It was a great pleasure to be on the Panel at the recent ALGA (Australasian Land and Groundwater Association) Melbourne session on "Love thy contractor" and to share my tips on contractor management, from an environmental perspective.
Modern procurement, particularly in the project and infrastructure sectors, means working with contractors during project delivery and ongoing operations. Organisations that engage contractors to undertake works at their sites, on their assets, or on their projects, need to be cognisant of the particular risks associated with environmental liability arising from contractors. Similarly, contracting service providers, need to understand their legal position and obligations.
All too often, there is a mis-match between the legal position adopted in commercial contracts and the true legal position articulated by environmental statutes and the courts. This can lead to confusion over which party has management of, and liability for, environmental matters, which in turn can lead to possible duplication; or a vacuum of effective management (if neither party undertakes their obligations); or a piecemeal management approach. All of which amounts to an increased risk profile.
TIPS FOR HOW TO MANAGE THIS RISK
• Seek to understand your commercial agreements. Obtain current copies of contracts and review the clauses relating to management action and environmental obligations. Some contracts contain really useful management tools, such as processes for review and approval of contractors’ policies and procedures. If no contractual processes exist, consider what level of scrutiny and reporting you require from your contractors commensurate with the risk and your liability.
• If in doubt, seek legal advice on your organisation’s legal position and obligations.
• Ensure that incident management and regulatory reporting are given special attention when managing contractors. It is important that the parties understand who is responsible for managing an environmental incident and making regulatory notifications. Ideally, put in place an incident response protocol with arrangements for notifying each other of regulatory communications, including things like regulator site visits and spot checks.
• Be mindful that different states and territories adopt different legal management and control tests. A one-size-fits-all approach won’t work with contractor management.