A Trafficking and Governments’ Failure to Prohibit It in Procurement Legislation

Human trafficking has withstood the test of time, although the terminology has changed over the years from ‘slavery’, to ‘trafficking’, to ‘modern slavery’.^{Footnote 10} Despite the generationally interchangeable terminology, ‘trafficking’ will be the term chiefly used in this paper because it is widely prohibited by international and domestic legal systems^{Footnote 11} and describes a severe violation of human rights occasioned by use of forced labour, child labour and severe labour conditions (excessive working hours, exposure to harmful substances, etc). Defined under Article 3(a) of the Trafficking in Persons Protocol (Palermo Convention), human trafficking is ‘the recruitment, transportation … of persons, by means of the threat or use of force or other forms of coercion … for the purpose of exploitation’.^{Footnote 12} The Protocol goes on to clarify the meaning of exploitation by stating that ‘exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs’.^{Footnote 13} This definition illustrates how exploitative labour practices such as commercial sex acts, child labour, forced labour, excessive working policies, exposure to hazardous substance and poor equipment and fraudulent or misleading recruitment practices all fall under the umbrella term of ‘trafficking’.^{Footnote 14} Thus, any reference to trafficking hereafter in this paper encapsulates the above exploitative practices occurring within the public procurement context.

Trafficking is a growing global industry with an approximate annual turnover of one hundred and 50 billion dollars (USD).^{Footnote 15} Statistics produced by the International Labour Organisation (‘ILO’) suggest that at any given time, an estimated 40.3 million people are enslaved, with one in four victims being a child.^{Footnote 16} These statistics make trafficking ‘one of the three evils’ that plague the 21^st century.^{Footnote 17} Despite strong signals from international organisations that Governments should address trafficking within their global supply chains, countries such as Australia are yet to effectively address this issue, as shall be discussed below and in Part III.^{Footnote 18}

B International Drivers to Use Public Procurement to Combat Human Trafficking

C COVID-19 and Trafficking

Before moving to look at the Commonwealth specifically, one further factor is worthy of mention, namely, the COVID-19 pandemic. Aggravating the global lack of concerted action to deploy procurement to tackle the scourge of human trafficking is the global pandemic (COVID-19), which has resulted in many rushed and improperly regulated procurements taking place^{Footnote 41} amidst a background of globally increased unemployment rates and rising levels of extreme poverty, factors which can contribute to the exploitation of vulnerable workers and children.^{Footnote 42} Governments’ pandemic-induced rush to procure vital medical supplies make it highly likely that measures designed to address trafficking before the pandemic have taken a back seat. For example, the necessity to secure medical hazmat equipment supplies to save front line workers lives can come at the expense of human/workers’ rights protection,^{Footnote 43} further aggravating an uncertain landscape.

D The Regulation Model of Public Procurement in Australia

In 2019/20, the Commonwealth procuring entities awarded 81,174 contracts valued at $53.9 billion (AUD), with 88.3 per cent of contracts awarded to suppliers in Australia.^{Footnote 44} The regulation of public procurement in Australia is based on a devolved system. The federal and state governments have separate procurement rules and policies that apply to their procuring entities.^{Footnote 45} At the federal level, which is the subject of this paper, the authority to regulate public procurement stems from the Public Governance, Performance and Accountability Act 2013 (Cth) (‘PGPA Act’),^{Footnote 46} the Public Governance, Performance and Accountability Rule 2014 (Cth)^{Footnote 47} and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (Cth).^{Footnote 48} The PGPA generally ‘establishes a coherent system of governance and accountability for public resource’ through s 105B(1) of the PGPA Act, authorising the Minister for Finance to regulate public procurement by adopting ‘written instruments’ that promote the efficient, effective, economic and ethical use of public resources.^{Footnote 49} The Minister for Finance’s written instruments in public procurement include five Procurement Connected Policies,^{Footnote 50} Procurement Guidelines^{Footnote 51} and the Commonwealth Procurement Rules 2020 (Cth) (‘CPR’).^{Footnote 52}

