Purpose of the Threshold and Mandate
The purpose of the Threshold and Mandate is to establish more rigor around the business practices of suppliers of goods and services to Queensland Government agencies. In short, ensuring compliance of suppliers with relevant laws governing the payment of employee entitlements, use of independent contractors, unpaid interns, labour hire services and compliance with applicable modern awards.Ethical Supplier Threshold – What is it?
The Threshold applies from 1 August 2019 to all budget sector agencies, statutory bodies, Government owned corporations and special purpose vehicles in relation to the manner in which the procurement of goods and services are managed.
The Threshold places additional obligations on suppliers to demonstrate compliance with the Threshold criteria when tendering and throughout the contract term.
New obligations imposed under the Threshold include:
- invitation to tender documents are required to specify that compliance with the Threshold is a mandatory criteria;
- suppliers are required to state in tender responses whether they comply with the Threshold (and have complied with the Threshold in the previous 5 years (from 1 August 2019));
- tender documents should give evaluation panels the right to contact regulatory bodies to verify compliance information about the supplier (and to assess this information as part of the tender);
- a register of non-compliant suppliers with the Threshold is maintained with QPP Compliance unit, where information gathered may be used by evaluation panels before contracting with a supplier;
- if a supplier does not comply with the Threshold requirements, then its offer is considered non-conforming;
- all contracts are required to include an obligation on suppliers to comply with the Threshold during the Contract term. Contracts should also include a right for the procuring agency to give a 'show cause notice' where the agency reasonably suspects the supplier is not complying with the Threshold; and
- if the procuring agency identifies a supplier that is not compliant with the Threshold, then the procuring agency must notify the QPP Compliance unit.
Ethical Supplier Mandate – What is it?
The Mandate establishes a framework whereby suppliers to Government agencies can accrue demerits and sanctions for breaches of relevant laws and policy requirements.
The Mandate has tiered commencement dates as follows:
- (Commenced) Building Construction and Maintenance (BCM) category from 1 August 2019;
- (Commencing soon) Transport Infrastructure and Services category from 1 October 2019; and
- (Next year) suppliers of other categories of spend, and agencies at dates to be determined in 2020.
The Mandate supplements the existing frameworks in the management of procuring agencies and their dealings with suppliers. New obligations and requirements under the Mandate include:
- before contracting with a supplier, the procuring agency must check an online database managed by the Executive Officer, Procurement Penalties and Sanctions Committee (the Committee), as to whether the a supplier is the subject of a sanction;
- in the event of an alleged breach of the Mandate, the procuring agency is responsible for investigating the alleged breach and escalating it to the Committee (where relevant); and
- a decision making process to assess alleged breaches of the Mandate by the Committee and relevant sanctions.
The Committee will sanction a supplier once the supplier has accrued 20 demerit points. Sanctions include, but are not limited to:
- suspending a supplier’s prequalification for a defined period;
- making a supplier ineligible for contract award for a defined period;
- suspending a supplier from the relevant panel or contracting framework for a defined period; and
- precluding a supplier’s existing contract from being extended.
Action by Queensland Government Agencies
Queensland Government agencies should:
- familiarise themselves with their new obligations under the Mandate and Threshold;
- conduct an audit of current suppliers to ensure compliance with the Mandate and Threshold;
- ensure contracts and procurement processes are updated to reflect their additional obligations; and
- understand their investigative, disclosure and reporting obligations in relation to a potential breach.
Action by suppliers to Queensland Government Agencies
Suppliers to Queensland Government agencies should:
- familiarise themselves with their new obligations under the Mandate and Threshold;
- comply with their disclosure requirements with respect to tendering and contracting with Queensland Government agencies; and
- conduct an audit of your current systems and processes to ensure you do not fall foul with the requirements of the Mandate and Threshold so as to avoid the imposition of sanctions.
For more information, please contact a member of our Construction and Infrastructure team.
