panel. So it will be something like that as opposed to names being published on a website. We didn't think that was appropriate but we have also sought legal advice that that would bring about a whole range of other problems.
What does it mean for government buyers? It's about using the online checking tool to ensure that suppliers have not been excluded or removed. Investigating non-compliance with mandate policy requirements. Investigating breaches of the Threshold. And referring substantial non-compliance issues to the Procurement Penalties and Sanctions Committee. It may mean as I said previously not exercising extension options if someone has been sanctioned under the mandate. Importantly, up front, it means we will be including clauses about compliance with the threshold and the mandate in contracts up front and in tender documents up front so all of that is clear at the beginning. That's the presentation. As I said, you have possibly heard that information before. The important thing - point of us being here today is to work through any questions that people have, coming in from the livestreaming or from the audience. I might now hand over and we have the lovely Kelli I think who has a microphone. So open to having questions. Anyone in the room with a question?
>>: So there are a number of people watching and we do have an online question, why does the register only have ACNs as opposed to ABNs?
>>: I think I said ABNs, sorry. My mistake.
>>: No worries. The register does ask you for an ACN. The reason for that is that it relates to privacy law. So privacy law applies to individuals, but not to companies. So in the case of individual suppliers, so sole traders or partnerships that are unincorporated you would need to rely on mechanisms other than the online register. Would you either need to ensure that those people are on one of those standing offer arrangements that we will be -- where we will be advising the arrangement owner to remove people who are sanctioned. So if you go into those arrangements you can do that with comfort. Alternatively, if you are otherwise dealing with a sole trader and you need to go through this checking process then you need to contact the compliance unit. Through in fact the email address on the screen at the moment. And we will provide you with a quick response to the sanction status.
>>: If there are no other questions in the room -- perfect.
>>: Thank you.
>>: What happens if you've got a supplier that has a sanction against them but you have a long running contract with them? How do you deal with that?
>>: So, in terms of the Mandate, the sanctions are all prospective. They are all in the future. So it doesn't have a bearing on contracts on foot. So that's the simplest part to your question. That is not to say, obviously, that that situation has arisen, because that supplier is in breach of that contract. So this is not meant to replace that contractual management process. So you would need to make an assessment of what that contract breach means for that contract.
>>: If it's a fundamental breach you might want to take action under the contract.
>>: So there could be suppliers that have incurred a sanction in relation to a contract with another department. So, that doesn't impact on you, the contract with you?
>>: No. No. In terms of the threshold, it's slightly different in the sense that a breach of a threshold will give rise to a fundamental breach of a contract. And I think it would be wrong for me to say anything but government's expectation is that we would take action to immediately stop doing business with that supplier.
>>: Are there any other questions in the room?
>>: Good morning. I work for the housing partnerships office, Department of Housing and Public Works. We're actually in the process of having multiple contracts signed with the EST requirements and supplier Mandate requirements. Once the EST form declaration is completed, how do we go about getting that information registered? Do we go in and register that ourselves? Or what is the process? And do we need to keep a register ourselves or keep referring back to that one?
>>: That's a good question. There is no -- short of a breach, there is no requirement in policy for you to let us know. Now, having said that, we probably would be grateful for that information, because that does assist us in terms of not this process but in terms of our business intelligence work to know what is out there. So I'm guessing if a supplier comes back and says, no, I don't meet ... I think that will be unlikely, but possible. The reason I think it's unlikely is they will essentially be writing back to say, "Yes, I'm breaking the law" and most people wouldn't do that. Most people would choose to not proceed with the process. But if you do -- if you are aware of that business intelligence, we welcome you letting us know. But there is no requirement for you to report back. Where there is a breach -- where you have a contract on foot and you become aware that the supplier is in breach of the threshold or a mandated provision, then, yes, you do need to let us know. And there is guidance online to talk to you about how to do that.
>>: A follow on question -- so the supplier list would only really capture those that are going through a process at the moment to investigate an allegation? Or those companies that potentially already have demerits and sanctions placed on them?
>>: The online look-up tool will only provide you with information about sanctioned providers. Quite specifically we're not publishing demerits and we're not keen to see demerits used as a proxy for contract assessment. Tender assessment.
>>: So we should be using it as a reference tool before we contract with any contractors?
>>: Unless they're in prequalification scheme or ...
>>: The prequalification scheme builders, if they are already registered through that process, there is no requirement to do the EFT or ESM
>>: There is no requirement to use the look-up tool to determine if they are sanctioned.
>>: But they are still required to fill out the EST form.
>>: And as a special condition of their contract. If we are contracting with one construction firm and there are 10 various contracts throughout the year they complete one form for every contract?
>>: Yes, that's correct.
>>: Okay. So not solely one for a group of five that go through at once?
>>: If you are contracting over the course of a year, obviously the situation could change through the year. So you will need --
>>: So it's not valid for a period of time as such?
>>: No, it's a declaration of current and past.
>>: So we would just be required to keep that in our system?
>>: Okay. And there is no need for us to keep a register in-house of ones that have been completed over the time or anything like that?
>>: There is no policy requirement. I think that's a valid question that you ask in terms of your own contract management systems, as to whether that's useful.
>>: Okay. Thank you.
>>: All right. If you don't mind me asking, can I just check, does the mandate and threshold apply to all Queensland businesses and companies? Or is it only for particular contracts or is it just across-the-board generically? Do these policy requirements apply to any business?
>>: The Threshold applies to businesses doing business with the Queensland Government. If you are not doing business with the Queensland Government, we hope you apply the law and abide by the law. But with the ethical supplier threshold and if you are doing business with the Queensland Government, you must meet that Threshold regardless of the category of spend you are doing business on or whether you are contracting with a budget agency or a government owned corporation or a statutory body. It applies across the board. With the supplier Mandate, it currently applies to businesses who are supplying for Building Construction and Maintenance, if they have a contract that commences after 1 August. From 1 October, it will apply to businesses who are contracting with the Queensland Government in the transport and infrastructure spend category and have contracts that commence after 1 October. So, yes. And then following the review next year, we will make a determination about how it's rolled out to other categories of spend, so general goods and services. medical, et cetera. And the application to the government-owned corporations and statutory bodies. Different from the threshold and mandate.
