textual image stating 'Department of Health, Victoria, Australia'

2. Key issues and quality assurance

Compliance with government policy

In the preparation of contract documentation, agencies and consultants should be aware of, and take into consideration, Victorian government policy in respect of security of payment (SOP), requirements of the Australian and United States free trade agreement (AUSFTA, refer to chapter 15), probity and disclosure. By law, contractors must comply with relevant VIPP, IR and OH&S regulations and Clause 15 of AS2124 (1992) as has been amended, through the special conditions, to reflect and emphasise those obligations.

Australia USA free trade agreement

The Australian government has approved the Australia USA free trade agreement (AUSFTA) for use on major projects. The application of the AUSFTA requires that potential tenderers be accepted from the USA as well as Australia for nominated Victorian government departments. Note that the hospitals and funded agencies are not nominated Victorian government departments and do not fall within these requirements. Further information can be obtained by reference to the Victorian government website.

Disclosure / probity

The Victorian government special conditions of standard contract AS2124-1992 include clause 50, which concerns the government’s policy of publishing certain information regarding the successful tenderer and the conditions of the agreement generally.

Reference should be made to Department of Health protocols established to ensure privacy is maintained for those projects dealing with clients at risk or for secure / custodial facilities where publication of contract details may prejudice service delivery.

Security / retention

The option of a bank guarantee or unconditional undertaking given by a bank, as distinct from the use of retention moneys is the preferred form of security. The amount of bank guarantee is set by the principal following a report on the financial viability of the building contractor.

Security of payment

Clause 43 of the AS2124-1992 contract requires the contractor to provide evidence, such as a statutory declaration, that moneys due to and payable to sub-contractors have been paid in accordance with that clause 43. Further, the special conditions of contract introduce a new additional clause 54, which requires the contractor to comply with the security of payment act.

Provisional sums

When information on part of the work, or the full scope of works is not known at the time of issuing tender documents, the consultant may nominate a provisional sum for such work. This could be either for supply of materials only or supply and installation. The tenderers will make such an allowance in their tender including their own overheads and profits.

Compliance with government industrial relations and occupation health and safety (OHS) policy

The Victorian government requires contractors involved in government capital works projects to comply with government industrial relations and OHS policy. It relates to the maintenance of a good industrial and safety records by contractors.

This undertaking is to be applied to all works undertaken by or on behalf of government funded services, including health services / agencies.


Under AS 2124 - 1992 there are two alternatives for insuring the works and public liability - either by the contractor (alternative 1) or the principal (alternative 2). The tender documents must clearly identify which alternative is to be adopted. Refer to Infrastructure Planning and Delivery (IPD) branch for current policy.

Principal supplied items (valued for contract)

The principal is to advise the consultant on what items are to be supplied by the principal and installed by the contractor. This information should also include the value of the item(s) to be supplied.

Fire safety works - code of practice

For Department pf Health and Human Services funded projects, tender documents involving fire safety works should indicate that contractors carrying out these works are bound to comply with the code of practice FPAA001 - 2000: code of practice for the installation and maintenance of fire protection equipment.