The Department of Human Services (DHS) has generated consternation within the ICT recruitment industry by adding a late amendment to its ICT Contractor Panel tender, which would see recruitment agencies penalised by up to 20 per cent of a contract’s value if personnel leave an assignment before the contract end date.
The lapsing DHS contractor panel has been responsible for a significant portion of all ICT labour hire business within the Federal Government market to date, according to Intermedium’s analysis. In 2010-11, 37 percent of all Federal ICT labour hire contracts were linked to this panel on Austender, reaching total contract value of $321 million.
The full contract value attributable to the panel is almost certainly far higher than this, as not all contracts signed against this panel include the panel identifier.
In addition to the DHS agencies (Centrelink, Medicare and the Department itself) 37 other Federal agencies are listed as procuring from the panel.
DHS approached the market to renew the panel on 13 January 2012, in preparation for the expiry of the current Head Agreement in October 2012.
An addendum to the Request for Tender has revealed that the Department intends to include a clause allowing itself and any other agencies which sign the Head Agreement to reduce the charges payable to a recruitment firm, “in the event that its specified personnel become unable or unwilling to provide Services prior to their completion”.
The Department states that the clause has been included to mitigate against expensive project delays.
“During the term of the previous panel arrangements, the Department has experienced several instances where a vendor's specified personnel have become unable or unwilling to continue work in relation to services for which the vendor was contracted to provide.
“These instances have, at times, had significant impact on the Department's ability to deliver projects on time and on budget,” said the Addendum.
However, some recruitment industry members say that the clause has the potential to produce a labour market unfairly skewed towards agencies.
“The Commonwealth reserves the right to terminate contracts as and when it feels like, and is not required to provide any reason or justification,” said one senior executive in the ICT recruitment industry.
“I would suggest that if the Commonwealth was obligated to honour its contractual agreements and could only terminate on the basis of machinery-of-government changes, then contractors would feel more secure in their contracts and would be more likely to complete the agreed contracted term,” he said.
Julie Mills, Chief Executive Officer at the Information Technology Contract and Recruitment Association (ITCRA) says that she hopes that a balance of liabilities between the Government and the ICT recruitment industry can be achieved.
“We will be looking to make sure that if there is any sort of penalty on recruiters, then equally there is a counter conversation regarding what happens if a project is cancelled by the government,” she said, adding that the final parameters of the DHS Panel Head Agreement were by no means set in stone at this stage.
“It is the next stage [of the tendering process] when the offers come out that is important. That is when people will have to make their decisions,” she said.
“If the tenders come back for signing and there is a clear disadvantage to recruitment companies, then there are still steps we can take if we have to,” she added.
Mills said that she would personally like to see consultation and dialogue processes implemented to address contractor concerns before they reach a point where a contractor feels he or she needs to leave a role.
“You need to know every step of the way what’s going on...which is not necessarily ITCRA policy, but it is a solution that makes sense to me,” she said.
Tenders for the DHS ICT Contractor Panel closed on 13 February 2012, and it is now up to the Department to negotiate the terms of the final head agreement with potential panellists.
The existing panel will expire on 31 October 2012.