Implemented and updated periodically by the Department of Finance, the CPR applies to all federal procuring entities procuring goods and services^{Footnote 53} whether below or above stipulated procurement thresholds.^{Footnote 54} The CPR contains provisions relating to procurement objectives, rules regarding the publication of opportunities, specifications, time limits, use of procurement methods and conditions for participation. There are also provisions regarding contract award and contract management, in effect covering the entire procurement process. Complying with the CPR provisions is critical in mitigating the risk of bid challenges.^{Footnote 55}

E Sustainable Procurement — Australia’s Procurement Connected Policies

Sustainable procurement, which refers to the promotion of social, environmental and economic policies through public procurement, is at the forefront of the Commonwealth procurement framework in the form of five Procurement Connected Policies, alongside achievement of value for money under the CPR.Footnote 56 In no particular order, the five connected policies are (1) the Indigenous Procurement Policy, which encourages contract awards to indigenous-owned businesses by setting aside contracts and requiring minimum Indigenous participation requirements for contracts valued at or over AUD $7.5 million in specified sectors^{Footnote 57}; (2) Workplace Gender Equality Procurement Principles require potential suppliers with more than a hundred employees to demonstrate that they comply with the Workplace Gender Equality Act 2012 (Cth)^{Footnote 58}; (3) the Black Economy Procurement Connected Policy requires potential suppliers tendering for contracts over $4 million Australian dollars (AUD) to certify that they have a satisfactory tax record by furnishing a statement to that effect from the Australian Taxation Office^{Footnote 59}; (4) the Australian Industry Participation Plans for Government Procurement policy requires suppliers awarded contracts exceeding $20 million AUD to prepare and implement an industry participation plan outlining how Australian industries will be included in the contract performance^{Footnote 60} and (5) the Code for Tendering and Performance of Building Work requires procuring entities to apply the Building Code 2016 to all works contracts, to ensure that health and safety, freedom of association and other regulations are adhered to by federal suppliers.^{Footnote 61}

These five Procurement Connected Policies are evidence that the Commonwealth Government is prepared to address social injustice and promote compliance with key policies or legislation through public procurement. As such, there appears to be no reason for not effectively addressing human rights violations through the public procurement process as well, as such would appear to be a legitimate pursuit of government policy and a legitimate concern of the public procurement process.^{Footnote 62} However, as this paper shows, many effectiveness and legal certainty deficiencies are evident when we examine the CPR, thereby causing the question to arise: why has no Procurement Connected Policy been developed specifically to cater for combating trafficking in the Commonwealth procurement governance model?^{Footnote 63}

F Public Procurement and Trafficking in the Commonwealth of Australia

The call to implement a policy or statutory instrument to tackle trafficking in Commonwealth supply chains can be traced back to the 2013 inquiry of the Parliamentary Joint Standing Committee on Foreign Affairs, Trade and Defence.^{Footnote 64} Thus, not only has the Commonwealth Government realised for some time that there is an inescapable and compelling obligation to exercise ethical and moral leadership in ensuring supplied goods and services are free of human rights abuses, but there have been calls to amend the CPR to reflect this objective. For example, a Parliamentary Committee consultation on the issue of supply chain reporting considered the issue of modern slavery in the Government’s supply chain.^{Footnote 65} The Committee noted that in June 2017, the Parliament Joint Select Committee on Government Procurement reported on the effectiveness and adequacy of the CPR.^{Footnote 66} The report recommended that the Attorney General Department ‘oversee the introduction and application of a procurement connected policy requiring Commonwealth agencies to evaluate suppliers’ compliance with human rights regulation’.^{Footnote 67} Furthermore, tackling modern slavery through public procurement was explicitly mentioned in the Federal Government’s National Action Plan 2015–2019.^{Footnote 68} Additionally, in 2013, then Prime Minister Gillard announced a ‘government strategy to reinforce ethical behaviour in procurement so that no firm providing goods or services to the Commonwealth is tainted by slavery or people-trafficking anywhere in the supply chain’.^{Footnote 69}