>>: Thank you for the clarification. Can I please also ask in terms of the investigation of an allegation of a breach, who will carry this out?
>>: So, as is the case already, because we're talking essentially about contractual breach, that's the responsibility of the contract manager for the particular contract and therefore for the procuring agency. I will make the comment in terms of investigation that our investigation guidelines talk about proportionality. So that's to say not every breach will require a very large, complex investigation. Some breaches will be extremely simple and boil down to some basic facts that will come through in the contract management process. So, I would ask you not to get distracted by the word "investigation". It may well be an investigation that's complex. It may well be a simple matter of resolving that in the normal process that you would to undertake to resolve a contractual breach. I say it's always a contractual breach because those aspects of the mandate which are -- relate to breaches of law, because they are breaches of law and because of the construct of our contracts, they are effectively breaches of contract as well. So they would be managed in the usual way. And obviously if there is an appropriate regulator managing those breaches of law, there may -- it may well be appropriate to refer the matter to the regulator for them to undertake an investigation.
>>: Again, always depending on the complexity and the proportionality I think is the key word there. Certainly when we have been out talking with industry often their first thing is, "So if I get a workplace health and safety notice, is that a breach?" Well, actually, everything is on a case-by-case basis but it does come down to that we're not here to play gotcha with people, it's about wilful and repeated behaviour. It’s not about oversights or mistakes or accidents. We want suppliers to succeed and we want people to do well. As all of you would know, we like to work with our suppliers to make sure they meet the conditions. And we want people to succeed. So I think that's been the approach on most things. And that's not going to change here. But there is a small proportion of businesses who are deliberately engaging in behaviour that we don't want to see. And that's really who this is aimed at.
>>: Just while the microphone moves, I will also say, if contract managers, procurement agencies have questions about a particular case, by all means contact us through the phone number you see on the screen or the email address, and we will provide some advice about how to manage that particular case.
>>: If companies who have a breach against them -- if they fix their issues, and obviously the Queensland Government has moved on, how is that put into a database to say, well, this company has now been -- the issue has been rectified, so you are not penalising companies for breaches from maybe a few years back?
>>: So, the first thing to say in terms of a few years back is that the sanctions will never be more than a 12 month sanction.
>>: They will be wiped.
>>: The slate will be wiped clean. In terms of - slate will be wiped clean. In terms of that rectification question, the expectation is we would aim for rectification as Sharon’s just said, very early. So before perhaps there is even a contractual breach. And certainly before the matter is referred. So, by the time we get to the Penalties and Sanctions Committee, we have obviously got some serious difference of opinion between the supplier and government. Or some serious wilful behaviour on the part of the supplier. Obviously a supplier might rectify after that point. and we encourage that, too. But I think by the time you have gotten to that point you probably have received a sanction that you deserve and so we work through that circumstance, I think.
>>: You are right. It's the notion of how do people, if they've had that -- if they've been sanctioned and they've been suspended for a year, -- sanctioned, how does it not be a continuing blot going forward. We know companies change management and change practices and things evolve. So the notion it's almost a do your time and then again that's wiped clean as well. So, while -- it's always difficult if you know someone has had a sanction in the past, that is there in your mind. But we would be clear that companies regenerate and move. And that possibly in the tendering or contracting process they may be keen to show you that they, yes, they have rectified previous issues.
>>: I have a couple of questions. Will agencies be required to report annually on the amount of checks they undertake or will there be audits on them to actually make sure they are complying?
>>: I'm looking at Peter to make sure he is not keen to build an empire here. But at this stage, no. Doing the sort of checks and investigating potential breaches of the mandate and/or the contract is kind of agencies' business. It's something people do on a regular basis I would imagine. I don't think we would be keen to capture that or to have you report annually on it. That seem as little bit of a burden. That said, I think sharing business intelligence with us is always really welcome and anything we can do to help each other in terms of business intelligence is great. That would be -- my first response is I don't think we want to do that, unless it would be helpful. And I'm not seeing how it would be helpful over time.
>>: I just add that certainly we're not planning audits of agencies. What I would say, though, is that the Queensland Audit Office has a long-running interest in agency contract management practice. And so, they may well include this in their assessments. We haven't asked them to do so. But it's a valid scope for that. I would imagine that internal audit functions would have an interest too in that contract management process. But, no, not centrally are we talking about that.
>>: Just with contracts, is it just formal contracts or there are lots out there that might go out to three suppliers or something. And an email might form a contract, an email back just accepting their quote?
>>: So, in both cases it's applicable to all contracting that's within the category. So for the Threshold all contracts, all categories, all buyers. So strictly speaking, yes, it does apply to those types of arrangements. Certainly in terms of getting the three quotes, we hope the online tool provides simple mechanism to clear somebody in terms of going through with that. Another question which has been asked of us and which we're currently working through with an interdepartmental working group is the question of Corporate Card transactions. So again, strictly, government does not want to be doing business with businesses engaged in wage theft and that includes through Corporate Card transactions. There are some logistical questions about how we work our way through that. And so we're working with agencies to come up with some guidance about how to manage the risk of that contract.
>>: A question?
>>: We do have a handful of questions coming through online as well.
>>: Sorry, just another question. With the construction contracts, our process we have adopted is we send out the Threshold form first, once it's received and obviously ticks all the boxes, we then progress the construction contract with that special condition. So is that the process there, so it’s like a two-fold process.
>>: Thank you.
>>: All right. Just a question that's come through online about the relationship with SOAs. If there is an issue with a supplier on a current SOA and therefore they are removed, is there a timeframe on the breach before they are reinstated. And you may have covered this off but just in terms of the SOA process.
>>: Generally it's a 12-month sort of suspension. It would be a 12-month suspension from the SOA. And then wiped clean. So with the opportunity to be able to be brought back.
>>: Perfect. Thank you for that clarification.
