Funding entities and recipients
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.
The Code operates such that only building contractors who are compliant with the Code can tender for and enter into head contracts for building work funded directly or indirectly by the Commonwealth Government, subject to certain conditions. For further information, refer to the definition of building work and information on when the Building Code applies.
Responsibilities of funding entities and recipients
The Code places obligations on funding entities both during the procurement of Commonwealth funded building work and during the conduct of that work. In order to discharge these obligations when indirectly funding building work, funding entities contractually require funding recipients to ensure a number of aspects of the Code are applied when procuring building work that meets the required financial thresholds. 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.
The above definition of funding entity applies when the respective agencies are directly funding building work. All Commonwealth agencies as well as State and Territory funding recipients should, however, be familiar with the Code requirements, noting that where an agency receives Commonwealth funding for building work indirectly, they will contractually be required to comply with the Code.
How to ensure responsibilities are met
To ensure obligations under the Code are effectively met, the ABCC has developed Model Clauses for use by funding entities and funding recipients in advertising, EOI/tender and contract documentation for Commonwealth funded building work. Two sets of clauses are available for use:
- Funding Entity Model Clauses for Directly Commonwealth Funded Building Work (Word - 190K | PDF - 608K); and
- Funding Entity and Recipient Model Clauses for Indirectly Commonwealth Funded Building Work (Word - 190K | PDF - 540K).
The Model Clauses are not mandatory, but have been designed to request all information a funding entity or recipient must require from a contractor during procurement of Commonwealth funded building work. By using the Model Clauses, funding entities and recipients ensure contractors declare compliance to contractual requirements imposed on a funding entity or recipient, enabling the funding entity or recipient to set up the appropriate framework for meeting their obligations under the Code.
The ABCC has also developed an EOI/Tender Process Checklist (Word - 82K | PDF - 507K) for use by funding entities and recipients as a practical tool to ensure all procurement processes are conducted in a manner consistent with the Code.
Funding entities are precluded from entering into contracts with building contractors or building industry participants if the eligibility criteria have not been met. Funding recipients should be aware that Code requirements regarding eligibility are applied slightly differently when procuring building work under indirectly Commonwealth funded funding arrangements, and the Model Clauses reflect this difference.
The Code requires contractors bidding for Commonwealth funded building work to confirm they are eligible to be awarded such work, including by confirming they meet the requirements of section 11 of the Code (pertaining to the content of enterprise agreements).
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.
To demonstrate compliance with section 11 of the Code on directly Commonwealth funded building work, contractors will provide one of two forms of evidence - an ABCC Letter of Compliance, or a Self-Declaration (A, B, C, D or E). The form of evidence required from a contractor is dependent on the type of industrial arrangement(s) they operate under, when the arrangement(s) was made, and the timing of the procurement for which they are submitting a response. These forms of evidence are briefly explained below, however for a full overview of the necessary evidence for a contractor to demonstrate compliance, please refer to the Eligibility to tender page and the Proof of eligibility table (Word - 40K | PDF - 460K).
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 the subject of the letter meets the requirements of the Code. The ABCC issues Letters of Compliance for enterprise agreements made on or after 25 April 2014 that meet Building Code 2016 requirements (an ABCC Determination).
Some contractors may also require, or instead rely on, a self-declaration if they fit one of the following situations:
- they operate under a modern award or other lawful workplace arrangement;
- they operate under an enterprise agreement that was made prior to 25 April 2014 and has not been varied;
- they submitted an EOI or tender for the Commonwealth funded building work between 2 December 2016 and 16 February 2017 (and have not made an enterprise agreement since 2 December 2016); or.
- they submit an EOI or tender for Commonwealth funded building work between 17 February 2017 and 31 August 2017 (and have not made an enterprise agreement since 2 December 2016). Please note that this category can tender but not be awarded a contract except in very limited circumstances.
When the Code took effect on 2 December 2016, it included a transition period of two years for companies with current enterprise agreements to achieve compliance with section 11 of the Code. Amendments to the BCIIP Act and Code in February 2017 reduced the transition period for enterprise agreement content from two years to nine months. The new transition period concludes 31 August 2017. Importantly, the transitional provisions associated with these amendments mean some letters of compliance previously issued in relation to enterprise agreements made prior to 2 December 2016 are no longer valid (transitional letters of compliance).
While the required evidence to demonstrate compliance has been notified to contractors through industry alerts and updated web content linked above, funding entities are encouraged to contact the ABCC’s Manager of Government Code Compliance on (02) 6121 5528 should they have any questions in relation to evidence provided by contractors of eligibility to tender. The guidance on Eligibility to tender, including the Proof of eligibility table (Word - 40K | PDF - 460K), contain all information a funding entity or recipient will need to determine the validity of evidence provided by a respondent.
The Declaration of Compliance including Attachment A Mandatory Information, contained within the Model Clauses for Directly Commonwealth Funded Building Work, prompts respondents to attach their Letter of Compliance and/or Self Declaration. Model Clauses for Indirectly Commonwealth Funded Building Work do not contain the same provision as this is a responsibility of funding entities alone.
Aside from conformance with section 11 of the Code, the Code also requires respondents to a request for an EOI or tender for Commonwealth funded building work to not be 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)
Projects requiring a WRMP are those 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 and funding recipients 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 or recipient 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/recipients 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/recipient 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/recipients 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.
There are a number of funding entity notification requirements set out under the Code, where information is to be notified to the ABCC. Where the Commonwealth is indirectly funding building work, these notification requirements will be contractually obligated to be fulfilled by the funding recipient. 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/recipients 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 - 280K).
- 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 - 270K).
- 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 a Code compliant contractor is engaged to undertake Commonwealth funded building work, and by notifying the ABCC of any funding agreements with funding recipients, the ABCC can assist in working with the funding recipient to ensure all Code obligations are appropriately applied. Use the ABCC Funding Agreement Notification form (Word - 74K | PDF - 270K).
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 and recipients, there is 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/recipients 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/recipient 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. Please refer to the template letter and information sheet (Word - 180K | PDF 370K), which should be provided by the funding entity or recipient to head contractors 2013 Building Code projects.
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 funding entity and recipient compliance process has been developed to outline the typical steps the ABCC will take in dealing with funding entity and recipient non-compliance with the Code. View the Compliance process (Word - 77K | PDF - 370K).
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 - 608K); and
- Funding Entity and Recipient Model Clauses for Indirectly Commonwealth Funded Building Work (Word - 190K | PDF - 540K). Note that these include Model Clauses for inclusion in funding agreements and grants.
Need more information?
Any questions in relation to the Model Clauses, procurement processes, or any other funding entity/recipient related matter, should be directed to the Manager of Government Code Compliance, Cassie Woods, on (02) 6121 5528 or cassie.woods[at]abcc.gov.au.