Funding entities

The Code for the Tendering and Performance of Building Work 2016 (the Code) is established under the Building and Construction (Improving Productivity) Act 2016 (the BCIIP Act).The Code sets out the Australian Government’s expected standards for all building industry participants involved in Commonwealth-funded construction projects, and seeks to leverage Commonwealth funding to ensure building work is carried out fairly, efficiently and productively, for the benefit of all building industry participants and for the benefit of the Australian economy as a whole.

Responsibilities of funding entities

The Code places obligations on funding entities both during the procurement of Commonwealth funded building work and during the conduct of that work. Key obligations include:

  • Ensuring EOIs/tenders are conducted consistent with the Code;
  • Ensuring contractor eligibility requirements are met;
  • Requiring EOI/tender respondents to provide certain information;
  • Ensuring a Workplace Relations Management Plan (WRMP) is provided by contractors and approved by ABCC during the tender process for certain projects; and
  • Notifying the ABCC about issues such as tenders, contract awards and Code breaches.

Part 1, section 4 of the Code defines what a funding entity is for the purpose of the Code. This includes all non-corporate Commonwealth entities, and corporate Commonwealth entities where directed by the Minister for Finance to comply. Currently, no such directions have been made.

When indirectly funding building work, funding entities contractually require funding recipients to ensure a number of key aspects of the Code are applied when procuring building work that meets the required financial thresholds.

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How to ensure responsibilities are met

Model clauses

To ensure obligations under the Code are effectively met, the ABCC has developed Model Clauses for use by funding entities in advertising, EOI/tender and contract documentation for Commonwealth funded building work:

The Model Clauses are not mandatory, but have been designed to request all information a funding entity must require from a contractor during procurement of Commonwealth funded building work. By using the Model Clauses, funding entities ensure contractors declare compliance to contractual requirements imposed on a funding entity, enabling the funding entity to set up the appropriate framework for meeting their obligations under the Code.

The ABCC has also developed an EOI/Tender Process Checklist for use by funding entities as a practical tool to ensure all procurement processes are conducted in a manner consistent with the Code.

Eligibility requirements

Funding entities are precluded from entering into contracts with building contractors or building industry participants if the eligibility criteria have not been met.

For funding entities, the Code sets out two eligibility requirements for contractors seeking to express interest in or tender for Commonwealth funded building work. These criteria relate to compliance with section 11 of the Code, and exclusion sanctions.

Compliance with Section 11

Contractors* become code covered entities from the first time they submit an expression of interest or tender (howsoever described) for Commonwealth funded building work on or after 2 December 2016. Section 11 of the Code provides that a code covered entity must not be covered by an enterprise agreement in respect of building work which includes certain types of clauses.

To demonstrate compliance with section 11 of the Code, contractors require either a Letter of Compliance, or an appropriate Self-Declaration.

The evidence required of each contractor is different depending on:

  • the type of industrial arrangement(s) the contractor operates under, for example a modern award or enterprise agreement;
  • when the arrangement was made; and
  • when the contractor has/is tendering for Commonwealth funded building work.

A proof of eligibility table has been developed which explains the necessary evidence for a contractor to demonstrate compliance with section 11 of the Code.

If a contractor is covered by an enterprise agreement that is not compliant with the Code, that contractor will be ineligible to express interest in or tender for directly Commonwealth funded building work and will be in breach of the Code if awarded a contract on indirectly Commonwealth funded building work.

*The Building Code 2016 only applies to contractors that are constitutional corporations or where the work is being carried in a Territory or Commonwealth place.
 

Letters of Compliance, Self-Declarations and Exemptions

Letters of Compliance

Contractors requiring an ABCC Letter of Compliance must apply to the ABCC to have their enterprise agreement assessed, and to subsequently be issued with an ABCC Letter of Compliance. Funding entities are entitled to rely on an ABCC Letter of Compliance as advice from the ABCC that the instrument or arrangement meets the requirements of the Code. The ABCC issues Letters of Compliance for enterprise agreements made on or after 25 April 2014 that meet Code requirements (an ABCC Determination).

Self-Declarations

Some contractors do not need a Letter of Compliance and instead rely on a Self-Declaration if they operate under one of the following industrial arrangements:

  • a modern award or other lawful workplace arrangement; or
  • an enterprise agreement that was made before 25 April 2014 and has not since been varied in accordance with section 207 of the Fair Work Act 2009.

Please note: During the transitional period (17 February 2017 to 31 August 2017) some contractors were able to use Self-Declaration B, D or E to express interest in or tender for Commonwealth funded building work. These have been rescinded and are no longer valid. Contractors who previously relied on these Self-Declarations require a Letter of Compliance from 1 September 2017.

A proof of eligibility table has been developed which explains the necessary evidence for a contractor to demonstrate compliance with section 11 of the Code.

Exemptions

Exemptions also apply in the following circumstances:

  • to the awarding, before 29 November 2018, of building work relating to an expression of interest or tender lodged by the contractor in the period beginning on 2 December 2016 and ending on 16 February 2017.
  • to an enterprise agreement made before 2 December 2016, that applies to the contractor or related entity in respect only of building work relating to an expression of interest or tender lodged by the contractor before 2 December 2016.

A proof of eligibility table has been developed which explains the necessary evidence for a contractor to demonstrate compliance with section 11 of the Code.

Declaration of Compliance

The Declaration of Compliance contained within the Model Clauses for Directly Commonwealth Funded Building Work, prompts contractors to attach their Letter of Compliance and/or Self Declaration. The Declaration of Compliance requires contractors to set out in detail all enterprise agreements made or varied on or after 25 April 2014 that cover them or their related entities and confirm those enterprise agreements are also compliant.