>>: Does this apply to commercial business units with agencies?
>>: As buyers.
>>: As buyers, yes, as buyers or are they thinking about the other way around as suppliers?
>>: Just it was a general question.
>>: As buyers, it absolutely applies, but also as --
>>: Not as a supplier?
>>: But it would depend on -- yes.
>>: So, to pick two very specific examples, building and asset services in HPW -- Housing and Public Works, and Roadtek in the Department of Transport and Main Roads -- they're not subject to demeriting or sanctions but they are subject to the requirement like all other government buyers that when they source they are using the mandate and applying the threshold. But they won't be subject to demerits themselves.
>>: Perfect, thank you. I might do one more from online. So, just a quick question in regards to contracts that were awarded prior to the commencement of the Mandate or Threshold but then a variation is required post the 1st of August. How are you requiring agencies to manage the EST and does it still apply?
>>: So, the short answer to that is, yes, if you are doing a variation there is an expectation that we would look to include the threshold in that variation process.
>>: In relation to sanctions and demerits, at what level do they apply -- do they apply to company level or perhaps a subsidiary service provider, head contractor, or subcontractor.
>>: So, there a few ways or few answers to your question. Certainly, a head contract or a managing contractor could be responsible for the breaches of its subcontractors. As is the case in contracts. So, as it is the case in contracts, so it is possible that they -- both parties in that relationship could have demerits imposed for the same breach.
>>: But not always.
>>: But not always.
>>: But the key question in terms of the head or managing contractor will be whether they took reasonable action to prevent the breach taking place. And as Sharon has indicated, if the breach has occurred and on the managing contractor's part there is no wilful behaviour, and wilful by the way includes grossly negligent, as you know, if that hasn't taken place then there is no liability there. The Penalties and Sanctions Committee also has a capacity to impose demerits and or sanctions on parents and subsidiary companies as well as some related entities, particularly phoenix entities where one company has shut down and another one has raised up to avoid this sort of thing. So that will be its own process. The Penalties and Sanctions Committee will need to be advised of that and make a decision and there will be natural justice around that as well. But that's how it's going to be managed.
>>: Does that cover it?
>>: Just a particular scenario. If a procuring agency was to receive a phone call from a subcontractor making an allegation against a principal contractor what would you expect the procuring agency to do in that situation?
>>: To treat that complaint with appropriate weight, I guess. Again, the question -- the answer is really the same as is the current case in terms of contractual breach. So, if the subcontractor were alleging contractual breach on the part of the managing contractor of course we have a legal and moral duty to work out what's going on. We have had the question asked about vexatious or unsubstantiated claims. Of course, that's part of that assessment process as per normal. But essentially if a subcontractor complains, then the information they provided needs to be considered and action taken.
>>: Whose responsibility is it to notify the supplier of the breach?
>>: The contract manager. As it is the case now in terms of any contractual breach.
>>: But are you talking about of actual demerit points -- if we move into that then effectively that will be considered by the Penalties and Sanctions Committee and they will issue breach, the demerit points.
>>: Thanks very much. The invitation documents require the supplier to tell procuring agencies if they have breached in the last five years. So why is it the case that -- why is that the particular case if it resets after 12 months.
>>: That's largely because we're looking prospectively. That clause will make more sense in five years’ time. So effectively you are looking at behaviour that's five years in the past, but because we're only looking at contracts that start from 1 August, that is really kind of redundant I guess at this point in time. But the idea is these provisions will be ongoing and it is to assess about behaviour from five years back. So it's really just we're at the beginning of the implementation, why that looks a little strange and it's not appropriate, I guess.
>>: Thank you for that. I note you spoke about the agency's responsibility to investigate allegations of breach. But just in responding to a said allegation why does the onus of proof lie and what is the applicable standard? Is it a balance of probabilities or beyond reasonable doubt situation?
>>: So, in terms of contractual breaches, it's very differently a balance of probabilities test. Sorry, what was the first part of the question? The onus of proof?
>>: That's an interesting question. The onus of proof would be on the supplier once the allegation has been made and put to them. But at the end of the day it's a balance of probabilities test. So it's whether the breach is more likely than not to have occurred. So in terms of a regulatory breach -- it was mentioned before that basically if there is a prime facie case there is a breach of regulation and it's referred to the regulator, there are many regulators with many different onus arrangements and standards of proof, but it's usually a stricter test in those circumstances. But the procuring agency need not worry about that so much. That's the regulator's responsibility.
>>: Fantastic. Thank you. We have some -- procuring agencies who currently have extensions to carry out the SOAs. So under that scenario do they need to address the EST prior to or during the extension process?
>>: Fantastic. Does anyone else in the room have questions?
>>: Department of Transport and Main Roads -- we have a system where if we have a case of applying points and suspension of a company within Queensland, how do we deal with it? Was there any discussion about it?
>>: Indeed, we've been having a lot of discussions with TMR about just this issue.
>>: And they continue I think is the fair thing to say. So prior to 1st of October objecting there will be guidance about how this scheme and the national prequalification scheme operate.
>>: So we will apply it only to Queensland.
>>: Only to Queensland, yes. It doesn't apply in other states. So it's really only for Queensland.
>>: Thank you for that. Just in relation to the information provided regarding Roadtek specifically previously - a question has come through that in terms of the engagement with Roadtek, do procuring agencies need to get Roadtek to respond to the ethical supplier mandate when they create contracts for them, for example responding to the EST on the invitation to tender documents or they exempt from this requirement.
>>: They are exempt from this requirement.
>>: In regard to the onus of proof, is placing the onus of proof on the supplier not a reversal of the presumption of innocence?
>>: You are talking contract law and contract management. So effectively there is usually a show cause process in place in regard to contracts. So, that becomes -- I'm not a lawyer. I will be very clear about that. But when there is an allegation of a breach of contract there is usually a show cause process and that requires a response. So, whether we are calling onus of proof a response, we ask people to respond when we have those complaints. And whether we are satisfied with the response or not, taking into account other circumstances, allows a decision.
