Northern Rivers MLA Kevin Leahy will investigate the Government's procedures for awarding contracts for construction projects.
In a joint statement issued today Fuel and Energy Minister Geoff Gallop and Construction Minister Jim McGinty said the Government wanted to tighten its system to protect sub-contractors.
Because sub-contractors on Government projects had no contractual relationship with the agency responsible for the project, they could be treated as unsecured creditors if the head contractor was placed in receivership.
The Ministers said Mr Leahy would examine the issue and prepare a report for the Government. His terms of reference involved investigation of:
· the means and extent to which Government agencies sourced local contractors when calling for tenders. One solution to this issue was to directly contract the sub-contractor that performed the work on Government projects. Another solution involved use of these sub-contractors as nominated sub-contractors;
· the scope that existed for direct payments from Government agencies to sub-contractors under `apportioned contracts' when it was necessary to issue a contract to a head contractor. This could involve apportioning the contract into various stages such as earthmoving, roads and drainage, building and construction;
· the extent to which SECWA's standard clause C42 in the Conditions of Contract, or a variation of that clause, could afford protection to sub-contractors and the extent to which similar clauses could be used by other agencies;
· other measures to minimise the bad debt risk faced by sub-contractors when the head contractor was placed in receivership.
The Ministers said Mr Leahy's recommendations would have particular relevance for regional communities and the extent to which government agencies seek out local businesses in the tendering process.
Relevant government agencies had been asked to extend every assistance to Mr Leahy in his investigations.
Mr Leahy's report was expected to be completed by the end of June.