Despite these indications at the political and legislative level that use of the procurement process to combat trafficking is a legitimate pursuit, no dedicated procurement policies addressing trafficking have been published by the Commonwealth’s Minister for Finance, nor were relevant subject-specific provisions included in revisions to the CPR undertaken in 2017, 2018 or 2019. There was some progress in the 2020 revision of the CPR, which provided that procuring entities must now consider reporting requirements under the Modern Slavery Act 2018 (Cth), but this is not an adequate substitute to address the matter of concern.^{Footnote 70} Essentially, s 15 of the Modern Slavery Act requires the Minister to publish a modern slavery statement covering all Commonwealth procuring entities.^{Footnote 71} The statement must include the risks of modern slavery practices occurring in the operations and supply chains of all procuring entities; actions to be taken by the procuring entities to address those risks, including due diligence and remediation processes; and provisions on how the effectiveness of such actions are to be assessed.^{Footnote 72} While inclusion of the Modern Slavery Act to the CPR is a welcome development as it signifies the Government is concerned about trafficking within its supply chains, it does not however detail procedures which procuring entities should follow to mitigate the award of contracts to suppliers tainted by trafficking. For this reason, the next section analyses relevant provisions in the CPR that directly or indirectly address trafficking and shall demonstrate their shortcomings both in terms of lack of legal certainty and effectiveness and how this serves as a warning to other countries seeking to emulate such a model ‘off the shelf’.

A Public Procurement Objectives — Ethical Purchasing

The CPR recognises various procurement objectives that are critical when procuring goods, works or services, including the achievement of value for money, efficiency, effectiveness, economical and ethical purchasing, accountability and transparency.^{Footnote 73} We focus on the standout objective on this list relevant to the current enquiry, namely, ethical purchasing, because this procurement objective is directly relevant to addressing trafficking in Commonwealth supply chains.^{Footnote 74} Before defining ethical purchasing and discussing CPR 6.7 which attempts to address this issue, it must be observed that the Commonwealth’s attempt to address ethical purchasing suffers from several deficiencies which inhibit both its effectiveness and legal certainty.

Ethical purchasing refers to ‘honesty, integrity, probity, diligence, fairness and consistency’ in the procurement process and being defined in such terms means that it is often narrowly interpreted as equating to corruption-free procurement.^{Footnote 75} Rules 6.5 to 6.8 of the CPR govern ethical purchasing. Rule 6.6 covers issues such as conflicts of interest, fair treatment of suppliers, use of public resources and compliance with policies on gifts or hospitality. Of more relevant significance to this paper’s enquiry is r 6.7, which states:

So far as legal certainty is concerned, this rule is worthy of comment on several grounds. First, it is addressed to ‘relevant entities’ (procuring entities) and not to a procuring officer. This is significant because traditionally it was the personnel of a procuring entity who were the target of legal prohibitions, for example, anti-corruption laws. However, r 6.7 now goes a step further because it makes procuring entities the subject of prohibited behaviour, namely, in this instance, the procuring entity itself must not benefit financially from an unethical or dishonest supplier.

Second, r 6.7 is noteworthy because, in not defining the type of benefits obtainable from suppliers,^{Footnote 77} it could be argued that engaging in commercial transactions with suppliers tainted by slavery practices such as child labour and forced labour provides a form of financial benefit (ie, cheaper products) to procuring entities, and thus, such benefits are prohibited under r 6.7, though the matter is not beyond legal doubt. Therefore, for the avoidance of doubt, it is submitted that the Commonwealth should provide legal certainty on this point, making it explicitly clear that the award of contracts to suppliers that engage in exploitative or slavery-like practices falls within r 6.7’s ‘dishonest, unethical and unsafe practices’ which procuring entities must not benefit from.^{Footnote 78}