>>: Fantastic. Thank you.
>>: Were there any other questions in the room at this point? Excellent. I believe we may have addressed all of the questions that have come through online. Thank you very much for tackling some of those discussion points and creating clarity around some of these questions.
>>: Thank you. Thanks, everyone. That's a really good discussion. It's terrific as we work through these sessions people raise really good points. That's just adding to our guidance material. It's been really valuable and we really appreciate you attending. But if other questions come to mind after the session, certainly for people online and people in the room, don't hesitate to contact us. Sometimes we have to give some thought and consideration to them and get back to you, but it's really valuable and it's helping as we go through. Thank you, everyone.
Good afternoon, everyone. Welcome to those in the room. And I understand there are likely several hundred people online. So welcome to all of you who are watching via webcast.
My name is Peter Lacy, I'm acting Executive Director of the Office of the Chief Advisor Procurement. With me today is the Chief Advisor Procurement, Sharon Bailey. Thank you for making time to attend this information session in relation to the Ethical Supplier Threshold. As I mentioned, today's - this briefing is being webcast. So, that means it's also being recorded. So following today you will be able to access this if you would like to go back and review some of the content. For those who are connected to us online, sorry, my apologies, I will come back to that.
Firstly, I acknowledge the Traditional Owners of the land on which we meet and pay my respects to Elders past, present and emerging. For those who are viewing the session via webcast, there are a few interactive features. You will see a speech bubble on your screens. That's the "ask" button and that's the mechanism for asking questions when we get to that point. We will mix up the questions online with those from people in the audience here. When we do come to that part of the session, if I can ask those in the room to wait till you have the microphone before you ask a question just so that we can capture that for the recording. And I might also ask, if I could, if you could give an indication of where you're from in terms of agency and interest. Just some housekeeping pieces -- you will find toilets out the door that you came in and to the left as you are facing out the door. In the event of an evacuation, you - we should exit via the doors out here and proceed to Queen's Park, under the direction of the team. Again, thank you for coming, welcome. We might begin the presentation. We have a brief presentation and, as I say, questions will follow. If you could keep your questions until the end that would be great.
>>: Thanks, everyone, for attending. It's terrific to have you here and terrific to have people online. We have most recently introduced the Ethical Supplier Mandate and the Ethical Supplier Threshold and today we will be focusing mainly on the Ethical Supplier Threshold but we will provide a little bit of information about the Mandate and give you some resources should you need to chase up information about that. The Buy Queensland approach to procurement kicked off in 2017, the new Queensland Procurement Policy. It had a range of things added since that time. Best practice principles and now the Ethical Supplier Mandate and Ethical Supplier Threshold. The latter two are really about signalling to industry and to our buyers that the government is interested in doing business with ethical suppliers. It's interested in doing business with people who pay their people appropriately, who have good workplace health and safety records and who have good industrial records and who comply with their contracts and who comply with the government policy under which those contracts are negotiated. Effectively a large part of the whole thing is saying we would like you to comply with the law and we would like you to comply with the contracts that you negotiated and where you said you are going to do something and comply with the policy we would like to make sure you do that. As I said, this is really then about what are the sanctions for not doing that. It doesn't replace contract management. But it is really about that signalling and allowing us to address some of that unethical behaviour that comes up with suppliers.
Within the Department of Housing and Public Works we have an area that looks after procurement, the office of Chief Advisor Procurement and within that sits the Queensland Procurement Policy Compliance Unit. Peter is currently the ED of OCAP and also looks after the Compliance Unit and the team is here today. That will be largely responsible for implementing and rolling out the Threshold and the Mandate and are a source of incredibly deep knowledge. Please take advantage of us today to ask questions. We will also give you an email address and some web resources should you have any other questions after you lever today. So, what is the Ethical Supplier Mandate? As I said, we really will focus on the Threshold here today but it's helpful to understand where all of this has come from. The Mandate is again about ensuring that only responsible suppliers do business with the government. And the intention is to remove unethical businesses from the supply chain. The Mandate applies to suppliers to the Queensland Government and their subcontractors. There is further information on the Mandate as it applies to your area. At the moment, the Mandate is being rolled out in a staged process. So, it has been first rolled out to contracts that commence after 1 August in the Building, Construction and Maintenance category. And then it will apply in the Transport and Infrastructure category from 1 October on. But that is to budget agencies. It will not apply to government owned corporations or statutory bodies until a further review has been conducted in 2020 and that will inform roll out of the Mandate to those other agencies. And those other categories. So, the Mandate I think it's important to emphasise, is really about targeting wilful and repeated behaviour. It's not about trying to catch people out on mistakes, oversights or accidents. It's really about targeting behaviour that is unethical but that is repeated and wilful. We will use those words a lot. It's not about where people have had an over sight or made a mistake. Where that happens we are keen to work with suppliers to bring them up to the standard.
So, you would be aware that there was a parliamentary wage inquiry -- a parliamentary inquiry into wage theft last year which came up with a whole range of representations. The Ethical Supplier Threshold is one of the things that has been done to respond to that. Again, that is to signal to industry that the Queensland Government is only interested in doing business with people who pay their workers appropriately. And the Ethical Supplier Threshold is just that, a there are hold, a precondition of us doing business with people. So do not pass go, kind of thing. If you don't meet the Threshold, if you don't pay your people appropriately, we will not do business with you. There is quite a detailed obviously definition of what the Ethical Supplier Threshold is. And that is available - it's in addition to the Queensland Procurement Policy. And it is also contained within the Ethical Supplier Mandate. Largely, if you read through that, you will see that the it's largely about complying with the law.
