Government Should Adopt Best Practice Contracting
The building and construction industry has called for the Government to examine its contracting practices and introduce a best practice model code for contracting.
In a submission outlining priorities for reform of contract law lodged with the Attorney General’s Department today, Master Builders urged the Government to lead by example in the reform of on ground practices.
Wilhelm Harnisch, CEO of Master Builders Australia said “it is an opportunity for the Government to show leadership and set a best practice benchmark for contracting, and then of course, abide by this best practice.
“The Attorney General administers a model litigation program that any Department wanting to engage in litigation must follow. This model should be recreated for contracting.”
Mr Harnisch said it is not unusual for Federal and State Governments and their agencies to engage unfair contract practices in their dealings with the construction industry.
“It is common for governments to include ‘termination for convenience’ clauses in contracts. This allows the government department or agency to end the contract at will, at a time of their choosing and without reason.
“Other clauses permit governments to change the scope of a project at any time. So if a contractor has tendered on a $10 million project, the government could change it to a $15 million project and expect the tenderer to stick to its price and margins for a smaller project. The clause also allows government to reduce the size and scope of a project at any time.
“These practices would not be permitted in the private sector. The Government should set a positive example and play by same set of rules it creates for other parts of the economy,” Mr Harnisch said.
Master Builders’ submission to the Attorney Generals Department on Improving Australia’s Law and Justice Framework makes 10 recommendations to improve Australia’s contract law practices.
- Master Builders' submission to the Attorney General on Contract Law - Submission to Attorney General Australian Contract Law.pdf (157KB)