A further legal certainty problem arises with r 6.7’s requirement that suppliers who have been found guilty of violations of ‘employee entitlement’ should not be engaged by procuring entities, that is, procuring entities must not transact with such suppliers. The lack of legal certainty arises because the term ‘employee entitlement’ is not a defined term in the CPR. Some illustration of what employee entitlement could mean could be found in the Fair Work Act 2009 (Cth) (‘FWA’), the primary legislation governing Australia’s labour conditions. Under the FWA, employees are entitled to unpaid parental leave, annual leave, return to work guarantee, compassionate leave, extended service leave, entitlement to be absent from employment on public holidays and so forth.^{Footnote 79} These entitlements must be available to each employee in a non-discriminatory manner unless the FWA excludes specific groups or classes of employees from receiving the entitlements. As these entitlements relate to labour rights, it could be argued that r 6.7 addresses labour exploitation as suppliers exploiting their workers' entitlements should not be awarded a contract. However, this interpretation of ‘employee entitlements' does not negate the ambiguity caused by the undefined term. To remedy this lack of legal certainty, the Commonwealth should define the term in Appendix B of the CPR. Such an amendment should explicitly include trafficking practices such as forced labour, child labour, recruitment fees, commercial sex acts and other exploitative labour conditions listed under existing federal laws to remedy the lack of legal certainty as to r 6.7’s scope.

Such clarification of employee entitlements may not on its own be enough because another notable limitation on the effectiveness of r 6.7’s prohibition relates to the requirement for there to be finality of ‘judicial decisions’ relating to denial of employee entitlements. Naturally, on one hand, this requirement for judicial determination reflects the traditional respect for due process and presumption of innocence to be observed in a legal system observing the ‘Rule of Law’. However, given the diverse, highly sophisticated and organised nature of trafficking, it may be difficult to convict traffickers, especially legal persons with global networks.^{Footnote 80} To this end, it is argued that r 6.7’s requirement for a final conviction to be obtained against a supplier before r 6.7’s prohibition comes into effect is no longer appropriate. It brings the CPR out of line with the most recent international thinking^{Footnote 81} in this respect.^{Footnote 82} The difficulty in obtaining a final judgment for trafficking is evidenced in statistics showing a wide divergence between the estimated number of suspected trafficking-related offences in Australia and the number of convictions.^{Footnote 83} The disparity between the lack of convictions and reported incidents is a testament to the difficulties surrounding errant suppliers’ successful prosecution. Thus, this limitation, if maintained, will remain a significant obstacle to procuring entities seeking to exclude suppliers tainted by trafficking practices.

Therefore, it is recommended that r 6.7 should be further amended to require procuring entities to exclude suppliers from tendering exercises where there is a Judgment or credible allegations against such suppliers engaging in trafficking practices. This would bring the CPR into line with international thinking as suggested in the OSCE paper on ending exploitation.^{Footnote 84} The practicalities of such an exclusion are extensively discussed in Part III(C) below.

Finally, a major problem arises with the effectiveness of r 6.7 with the exclusion of suppliers from the scope of r 6.7’s prohibition. As currently drafted, r 6.7 is directed at prohibiting actions by procuring entities, but it fails to prohibit actions by non-compliant suppliers: in other words, although the Rule does prohibit procuring entities entering into contracts where suppliers have violated ‘employee entitlements’, the rule does not prohibit such suppliers from seeking to enter into contracts with procuring entities. This represents a major lacuna in the CPR and calls its effectiveness into question if this lacuna is not remedied.

In summary therefore, all the CPR r 6.7 currently requires is that officials seek declarations from all bidders that they have not been subjected to a Judgment denying employee entitlements. This is a very weak regime because of (a) the considerable lack of legal certainty whether r 6.7 covers slavery and trafficking practices at all (as discussed above) and (b) even if it does, the requirement for judicial finality leaves the way open for suppliers engaging in slavery practices to be awarded contracts by unsuspecting procuring entities until such time as a Judgment convicting the supplier is handed down.

B Procurement Planning

C Qualification of Suppliers Stage

The CPR model exhibits several major weaknesses in terms of its effectiveness to combat trafficking in procurement as becomes evident when analysis is undertaken of the CPR’s requirements for the suppliers qualification stage of a public procurement. In this section of the paper, the authors shall identify the problem and propose how it may be remedied. It will be seen how the CPR employs an approach that is no longer fit for purpose, which allows errant suppliers to enter the tender process because the CPR is not assessing them from a trafficking compliance perspective at this early stage. This represents a fundamental weakness in the CPR model as currently constituted.