So we're not asking people to do anything more than what we currently had to do, because under contracts you do need to be law-abiding and comply with the law. This just lays it out very clearly. The one piece that is not about legislation is the last comment. And that is about paying employee wages above those provided for in applicable modern awards. This is really about targeting -- there are some sectors where there are old agreements in place and those were usually transacted between 2006 and 2009, that have stayed on the books. They are progressively being removed. We're not saying we won't contract with people who have those agreements in place. We are saying that what we would like is if they have those agreements in place that they are paying their staff and the applicable -- applicable modern award rate. That's probably the only nuance in the Threshold; otherwise it's all fairly clear. So why is it needed? The wage theft inquiry came out with these sorts of statistics. That there are instances where superannuation contributions are not being met. That people are not necessarily being paid at the appropriate rate. So a whole range of things came out there. Our sense is that largely we are dealing -- most of industry is ethical and wants to do the right thing. Sometimes people are not necessarily aware of what they should be paying people. And sometimes there are oversights and mistakes. However, there is a percentage where that is deliberate, where under paying people is deliberate. It's part of how they undercut and undercut other suppliers. We have received numerous complaints from suppliers about their competition, with people they feel are not paying people appropriately, which is why they are able to undercut the market. I guess this is signalling very clearly that we do not entertain that. That if we find that people are engaging in that behaviour they will attract a sanction, under the supplier Mandate that is a sanction of 20 points which effectively means you will be suspended for at least 12 months from supplying. So as I said, the supplier Mandate itself is having a staged roll out.
At the moment it's just come in. It is about contracts that have commenced since 1 August in the Building Construction and Maintenance area. And then with Transport and Infrastructure it will be about contracts that commence after 1 October. And again, for budget sector agencies, government owned corporations, statutory bodies and -- special purpose vehicles that will be determined in 2020 post the review. We're looking for Cabinet to consider a review of the Ethical Supplier Mandate and Threshold by June 2020, which means we are currently looking at the scope of the review and feeding into that.
The Ethical Supplier Threshold however applies to everybody. I guess that's the key message. It applies across category spend and it applies to budget sector agencies, government owned corporations and other statutory bodies, in fact if you -- if the Queensland Procurement Policy applies you to the Ethical Supplier Threshold applies to you as well. So how do I incorporate the Threshold? There is a range of ways that we're looking at how we do that. In particular we ask people up front when we are contracting with them to indicate that they do this, that they meet the Threshold, and then obviously there are a range of ways after, if we're finding out that that hasn't been the case, if there are complaints, there are a range of processes for complaints to come through. But effectively up front a simple declaration and incorporation into contracts of a specific clause about the Threshold. So, who will be responsible for determining compliance? As contract management sits with the procuring agency, so will compliance for this particular aspect. But in terms of making sanctions decisions or demerit decisions, that will sit with Procurement, Penalties and Sanctions Committee. That Committee is being established. It will sit at the level of Deputy Director-General. It will be at this stage at the top seven spend agencies along with the Office of Industrial Relations and the Department of Aboriginal and Torres Strait Islander Partnerships. I have the privilege of chairing that Committee. So, the decision about a sanction will be made by the Committee. But in the first instance, determining whether people are compliant rests with the procuring agency. If there is complaints et cetera raised, the first allegation I guess would go to the procuring agency and the agency would determine whether -- agency would determine whether that was a reasonable allegation or not and needed to be referred. So as you see in terms of -- there is a number of ways -- normal contract management would bring that up. A third party complaint or findings from audits that are occurring throughout the Queensland - QPP compliance unit.
Who will be notified of sanctions on suppliers? I think we're very mindful of not publishing this information widely. So the idea is that it will be closely held information of where there is a standing offer arrangement or where there is a prequalification system, that supplier would be removed. But if you wanted to know, is someone that I'm considering for a contract, have they taken on a sanction? Then we have a very simple online tool to look at that. Effectively, it's a register. What you would need to do would just be enter the company's ACN and you will get one of three responses. That ACN is not recognised. There is no issue here. Go forth. Or please call the Queensland Procurement Policy Compliance Unit for further information.
So, again, we're mindful of keeping that information tightly held, because of course organisations change over time and it may well be that having had one sanction -- a sanction lasts for 12 months -- the organisation changes and then is completely compliant, we don't want to prejudice that. So as I said before, government buyers would be responsible for using the online checking tool to check that people you are contracting with don't have a sanction against them and are compliant with the Thresholds. Obviously having those declarations up front and incorporating the clauses into contracts. If a breach comes up, investigating and I think as we have talked about in previous sessions, don't be scared by the word "investigating". We're talking about what you would normally do under normal contract management processes. If a complaint or something comes to you, to your attention, you need to look into it. If you feel that that breach is substantiated it is then referring it to the Penalties and Sanctions Committee for them to consider. There may well be opportunities to refer some behaviour it may need to be referred to regulators because there will be other things involved. But that kind of largely covers with the Threshold. There are points of natural justice, of course, in this process whereby we would let people know this issue has been raised against them and they have the right to respond. If a sanction is imposed, they also have the right to respond and there is a final right of appeal to that Committee and to the Director General of HPW. So that's the formal part of the presentation. Obviously with these sorts of things it's always about the detail. So it's much more helpful I think to have a discussion. We're very keen to hear any questions that people have. That presentation really sets the parameters for that. And we're going to have some questions from online as well. The lovely Kelli is taking those on as they come. But do we have any questions in the room?
>>: Hi, for agencies using SOAs, that are on the online contract directory, from a screening perspective, can we rely on the agencies that established the SOAs, the published SOAs have done that screening already? Or do we as we look to buy off SOA. do we still need to do our own screening of those clients?
>>: So, no, you can't assume that that screening has been done. As SOAs are established going forward or renewed, that testing will take place. But in terms of pre-existing arrangements, once you -- if you can find a supplier there I think you can reasonably assume they've not been sanctioned but in terms of testing their current compliance with the Threshold you would need to take the steps that have been suggested when you get to the contracting point.
>>: Hopefully as we get further along the line it will be a little bit cleaner but at this interim implementation stage it's better to be safe than sorry.
>>: I'm from the Queensland Audit Office. My question is, what about spend procurement that are not contract based, low value, one-off situations where the system is not necessarily as practical as it could be?
>>: So, at the risk of giving a non-answer -- that is an issue which we have identified and we have established a whole-of-government working group to look at that particular question. Low value spending. I think the likely approach that we will recommend will be a risk management approach. Certainly, you could have some relatively large or sensitive purchases through some of those mechanisms and the online tool is available to check in with that.
