Suppliers providing ICT products and services under the new version 2 of the QITC Contract Conditions will be obliged to comply with the Ethical Supplier Threshold under the Queensland Procurement Policy, with serious consequences for non-compliance.
On 19 December 2019, the Queensland Government released a new version (version 2.0.0) of the General Contract Conditions – ICT Products and Services and the Comprehensive Contract Conditions – ICT Products and Services (together, the Contract Conditions), under the Queensland Information Technology Contracting (QITC) framework.
The Contract Conditions introduce an obligation on suppliers of ICT products and services to comply with the Ethical Supplier Threshold under the Queensland Procurement Policy, including to not pay employees wages below the applicable modern award.
If Queensland Government customers believe a supplier has failed to comply with the Ethical Supplier Threshold then a show cause notice may be issued and the contract terminated.
New provisions in the Contract Conditions
The new provisions in the Contract Conditions introduce, as a contractual term, an obligation on suppliers to comply with the Ethical Supplier Threshold under clause 2.3 of the Queensland Procurement Policy.
The amendments also permit government customers to disclose information about the supplier's compliance with the Ethical Supplier Threshold to other Queensland Government entities (including the Queensland Procurement Policy Compliance Unit) for inclusion in a register.
Additionally, the Contract Conditions now specifically permit government customers, as a carve out to the parties' confidentiality obligations, to disclose information about the contract as necessary to comply with the Procurement Guidelines: Contract disclosure, under clause 3.3 of the Queensland Procurement Policy. This is in addition to the customer's existing right under the QITC framework to publish information about the contract where required or recommended by Queensland Government policy.
What is the Ethical Supplier Threshold?
The Ethical Supplier Threshold applies to all suppliers who supply to the Queensland Government, not just those who supply ICT products and services.
A supplier does not meet the Ethical Supplier Threshold if the supplier engages in conduct after 1 August 2019 where the supplier:
- contravenes certain civil remedy provisions or committed any offences under the Fair Work Act 2009 (Cth) or Industrial Relations Act 2016 (Qld);
- fails to make superannuation contributions;
- improperly treats employees as independent contractors or unpaid interns;
- engages labour hire services with unlicensed persons or providers; or
- pays employees wages below the applicable modern award.
In accordance with the Guidelines: Ethical Supplier Threshold, the requirement to pay employee wages at or above the applicable modern award applies even if an employer is paying wages in accordance with a pre-reform agreement that is continued in operation by reason of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth).
In line with the demerit scheme under the Ethical Supplier Mandate, suppliers who fail to comply with the Ethical Supplier Threshold may be excluded from tendering for Queensland Government contracts for 12 months.
Suppliers found not to be complying will be placed on a register maintained by the Queensland Procurement Policy Compliance Unit. This may affect the supplier's ability to participate in future tenders.
Consequences of non-compliance with the Ethical Supplier Threshold under the QITC Contract Conditions
The introduction of the obligation to comply with the Ethical Supplier Threshold into the Contract Conditions means that a supplier's failure to comply will now give rise to contractual rights and remedies for the customer.
Under the new version of the Contract Conditions, if the customer reasonably suspects that the supplier has failed to comply with the Ethical Supplier Threshold, the customer may issue a written show cause notice to the supplier. The supplier must respond to the show cause notice within 14 business days.
If, after having issued the show cause notice, the customer believes the supplier does not comply with the Ethical Supplier Threshold, the customer may terminate the contract (in whole or part) on written notice with immediate effect.
In keeping with the Guidelines: Ethical Supplier Threshold, the procuring agency will consider the representations made by the supplier when deciding whether to terminate the contract.
Importantly, under the Contract Conditions, an adverse finding (for example, by a court or the Fair Work Commission) is not required before a customer may terminate.
How does this affect you?
Suppliers providing ICT products and services under the QITC framework's General or Comprehensive Contract Conditions should be aware of the obligation to comply with the Ethical Supplier Threshold and its impact on tendering to Queensland government.
Government and other entities receiving ICT products or services under the QITC framework's General or Comprehensive Contract Conditions should be aware of:
- their rights, in particular termination rights, where the supplier is believed to have failed the Ethical Supplier Threshold; and
- their obligation to disclose contract information under the Procurement Guidelines: Contract disclosure.