Federation highlights ‘disturbing trend'

Media Release – for immediate release

17 August 2009
 

Contractors’ Federation highlights ‘disturbing trend’ by councils.

A “disturbing trend” towards consolidation of local government contracts could force smaller contracting companies out of business, the New Zealand Contractors’ Federation has warned.

Speaking at the federation’s conference in Paihia, chief executive Jeremy Sole said the practice of ‘bundling’ multiple smaller contracts together and awarding them to a few large contractors could lead to closure of small businesses and to rising unemployment.

Mr Sole highlighted recent examples of Marlborough, where 24 contracts have been rolled into two, and Gisborne District Council which has agreed to consolidate three roading contracts with the explicit aim of attracting cheap tenders from outside the region.

Mr Sole said that while the federation does not advocate setting up contracts and tender processes to favour local businesses, many smaller firms, who have traditionally carried out local government contracts, would be shut out of the process because of the scale of the contracts.

“We do advocate for open and fair tender processes,” said Mr Sole. “A mix of project sizes in the market – and a range of procurement methods – as we believe these things will create and sustain a healthy industry.”

Mr Sole congratulated the Government on measures taken to support the industry, and the New Zealand Transport Agency for its willingness to engage with engineers and contractors to facilitate and accelerate the roll out of major roading projects.

“We are fortunate that we have a Government and a Minister for Infrastructure who recognises the contribution of infrastructure to the performance of our economy and by association, the importance of the sectors who design, construct and manage these assets.”

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