>>: Thank you. While we find our next audience question, just a follow on with that, may I ask why the search parameters on the online checking tool are limited to ACNs?
>>: The reason the online look-up tool asks for an ACN rather than an ABN is because there are privacy constraints around the publication of information for individuals who are not companies. And -- if you are a sole trader for example, you will mostly have an ABN but not an ACN. It's a mechanism to ensure we don't breach our privacy requirements and in that situation we welcome you to contact the ethical supplier email address and we will get a quick response to you.
Hi, I'm from the Department of State Development. My question is about the building and construction category. And whether the Threshold would apply to development agreements in the sense that engaging a builder to construct a building that will be owned by government and which may form part of a wider arrangement for the sale and purchase of land.
>>: So, the answer is, yes, the Threshold applies to all procurement of all sorts. So governments making it very clear that it simply doesn't want to do business with suppliers who have illegal industrial relations in place. So it does apply.
>>: Nigel from Queensland Treasury. So suppliers offshore - we engage an Australian provider but then subcontract to offshore suppliers ..
>>: The answer basically is, yes. As the Threshold is defined, it relates to breaches of Australian law. But certainly there would be an expectation that a foreign supplier, I guess, would remain compliant in what they did. If they for example set up shop here and employed people here there would be an expectation that they would. In terms of the Mandates relates to their commitments in contract to us or to our contractors. And so slightly different to the answer to the previous question in the sense that, yes, they are quite simply could be subject to penalties under the Mandate, if they breach. But is your question about supply chain, about how far down the supply chain?
>>: Yes. And simply with I guess they may offshore some of the supply. As I -- as a service-type arrangement.
>>: I think it does get into industrial law in other countries which does get a bit complex. But I think the expectation is we are meeting the appropriate standard and so while - I guess the level of principal we are expecting an offshore suppliers to apply that is appropriate in those circumstances. But I think there is an expectation that you know your supply chain.
>>: Thank you for that. Just as a follow-on why would you mind if I just ask in that same scenario what would a procuring agency practically have to do if their supplier does not have an ACN?
>>: So, if they are for example a partnership or a sole trader, then they need to contact us to get clarification. That's the simple answer to any situation. If the online check-up tool -- if they don't have an ACN --
>>: Come to us.
>>: Come to us.
>>: You touched on this with the previous question as well. Do you mind if I just ask for clarity as well, how far down the supplier chain are procuring agencies required to look in terms of primary contractors.
>>: Do you want to talk to these arrangements, contractor, subcontract.
>>: The Threshold and Mandate do relate to the entirety of the supply chain. That's to say supplier is defined as either a direct supplier to government or a subcontractor to a supplier and therefore by iteration it goes all the way down the supply chain. There are some practical considerations in that space. But again, government doesn't -- is definitely wanting to seek to exclude unethical practice from its entire supply chain. In terms of managing contractor or head contractor's responsibilities, it is possible under the Mandate or the Threshold that we might wish to hold both a contractor and subcontractor to account. And in terms of the contractor's responsibility, that hinges on whether they have taken reasonable action to ensure that their supplier, that their subcontractor, has conducted themselves ethically.
>>: Hi. I'm from the homelessness program in public works and housing. Given that the implementation for like social services isn't happening until 2020 next year, if that's right?
>>: The Mandate from 2020 but the Threshold applies now.
>>: Oh, now, okay.
>>: So do we have to do anything with existing contractors, agencies? Do we need to send a variation out that blanket covers like everybody?
>>: It's really from contracts that start after 1 August.
>>: Okay. So if a new contract is coming out we will have to include the provisions you have talked about today?
>>: Okay, great. But nothing --
>>: It's not retrospective.
>>: Can I add, though, in relation to the Threshold that most of the contracts impliedly and most of them expressly exclude illegal behaviour. So a supplier can't conduct themselves illegally. Most of what is in the Threshold involves illegal conduct. Even if you didn't have a Threshold provision in the contract if you became aware of wage theft in a supplier, I would definitely say you need to consider contractual remedies.
>>: So progressing that any way.
>>: That's good contract management.
>>: Thank you.
>>: Just to follow on from that if you don’t mind me asking, for the Threshold are the relevant contract clauses embedded in a later version of the standard general conditions QITC contracts?
>>: So, I'm not sure of the current state. The intention is, yes. So the intention is for all standard suites of contract across government we will be incorporating Threshold provisions.
>>: Thank you. Thank you for that. Would you mind if I also ask if principal contractors will be potentially be penalised for the actions of their subcontractors.
>>: As Peter mentioned, partly it will be in regard to the conditions of the contract and subcontract. So that will be a consideration. But also if the head contractor has taken reasonable action and exercised due diligence, then potentially, no. But if they have not -- so there is a range of conditions that would need to be considered.
>>: Thank you for that.
>>: My name is Kevin, I'm from Queensland Rail. So the Mandate will be determined for statutory bodies in 2020, I presume and Queensland Rail will be part of that.
>>: My question is sometimes in the past we have purchased rolling stock from suppliers -- and in that case. If that goes wrong and we cant use them for 12 months, so what option do we have ...
>>: So, I guess there are a couple of things coming into play. In terms of - there is a natural justice process for where people can show cause and appeal. But if they ultimate have a sanction, we have talked in the past about that example, not so much that example but for example if there was a disaster and we knew there was only one supplier and that was the supplier -- I think there is a potential kind of get out of jail card but we would be very loath to use it. So if they are a key dependency we would need to plan for that. And pray that they do the right thing.
>>: Are there any other questions?
>>: That's something to work in to the guidance. Because those sorts of things where you have a sole supplier and you have a key dependency on, we would need to look at that.
>>: I have a question around EBAs. It was mentioned before that for older EBAs, 2006 to 2010 were currently being reviewed to align with the modern award. Have we been given a time line for when that might be completed?