Many international procurement frameworks approach the matter of ‘not letting the fox into the henhouse’ by allowing their procuring entities to pre-qualify potential suppliers using the procurement framework’s mandatory exclusion and supplier-qualification selection criteria.^{Footnote 107} Currently, the CPR does not take such an approach. It does not explicitly provide for the exclusion of suppliers guilty of criminal activities such as trafficking from the procurement process.^{Footnote 108} Instead, r 10.17 of the CPR provides for mandatory supplier exclusion from further participation in the tender where potential suppliers have not satisfied the commercial, financial and technical conditions for participation.^{Footnote 109} It is submitted that this provision is not sufficient for the purpose of addressing trafficking in public supply chains. To remedy this lacuna, the CPR should address this gap, by introducing an exclusion list that permits procuring entities to exclude suppliers convicted of, or against whom there is strong credible evidence presented, that they have been engaged in trafficking-related activities, such as child labour, forced labour, smuggling and labour violations.

In a well-designed supplier qualification system, each competing supplier’s eligibility to go forward and be evaluated as the winning tenderer first requires a determination to be made as to the supplier’s integrity and capability to perform the contract were they to be eventually selected as the winning bid.^{Footnote 110} To set the background to achieve this objective, procuring entities must set clear conditions for participation in the tender and elaborate supplier evaluation criteria in the procurement documentation against which suppliers will be assessed (assuming they pass the eligibility and capacity to perform the contract stage).^{Footnote 111} Only those suppliers who satisfy such tender participation conditions and provide an otherwise compliant tender can go forward to the tender evaluation stage (to decide whether they, rather than others, should be awarded the contract).^{Footnote 112}

However, the Commonwealth’s CPR model approaches the qualification of suppliers by reference to assessing only the capacity and capability of a supplier to perform the contract (CPR rr 10.15–10.19).^{Footnote 113} This paper therefore recommends that Rules 10.17 and 10.19 be amended to include provisions that will require tenderers to demonstrate anti-trafficking integrity at the supplier-qualification stage. We also submit that clear guidelines are required to be developed to steer procuring officers on how to assess suppliers under such amended CPR Rules.

A further example of how the CPR is not sufficiently effective to cater for trafficking at the supplier qualification stage in the procurement context arises when CPR r 10.19 is considered, presenting yet another example of how major revision of the Commonwealth’s CPR model is required if it is to become effective for combating non-compliant suppliers, and become compliant with UN Sustainable Development Goals for conduct of public procurement.

Rule 10.19 states that:

Rule 10.19 insufficiently addresses trafficking at the supplier assessment stage on several grounds. First, exhibiting lack of legal certainty, the Commonwealth does not provide a definitive (nor regularly updated) list of labour regulations or unethical practices that procuring entities should always consider when conducting their due diligence on suppliers. Second, the CPR does not detail for procuring officers what constitutes ‘reasonable enquiries’. For example, should procuring entities carry out mandatory criminal checks on all suppliers who have submitted a tender? Or should there be some form of uniform declaration/certification that suppliers must submit for consideration along with their tender (the UK approach). As already discussed earlier above, r 6.7 is not sufficient to address this issue because it only requires declarations as to past convictions but does not extend to require declarations as to unethical practices not the subject of judicial determination.^{Footnote 115} Third, another issue relating to r 10.19 concerns the lack of transparency relating to procuring entities’ decisions when reasonable enquiry has shown that a potential supplier is tainted by trafficking. For example, under the US FAR, procuring entities are required to exclude suppliers that do not demonstrate sufficient integrity and do not operate ethically.^{Footnote 116} The EU Public Sector Directive 2014/24/EU takes a somewhat narrower approach by requiring mandatory exclusion of suppliers convicted of trafficking by a final judgment.^{Footnote 117} However, in contrast to these two models, the CPR model provides no guidance on this key matter. So, while it is expected that procuring entities should exclude such suppliers, the lack of clarity and lack of legal certainty as to whether there is a legal obligation to exclude may lead to procuring entities’ approaches to this question varying widely across the Commonwealth’s entities and territories.

