THE construction industry and the Government are at odds over a new Department of Housing and Works tendering policy.
Industry figures claim the policy is aimed at hurting individual companies while Housing and Works Minister Tom Stephens says he is simply making the process more transparent.
The new policy, which came into effect on May 2, requires the department to limit companies to five construction contracts worth more than $1.5 million. That cap will be tightened in July when companies will be limited to obtaining no more than 25 per cent of the department’s total spend on contracts worth between $1.5 million and $25 million.
Mr Stephens has the discretion to exempt a company from the policy if he deems it necessary.
Many in the industry say the policy is aimed at BGC Construction, which reportedly holds 85 per cent of the Government contracts worth more than $1.5 million. The company also has a reputation for tight tendering. Market sources say it saved the Government around $3 million on two recent projects.
Contents of a memo from Mr Stephens to department director Greg Joyce, in which the minister outlined how he wanted the policy to operate, has been common knowledge within the industry for some time.
BGC Construction managing director Gerry Forde told WA Business News he believed the policy was Government “payback for BGC giving evidence at the Royal Commission”.
Master Builders Association director Michael McLean said he was “shocked” to find out that the policy had already been implemented because it was still in the consultation phase.
“For such a significant policy to be implemented without stakeholder input smacks of an ulterior motive,” he said.
Mr Stephens said the policy was designed to “fetter” the discretion he had as Housing and Works Minister.
He said the policy was not aimed at BGC but admitted it was designed to stop certain builders such as “BGC and Multiplex” dominating the Government contract market.
“When you’re looking at a $3.8 billion capital works budget you don’t want one or two companies dominating the market,” Mr Stephens said.
Chamber of Commerce and Industry director industry policy Bill Sashegyi said this policy was yet another sign of the Government unnecessarily interfering in the market place and that such interference invariably increased costs.
“There’s a strong need to send a message to Government that it needs to get best value for money through its tender processes if it is to meet the crucial needs of the WA community,” he said.