>>: There are two parts to the review. This is not my area of expertise. My understanding is that a trigger for a review of those arrangements has to come from someone who is subject to those arrangements and they are triggered in court. I have tried to get information on how many are out there and it's really difficult. We have not had a lot of information about that. Our understanding is that in most of the sectors we're dealing with they almost don't exist. But there are a couple of sectors where there is a risk.
>>: As second part to the question. Acknowledging that for now that those the old EBA are still recognised.
>>: And they are absolutely legal. So they are legal. But the Queensland Government is signaling and has the legal right to say that its policy is that it will do business with people who have those arrangements only if they are paying people at a modern applicable award. So that is saying that, yes, we recognise those agreements are legal. We also recognise that employers who have those agreements in place do have the option -- and a number of them do -- pay their people at the modern applicable award and they're the people we want to do business with.
>>: It's probably worth mentioning that it's not appropriate and in fact not legal for us to require people, suppliers, to have specific industrial arrangements. They are free to choose their industrial arrangements.
>>: What the last point on the Threshold is doing is saying you can have which ever legal basis you wish for the arrangements but here is the rate and the entitlement we expect to see. So, you can put which ever legal arrangements you want in place underneath that. But if you are paying below the award rate, then you shouldn't be in our supply chain.
>>: We have spent a lot of time with lawyers over the last little while and I imagine we continue to do that for a while as we roll this out. So we're testing these things appropriately. Part of the great thing about these questions is you are asking terrific questions which is helping inform our guidance material. We always come away with one or two things that helps us add to that guidance material. That's the purpose of having a review process. Next year as well. Is that doing this, we are having an iterative approach. I know a number of our suppliers have said, "Why couldn't you come out with it being perfect and implement it that way?" I'm not sure we ever get anything perfect. We are recognising that up front and saying we just need to do it. We have put a lot of thought and had a lot of advice into getting it to this point but we need now to implement it and keep account of what issues are coming up and make sure they are included as we are -- and we are able to tweak and review.
>>: Hi. I'm from Corporate Administration Agency. We deal with a lot of customers in various stat bodies. And cultural centre. Is there any timeframe in relation to the goods and services templates being made available? I know the DCM is fully available in capturing the conditions around that. What is the timeframe around the goods and services?
>>: I'm a Director in Goods and Services. My name is Frank. We're working diligently on getting them out. We want to make sure they are right. It's not just the terms and conditions. We have to make sure all of the changes that occur in the terms and conditions -- we're not just doing the Thresholds, we’re doing a whole refresh because they are pretty old now. We have it make sure all of the changes including all of the clause numbers down the side flow through to all of the templates and guidance. We're a long way down that track. I'm loath to put a date on it but I'm hoping we're not talking months, we're talking sooner than that; we're pretty close.
>>: I have another question. Just a lead onto the variations for the contracts that have been implemented since 1 August, where we may have period contracts or standing offer agreements that we’re managing on behalf of customers if they are up for renewal post 1 August there is then -- my understanding is we have an expectation that as part of the variation and the extensions that we would incorporate the new changes; is that correct?
>>: Yes, that's correct.
>>: We would ask people to do that declaration up front. And we would include the clauses going forward on that.
>>: I'm from Health. With regard to the declarations for the Threshold that have come in since 1 August, do we send them to those vendors now?
>>: Sorry, if they have signed since 1 August -- I think it would be -- if that hasn't taken place it would be prudent to have a conversation with those suppliers to ensure that they do meet the Threshold. So are you saying that the contracts include the Threshold?
>>: Well, not as they stand at the moment.
>>: We have a due diligence chapter but this is quite specific.
>>: It is specific.
>>: And they were signed three weeks ago. Done and dusted.
>>: So also bearing in mind what I was saying before, that usually a breach of the Threshold will be a breach of the existing contract provisions any way.
>>: It just brings -- highlights.
>>: It making it fair.
>>: It calls it out. For some of the less mature suppliers, it's, "I really do need to check on that" but for the more mature suppliers it's, "I get that. That's standard". But that's a really good point.
>>: I should say too, we have done some communication broadly to the supplier base and we're continuing to, both directly and through peak bodies. But if agencies like yourself or others have suggestions as to how we can further communicate with suppliers, very happy to do that, too.
>>: Thank you for that. Can I just ask, for agencies who do a significant amount of procurement and a large portion of those suppliers may not have ACNs, in that scenario, are procuring agencies always expected to contact the compliance unit and, if so, are there measures or plans in place to make that process a little bit more efficient?
>>: So, again, if you feel that that's your circumstance, actually, I encourage you to come and talk to us because I'm not sure that that might be this case. So let's work through the problem. In the situation where it is the case, yes, please come back and talk to us.
>>: Yes, come and talk to us and we will look at what we can do to streamline that process.
>>: The online look-up tool is not meant to be -- as Sharon said -- this -- what we have put together is a practical response to the timeframes. We certainly do intend to develop that further and to make that tool and other aspects more user friendly as we go forward.
>>: Hi, I'm from DAF. The online portal that is open to the public -- what sort of information is stored in there?
>>: So, you are talking about the supplier portal?
>>: The one we have shown you previously is not open to the public. It's just government buyers. So, no public. And in terms of any online supplier portals, we wouldn't record any of this information there. That applies for people who have an interest in the Mandate. So with the Mandate and demerit points, we don't publish those publicly. That's purely internal.
>>: I might add that if anyone in the room or anyone online has experienced difficulties getting through to the portal, to the look-up tool, it could be about governments' firewall arrangements. So when you try to tie down stuff you end up with a few perverse outcomes. We have resolved technical issues as we have found them. If you are experiencing those, please let us know. And we will work with your agency to make sure that that access is there.
>>: My name is Katie Martin from Education. I wanted to ask, with ABN look-up is that intended to register for the Mandate and just the Threshold or just the Mandate.
>>: Both. It will effectively allow you to know when you need to contact us, where an organisation might have a sanction in place, whether it be through the Mandate or through the Threshold.