This failure by the CPR to require procuring entities to use the tendering process to adequately pre-qualify potential suppliers on trafficking grounds before they can proceed to evaluating the bid and contract award stages threatens Australia’s credibility that it operates a procurement legal framework possessing effective mechanisms to prevent the awarding of contracts to errant suppliers. This may lead to poor performance, delay in completing contracts, reputational damage to the procuring entity, increased costs as well as administrative burdens.^{Footnote 118} It is critical that an effective assessment of every potential supplier, including the practices adopted in their organisation and supply chain, is conducted at this (early) qualification of suppliers stage in the public tender process, in order to determine the integrity of all tenderers well in advance of them being allowed to proceed to the tender evaluation and contract award stage. According to Koker and Harwood, if adequate integrity checks are not performed, ‘unscrupulous suppliers can access and abuse public procurement’.^{Footnote 119}

Thus, in order to maintain the integrity of the Commonwealth CPR procurement regime, it is essential that effective due diligence of suppliers is conducted at the supplier qualification stage to prevent unethical suppliers accessing public contracts. This would enable procuring entities to uncover trafficking practices adopted by potential or incumbent suppliers and allow for the adoption of measures designed to prevent or mitigate against occurrence of this illegal activity contaminating the public procurement system of the Commonwealth.

To enable procuring entities to prevent the award of contracts to suppliers tainted by trafficking practices, the following measures (if adopted) would strengthen the CPR model by leading to the effective exclusion of unscrupulous suppliers at the supplier-qualification stage of the procurement process. If procuring entities adopt these recommendations as pre-conditions for participation, they will need to be brought to potential tenderers attention in tender preparatory documentation in order to comply with observance of transparency. As the following discussion will now illustrate, the adoption of such measures will undoubtedly increase the CPR model’s effectiveness to act as a tool for the disruption of labour trafficking and conduct of unethical labour practices via the public procurement process and additionally address the lack of legal certainty.

D Contract Award

As part of the process of determining a contract award, procuring entities must evaluate tenders received against pre-defined evaluation criteria set out in the procurement documentation to determine the ranking of competing submitted tenders.^{Footnote 124} The contract award stage of the procurement process therefore presents another critical phase of the procurement process which presents a key opportunity to use the procurement process to tackle trafficking.^{Footnote 125}

The CPR r 7.12 requires procuring entities to include ‘relevant’ evaluation criteria and ‘the relative importance of those criteria’ in the request documentation ‘to enable the proper identification, assessment and comparison of submissions’.^{Footnote 126} Beyond this general provision, the CPR does not specify the content of such criteria.^{Footnote 127} Thus, procuring entities have considerable discretion in this area, as long as the evaluation criteria are applied fairly and transparently. The weight attached to each criterion should reflect the priorities of the procuring entity.^{Footnote 128} The flexibility afforded to procuring entities under r 7.12 is advantageous for the procuring entities because it means that procuring entities can adopt evaluation criteria without any infringement or conflict with the current CPR. This approach can be contrasted with the comprehensive approach adopted in international procurement frameworks, such as the European Union’s Directive 2014/24/EU and the UK Public Contracts Regulations, which explicitly permit contracting authorities to include social criteria (such as trading conditions and suppliers’ production processes) in the tender award criteria provided that they can be genuinely linked to the procurement subject matter.^{Footnote 129} In this way, award criteria relating to labour conditions can form part of the tender award evaluation criteria as long as they do not restrict competition; do not give rise to discriminatory treatment between suppliers; are proportionate to the nature of the contract and are applied uniformly, fairly and transparently.^{Footnote 130} It is submitted that the Commonwealth should consider and follow this approach followed in other jurisdictions, by supplementing the CPR with ample guidance on r 7.12 in order to make it clear to procuring entities how to include social considerations such as labour conditions in public tenders’ award criteria.

