Local Government Procurement Initiative
We are working with the Australian Security Industry Association Limited (ASIAL) and United Voice to strengthen the procurement practices of local councils, starting with how they procure security services.
What does workplace relations have to do with procurement?
Like anyone, local councils need to get value for money when procuring services.
However, focussing on getting security services for the lowest price is resulting in a race to the bottom among some security providers, who cut costs to stay competitive.
When this happens, it’s often their employees who pay the ultimate price, through underpayment of wages or misclassification as independent contractors. Those security providers that want to do the right thing by their employees, but can no longer compete, also pay a heavy price.
If a quote seems too good to be true, it probably is.
Why should I care about what happens in my supply chain?
Sometimes, the lowest quote can have the highest cost.
Choosing the security provider that offers the lowest price without looking more closely and asking questions about how they can offer such low prices can:
- damage your organisation’s reputation
- expose you and your organisation to financial penalties if you’re found to be an accessory to a breach of the Fair Work Act 2009.
This means that turning a blind eye to your security provider’s dodgy practices can be risky.
In 2015, we’ll conduct a supply chain-focused compliance campaign to identify unlawful practices among those providing security services to local councils. The campaign will start with local councils at the top of the chain and work down to security providers.
How can I strengthen my procurement practices?
If you work for local council and it’s your job to pick a good quote from a dodgy one, or if you’re a security provider and subcontract some of your services to other providers, there are some simple things you can do to strengthen your procurement practices.
Don’t make your procurement decisions all about price
Performance and quality should also be considered.
Understand the cost of employment
The contractor you choose needs to pay their employees at least the minimum pay rates, including penalties, overtime and allowances. Then there are indirect costs like superannuation, workers compensation, payroll tax and insurance and licenses. These need to be included in the charge-out figure as well.
Minimum pay rates vary depending on the award or agreement the employees of your contractor are covered by.
Example: How low is too low?
Malinda works for Sunshine Valley Local Council. She’s been quoted a $24 per hour charge out rate for a contract which needs coverage during the hours:
- Monday – Friday 8pm – midnight
- Saturday 12pm – midnight
The contract tender says the employees will be:
- adults employed on a part-time or full-time basis
- covered by the Security Services Industry Award 2010
- performing duties which fall under the Security officer level 1 classification.
She checks the Security Services Industry Award 2010 Pay Guide and discovers the minimum pay rates are:
- $23.06 per hour for hours worked between Monday – Friday 8pm - midnight
- $28.43 per hour for 12pm – midnight on Saturday.
Malinda thinks the $24 per hour might not be enough to cover the minimum wages for the employees as well as the indirect costs incurred by the contractor.
Malinda decides to ask the contractor a few questions about how they calculated their quote. It seems too good to be true.
Do your due diligence
Access our resources to help you.
Use our Pay Calculator to find minimum pay rates including penalties and overtime.
Source reference: Fair Work Act 2009 (Cth) section 550
Think a mistake might have been made?
Mistakes can happen. The best way to fix them usually starts with talking.
Check out our Help resolving workplace issues section for practical advice on:
- figuring out if a mistake has been made
- talking to your employer or employee about fixing it
- getting help from us if you can't resolve it.
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