>>: One more. In relation to investigating breaches of the Threshold, I wanted to clarify it's not your expectation that agencies will be investigating breaches of the legislation they will be required to refer those to the appropriate regulatory bodies.
>>: Absolutely. Where there is an appropriate regulator, absolutely refer to the regulator and that's the same with the Mandate as well.
>>: That's something you will provide guidance on?
>>: Absolutely. Who to go to.
>>: Yes. Thanks.
>>: I should say the regulators -- this is not just Fair Work -- none of them will be grateful to you for just flicking everything that comes in the door without having looked at it. I guess a basic level of testing whether it's the case to answer is probably reasonable. And the regulators will be grateful if you can put together whatever information you can to support what they do as well.
>>: Thank you. I have a question from online. What are the implications for in flight contracts if the suppliers are sanctioned?
>>: Okay. For the Mandate and the Threshold, the answer is slightly different. In terms of Mandate sanction -- it's purely prospective. So it's about future contracts, including extensions to existing contracts.
>>: It won't impact the contract that's in place.
>>: Absolutely not, no.
>>: That's not to say -- what gave rise to the sanction might itself be a contract breach. So there may be the reason to look at that out of the sphere of the Mandate. But not directly. In terms of the Threshold, it's different because if Threshold clauses are in place in the contract, then perhaps even if the pre-existing clauses are in place, there is every chance that that is a fundamental breach of that contract and therefore the agency will have a right to terminate those contracts. In that case there would be a direct impact ...
>>: Again, these things don't take away contract management. Contract management still needs to occur and this kind of works alongside.
>>: I note that this all came from the investigation into wage theft. Is there a sense of how big the problem is? Is there a sense of how many of our suppliers might fall foul of this and how often buyers are likely to face the prospect of market failure for example?
>>: I will take the general. And Peter, then you have done a bit of modelling ...
>>: Our sense is that largely our suppliers pay people appropriately. But there is a disproportionate number in particular sectors that don't. There are particular sectors of spend where we think there's a higher risk than in others. Peter?
>>: For example, in cleaning, catering and security sectors -- I think it's widely published -- they are areas where there might be a higher risk than others. But not to say there are not very reputable suppliers in those categories as well. But they are sectors where you might see a bit more risk.
>>: Overall we think it's small but it is concentrated in particular areas.
>>: I think I know the answer to this. But for buyers in regional areas where they have only one cleaner or two cleaners, they have only one security agency to depend on are they ringing you when they discover they have a problem.
>>: I'm very happy for them to ring us, for us to assist them through.
>>: So that's when they need to come up with compelling reasons as to why they should continue?
>>: We're not interested in catching people if it's a mistake or an oversight or accident that. It's about willful and repeated behaviour. We're keen to work with suppliers to help them meet the standard. But I also think it is a signal to agencies about the true cost of a particular service, and we need to be signaling that we are interested in the true cost of the service, not necessarily in the lowest price when it means undercutting and not paying people appropriately. That's largely where this has come from, it's the Queensland Government saying we actually want to do business with people that pay people appropriately and we're willing to pay to have people paid appropriately. A lot of this has come from those complaints that we know suppliers are undercutting other people in the market who do pay people appropriately by not paying people appropriately.
>>: I probably also would comment that for large agencies and portfolios that have mature central procurement functions, absolutely suggesting that people operating in those portfolios make use of the skills amongst their colleagues in those functions as well. As well as having access to us.
>>: For less sophisticated agencies?
>>: Well, then we can certainly assist.
>>: Absolutely. Absolutely. I mean, that's the whole point of having this. It's to really be able to assist. And field those questions. We may not have the answers but I think we're keen to with people to try to find the answer. There's a huge risk in contracting with people who don't pay people appropriately. There is a huge risk to government in doing that. That's just where we are. And this recognises that.
>>: Thank you for that. May I please ask how does this interlink to the QBCC sanctions list ...
>>: So if there is no direct formal --. But having said that, we're in the process of establishing information sharing arrangements with the QBCC and a number of other regulators. So there will be some appropriate flow of information between those two things. And it's also possible that a breach -- a contract breach that affects the Mandate and the Threshold might also be a breach of the QBCC's legislation. But we will work with the QBCC. They are the regulator in their own right and, yes, operate under their own legislation.
>>: Hi. What is the mechanism if a supplier is found to be in breach either by itself or by a government entity and they have multiple contracts in place across the government? Is there a mechanism to advise other parties who contracted that supplier that the supplier is in breach? Because they are probably not checking on the database if they are already working with the supplier.
>>: Yes. We're aware of those mechanisms. Through the Office of the Chief Adviser Procurement we have some visibility of other contracts. Pretty good visibility. So we will use every best endeavour to inform other buyers who are engaged with those contractors of that situation. Does that answer your question?
>>: To a certain extent. How do you identify the contracts that are in place?
>>: We routinely consolidate information out of government's finance systems to understand who is in the supplier ...
>>: Statutory authorities are not?
>>: That's correct. Statutory authorities are not part of that world. So we will need to think that through.
>>: Thank you.
>>: We would dearly love to have some involvement in the space but that's another ...
>>: Thank you for that. Would you mind if I asked, in terms of your declaratory approach to suppliers meeting the Threshold, what level of evidence are you requiring procuring agencies to take when receiving that declaration from the supplier?
>>: So the purpose of the declaration is not really to collect evidence. The purpose of the declaration is that it forms part of the contracting process. It's also a signal to potential suppliers who don't comply that they should probably not proceed or rectify their arrangements. Or if they do proceed on -- fraudulently, because that would be the net result. If you make that declaration and it's not true and you are awarded a government contract, it would come pretty close to the definition of fraud. It raises the bar, but it's not of itself intended as an evidence gathering exercise.
>>: Thank you for that, Peter. Any more questions in the room?
>>: Okay, I'm conscious that there may be some further questions coming through online but we have reached the limit of our time. If you are online and your question hasn't been answered, please submit it and we will make sure that we get back to you. Thanks again to everyone for all of the fantastic questions and the interaction. And we will be in communication. So thanks for today.
- Last updated:
- 29 November 2019