Another significant part of the contract award process where trafficking can be addressed is in the awarded public contract. The public contract presents a crucial opportunity for procuring entities to tackle trafficking within their supply chains primarily through the insertion of anti-trafficking contract terms and providing effective contract remedies for breach, to deter suppliers from engaging in unethical activities.

The inclusion of contract terms and conditions in the awarded contract to address trafficking is not regulated in the CPR and is not included in the Commonwealth Contract Terms (a generic non-negotiable template used by federal procuring entities when awarding contracts).^{Footnote 131} This lack of anti-trafficking contract terms in public contracts contributes to the lack of effectiveness in the Commonwealth procurement framework because the absence of such terms in the contract means that pertinent legally enforceable provisions are not being used, when they could be, to contractually deter suppliers from engaging in trafficking practices when implementing procurement contracts.^{Footnote 132}

Including anti-trafficking contract terms in all public contracts is not a revolutionary proposal: procuring entities already use contract conditions to ensure supplier observance of procuring entities' social or environmental objectives and preferences.^{Footnote 133} Countries such as the US, and South Africa,^{Footnote 134} all use contract conditions to promote observance of ethical labour conditions, by making observance during the period of contract performance the subject of essential contractual conditions.^{Footnote 135} Thus, the assumption is that nothing precludes Commonwealth (or other) procuring entities from using the contract to address trafficking practices during contract performance, notwithstanding their absence from the CPR.^{Footnote 136}

E Contract Management

Contract management’s primary purpose is to ensure suppliers perform the contract to the required standard and in accordance with their contractual obligations, which should include adherence to anti-trafficking clauses.^{Footnote 137} Therefore, every procuring entity should have a procedure or strategy for managing and monitoring contracts, as doing so is likely to improve performance, manage budgets, ensure satisfactory delivery of the services, minimise risks and ensure the procuring entity continues to obtain value for money during the contract performance period.^{Footnote 138}

Contract management is lightly regulated under r 7.26 of the CPR. According to r 7.26, ‘where applying a standard for goods or services, relevant entities must make reasonable enquiries to determine compliance with that standard, including gathering evidence of relevant certifications’.^{Footnote 139} While the requirement of certifications to validate the standard of the goods or services supplied would obviously come under this requirement, it is unclear whether such standard is confined to certification of the quality of the product or services specified in the technical specification, or whether it also includes contract performance conditions.^{Footnote 140} For example, in the Commission v Netherlands,^{Footnote 141} Dutch procuring entities were in principle able to assess the conformance to specified fair trade product production standards by requiring suppliers of food products to supply products meeting fair trade production standards. The European Court of Justice held against the procuring entities because they were not permitted to specify that fair trade had to be demonstrated by use of a particular named fair trade label, the Max Havelaar label: to do so was discriminatory against suppliers holding other fair trade labels meeting the same objective fair trade product production standards. Applied to the Australian context, it is unclear whether requiring such certification of the standard surrounding contract performance is applicable under r 7.26. Despite the lack of legal certainty with r 7.26, it could be argued that nothing precludes federal procuring entities from requesting such certification from their suppliers, as long as the requirement of such certification is set out in the procurement documents and is not limited to a particular certification label or constitute an arbitrary form of discrimination between potential suppliers.

Furthermore, if certification relating to the standard of contract performance is permitted under r 7.26, to improve the effectiveness of the rule, it is recommended that procuring entities should request an annual (and also) end of contract certificates, similar to the certification of knowledge mentioned in Part III(C) earlier above. The certifications should specify that the supplier has not engaged or supplied products or performed services tainted by trafficking practices. This effective approach is adopted in Subpart 22.17 of the US FAR. The annual submission is a continous reminder to suppliers that the federal government adopts a zero-tolerance policy on engaging in trafficking. Therefore, it minimises the risk of contract performance being tainted by trafficking. Suppliers that fail to provide such annual and end-of-contract certification would lie open to being subject to remedies such as suspension of payment, termination of contract or suspension and debarment.