Exclusion Sanctions

For Commonwealth funded building work, the Code also requires that contractors are not subject to an exclusion sanction in order to partake in the EOI/tender process, and for contracts to be awarded. The ABCC is responsible for monitoring compliance with the Code, and publishes exclusion sanctions on the Notification of sanction page, where funding entities can confirm the status of relevant respondents in relation to sanctions.

Workplace relations management plans (WRMPs)

When issuing expression of interest or tender documents, funding entities must ensure the requirement to have a WRMP approved by the ABCC is included in all expression of interest or tender documents:

  • where the Commonwealth’s contribution to the project that contains building work is $5 million or more and this represents at least 50% of the total construction project value, or
  • where the Commonwealth contributes $10 million or more, irrespective of what percentage of the total construction project value that represents.

Where a WRMP is required for a project, funding entities must do the following:

  • ensure the requirement to have a WRMP approved by the ABCC is included in all EOIs and tender documents;
  • within tender processes, provide to the ABCC the WRMP of each of the respondents the funding entity shortlists, as part of the tender evaluation process; and
  • not award the tender to a respondent unless that respondent’s WRMP has been approved by the ABCC.

The Model Clauses provide for seeking a WRMP during tender processes from contractors, and also indicate the requirement for the WRMP to be approved by the ABCC. Funding entities have no role in assessing WRMPs, but are required to provide the WRMP(s) of only the shortlisted tenderer(s) to the ABCC for approval. Approval of the WRMP(s) must be sought from the ABCC and granted prior to any contract being executed. WRMPs should be submitted to WRMPAssessments [at] abcc.gov.au in a single email that indicates the tender to which the WRMP(s) relate (see notification requirements below), and an automated confirmation of receipt will be provided.

It is anticipated that assessments will initially require a one - two week timeframe for review, and the funding entity will be contacted if further information is required. Once assessment is complete, a WRMP assessment record will be sent to the funding entity for each WRMP submitted, indicating the approval or non-approval of the WRMP(s) and the reasons why. Where a WRMP is not approved, funding entities can submit a contractor’s amended WRMP for approval.

Further information on WRMPs, including the ABCC model WRMP and guide can be found on the Workplace relations management plans page.

If you have not had an assessment outcome within two weeks, please contact the ABCC’s Manager of Government Code Compliance on (02) 6121 5528 for assistance.

Notification requirements

There are a number of funding entity notification requirements set out under the Code, where information is to be notified to the ABCC. The requirements include:

  • must notify the ABCC when an EOI/tender is released for projects requiring a WRMP. As a matter of best practice, funding entities are encouraged to notify the ABCC of all EOIs/tenders subject to the Code to enable the ABCC to work with agencies and contractors to ensure compliance. Use the ABCC EOI/Tender Notification form; (Word - 75K | PDF - 138K).
  • must notify the ABCC when a tender process is completed and a building contractor or building industry participant has been awarded a contract to undertake Commonwealth-funded building work. Use the ABCC Contract Notification form;  (Word - 73K) | (PDF - 138K). 
  • must notify the ABCC of all allegations of breaches of the Code as soon as practicable but no later than 7 days after the funding entity became aware of the alleged breach. Notifications of this nature can be made by contacting the ABCC’s Manager of Government Code Compliance on (02) 6121 5528 for assistance.
  • funding entities are encouraged to notify the ABCC of any funding agreements with funding recipients. This is because funding entities are ultimately responsible for ensuring relevant Code obligations are appropriately applied. By notifying the ABCC of any funding agreements with funding recipients, the ABCC can assist in working with the funding recipient to ensure all relevant Code obligations are appropriately applied. Use the ABCC Funding Agreement Notification form; (Word - 74K | PDF - 132K)

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Transition information – 2013 and 2016 Building Codes

The Building Code 2016 took immediate effect from 2 December 2016, meaning any building contractor or building industry participant who submits an EOI or tender for Commonwealth funded building work from this time becomes subject to the Code. For funding entities, there are a range of possible scenarios that apply based on the timing of procurement processes, and the timing of respondents’ submissions to procurement processes.

For procurements commenced and completed with contracts entered into prior to 2 December 2016, the Building Code 2013 applies to the head contractor for the project.

For procurements commenced from 2 December 2016 onwards, the 2016 Building Code applies to the head contractor for the project.

For procurements commenced prior to 2 December 2016, but completed or due for completion from 2 December onwards, funding entities should contact the ABCC’s Manager of Government Code Compliance on (02) 6121 5528 for advice around the Building Code requirements applicable to the specific procurement.

Funding entities should note that for some projects commenced prior to transition, the head contractor and some or all subcontractors may be subject to different Building Code requirements depending on the date that each submitted a tender for the work (ie the head contractor may be covered by 2013 Building Code on the project, and subcontractors covered by the 2016 Building Code on the same project). This will not impact the funding entity requirements in relation to the procurement of the head contract for building work, however there will be some existing contractual provisions with the head contractor in relation to the Building Code 2013 that they can no longer enforce down the contractual chain.  Funding entities should contact the ABCC’s Manager of Government Code Compliance on (02) 6121 5528 for further information. 

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Consequences of non compliance by funding entities

Where the ABC Commissioner considers a funding entity, or an official, is not complying with, or has not complied with, the Code (whether or not in relation to a particular project, tender or expression of interest), the ABC Commissioner may refer the matter or make a complaint to the Secretary of the Department of Finance for investigation or further action.

A compliance process has been developed to outline the typical steps the ABCC will take in dealing with funding entity non-compliance with the Code. View the Compliance process; (Word - 77K | PDF - 140K). 

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Model clauses tender and contracts

The Model Clauses referred to throughout this article are available at the following:

Funding Entity Model Clauses for Directly Commonwealth Funded Building Work; (Word - 190K | PDF - 156K).

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