ABCC back in business

On 1 December 2016, the Building and Construction Industry (Improving Productivity) Act 2016 and the Building and Construction Industry (Consequential and Transitional Provisions) Act 2016 commenced. As a result from:

  • 1 December 2016, the Australian Building and Construction Commission (ABCC) is back in town (replacing Fair Work Building and Construction); and
  • 2 December 2016, a new code titled the Code for the Tendering and Performance of Building Work 2016 (Federal Code) applies, replacing the former Building Code 2013.

Federal Code for the Tendering and Performance of Building Work (2016)

The Federal Code applies to building contractors or building industry participants from the first time they submit an expression of interest for or tender for Commonwealth funded1 building work.

Once a building contractor or building industry participant becomes subject to the Federal Code, the company and its related entities must comply with that code on all of their new projects, including projects that are privately funded (with some exceptions). In addition, the company is required to ensure that the subcontractors it engages act consistently with the Federal Code and include specific obligations in their contract documents.

While the Federal Code retains some aspects of the old Building Code 2013, (for example, provisions in relation to sham contracting, freedom of association and right of entry), it also has significant new provisions which include:

  • prohibitions against collusive tendering practices;
  • provisions relating to security of payments, which prohibit engagement in illegal or fraudulent phoenix activities for the purposes of avoiding any payment due;
  • a large extension of Part 4 relating to compliance and monitoring arrangements of the Federal Code, including the imposition of sanctions for breaches of the Code; and
  • requirements of funding entities to comply with the Federal Code.

The Federal Code commenced operation on 2 December 2016 and requires immediate compliance for those tendering for or submitting an interest in Commonwealth funded building work (with the exception of some clauses). Any enterprise agreements made after 1 December 2016 must comply with the Federal Code. For existing enterprise agreements, companies have until 29 November 2018 to renegotiate agreements that are not compliant with the Federal Code.

If your business has tendered for Commonwealth funded building work that was subject to the old Building Code 2013, the provisions of the old code will continue to apply.

WA Building and Construction Industry Code of Conduct (2016)

From 1 January 2017, the Western Australian Building and Construction Industry Code of Conduct 2016 (WA Code) and its corresponding Implementation Guidelines will come into effect, with the aim of stamping out “inappropriate behaviour” on construction sites, preventing anti-competitive behaviour and improving payment security for contractors.

Like the Federal Code, the WA code will regulate the industrial relations practices of entities that tender for State-funded projects and will be supported by a Building and Construction Code Monitoring Unit within the State’s Department of Commerce.

The WA Code applies to State building work being work undertaken by or on behalf of a funding entity (a department, a statutory authority or a specified Schedule 1 entity (such as a port authority)). A building contractor becomes subject to the WA Code either:

  • pursuant to the tender conditions relating to State building work; or
  • pursuant to the terms of a covered contract for performance of State building work.

Whilst the WA Code does not mention any monetary cap on building contracts that will be covered by the WA Code, the Implementation Guidelines and State Government announcements indicate that it will initially (i.e. from 1 January 2017) only apply to State building work valued at more than $10 million. The State Government anticipates that this will initially cover nine major projects in WA.

The Implementation Guidelines state that the WA Code will be “rolled out” to all other building contracts for State building work when provisions can be drafted and included in the tendering process and after training sessions have been conducted. In other words, projects valued at $10 million or less will not be covered until further notice.

Be aware, as long as you are a covered entity, you must comply with the WA Code in relation to any private building work your entity performs within WA if that work was won as a result of responding to a tender or entering a building contract at a time when you were a covered entity. Any private contract work valued over $2 million must be reported to the Building and Construction Code Monitoring Unit.

Once covered, a building contractor must comply with the WA Code for the duration of the building contract (or until the tender is unsuccessful). If the State building work is in excess of $10 million, you must have a Code complaint Workplace Relations Management Plan.

There are extensive obligations placed on building contractors covered by the WA Code, including a requirement to ensure subcontractors and others comply with the WA Code.

A failure to comply with the WA Code may result in the contractor being disadvantaged in procurement processes or not being awarded State building work.