Federal Inquiry into procurement practices report released

Photo by David Martin on Unsplash.

In a significant step forward for the construction and infrastructure industry, the House of Representatives Standing Committee on Infrastructure, Transport and Cities on Thursday tabled its report for the committee’s inquiry into procurement practices for government-funded infrastructure.

The committee had commenced the inquiry on 1 June 2021 as per the request of [then] Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development, the Hon Michael McCormack.

The committee’s report Government Procurement: A Sovereign Security Imperative was tabled yesterday by the Committee Chair, Mr John Alexander OAM MP.

The enquiry had received responses from multiple key organisations from the civil construction industry, including the Civil Contractors Federation National (CFF), the Australian Constructors Association and the National Association of Women in Construction (NAWIC), among others.

Response from the Civil Contractors Federation National

Chris Melham, Chief Executive Officer, Civil Contractors Federation (National).

CCF Chief Executive Officer Chris Melham has welcomed the report, noting its significance given the allocation of a record level of taxpayer funded infrastructure investment of $120 billion over the next ten years as announced by the Federal Treasurer in the 2022 Federal budget.

“The Committee’s recommendations directly address many of the key challenges and opportunities in the procurement of government funded infrastructure, and in many respects, they pick up on a number of recommendations CCF provided the Committee in our submission,” said Mr Melham.

In particular, CCF has welcomed the Committee’s Recommendation 6, which states that: “The Committee sees that increasing the access of tier two and three companies, and related Australian small and medium enterprises, to projects in the Australian infrastructure pipeline as key to enhancing Australia’s sovereign industry capacity.”

Under the Recommendation 6 clause, the Committee recommends for the Australian Government to consider:

• providing opportunities in procurement and contracting to engage local industry and utilise local content;
• ways to break up projects into packages of less than $500 million to increase competitiveness by tier two and three companies;
• making as a condition of Australian Government funding for major infrastructure projects over $500 million industry sustainability criteria within the early stages of procurement design that encourage tier one
contractors to partner/joint venture with a non‐tier one company in the head contract;
• education and training for government officials to support these objectives; and
• reviewing market conditions for infrastructure insurances and the impact on small and medium enterprises.

“CCF’s submission to the Committee highlighted the need for a more sustainable level of project allocation for Tier two, three, four and below, and in so doing, deliver additional benefits to the community including jobs, increased and upskilled local workforce and higher economic growth in the local community,” Mr Melham said.

“Throughout the enquiry, CCF also advocated for a more balanced approach to the tender process to support industry sustainability and the broader national interest by maximising the return to the Australian economy of taxpayer funded civil construction projects. I therefore applaud the Committee’s strong commitment to improving Australia’s sovereign capability,” he added.

CCF also welcomed the Committee’s recommendation for the Australian Government to “…investigate, in consultation with state, territory and local governments, and relevant industry bodies and stakeholders, how to facilitate better planning and coordination of the infrastructure pipeline.”(Recommendation 1)

“CCF’s supplementary submission to the Committee stressed the need for a formal consultative mechanism involving key civil industry representative bodies, federal and state government infrastructure and policy agencies,” Mr Melham said.

“As acknowledged by the Committee, there would be significant value in establishing a formal mechanism, such as a ‘Civil Infrastructure Consultative Forum’ to facilitate a two-way dialogue between industry and government on critical civil infrastructure matters such as investment, procurement and enhanced skills development and training,” he added.

Mr Melham has invited all tiers of government to work with industry to progress the Committee’s infrastructure procurement reforms which are critical to building a stronger, more sustainable civil construction industry.

“It is imperative that this report does not gather dust on the shelves like so many others that have come before it on the necessary steps to improve how government funded infrastructure is procured and delivered,” he said.

Response from Australian Constructors Association

The Australian Constructors Association also congratulated the Federal Government for investigating the impact of government procurement processes on the sustainability of the construction industry.

Jon Davies, CEO Australian Constructors Association.
Jon Davies, CEO Australian Constructors Association.

Australian Constructors Association CEO Jon Davies said the inquiry findings supported the urgent need for reform and the important role that the Commonwealth can play in making this happen.

“The issues are well understood—we just need to get on with implementing the solutions,” said Mr Davies.

“The Australian Constructors Association is already progressing initiatives that directly respond to five of the eight recommendations. The government and industry-developed Culture Standard will go a long way in supporting cultural reform that will see the industry become an employer of choice, including for women.

“Work underway through the Construction Industry Leadership Forum is already targeting the report’s recommendations on value for money, standardisation, project packaging and adoption of digital technologies,” he added.

Mr Davies, however, noted that while state based reforms were important, the cornerstone of Australian Constructors Association’s advocacy efforts was the role that the Commonwealth can play in incentivising and coordinating reform.

To achieve this, Australian Constructors Association has suggested establishing the Future Australian Infrastructure Rating (FAIR), a mechanism designed to rate government funded projects on how well they perform against a range of key reform areas such as improved productivity and increased innovation.

“FAIR is the solution to the report recommendations to establish a mechanism for monitoring and rating project performance and verifying value for money,” said Mr Davies.

“FAIR would also enable sharing of best practice so the industry can continue to improve. In fact, FAIR provides a mechanism for the Federal Government to coordinate and incentivise most of the proposed reforms in a consistent way across state government procurement processes without the need for any major change in existing federal governance processes or for any increased Commonwealth involvement,” said Mr Davies.

A link to the inquiry report can be found here: Government Procurement: A sovereign security imperative


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