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Nec4 on Corrupt Acts and the Cidb Code of Conduct

16 November 2017

An issue we are all aware off and which has affected and unfortunately still affects the construction industry to this day (not only in South Africa, but worldwide), is the issue turning on corruption. This can include unethical practices and conduct, and it can take place during pre-tender or pre-contract stages, further after contract award and even during the contract period of project execution.

NEC4 has included a new clause, clause 18, which deals with corrupt acts, and further defines a corrupt act under clause 11.2(5) as follows:

  • the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust or
  • abusing any entrusted power for private gain

in connection with this contract or any other contract with the Client. This includes any commission paid as an inducement which was not declared to the Client before Contract Date.

The CIDB Code of Conduct also deals with “corrupt acts”. It states that “This Code of Conduct represents an important step in management of integrity and the creation of an environment within which business can be conducted in a fair and transparent manner. It also forms an essential first line of defence in combating the scourge of corruption.

All parties engaged with construction procurement in South Africa (and further within the construction world in general), should always be reminded of the provisions set out in the CIDB Code of Conduct.

It inter alia requires that the “Contractor or his employees should:

  • Undertake the contract with the objective of satisfying the requirements of the employer
    by observing the spirit, as well as complying with the letter of the contract, and, in pursuit
    of this objective, co-operate with all other parties in the procurement process.
  • Aim to meet all statutory and contractual obligations fully and timeously in regard to
    conditions of employment, occupational health and safety, training, fiscal matters, etc.
  • Employ subcontractors only on the basis of fair, unbiased, written subcontracts.
  • Not engage in unfair or unethical practices in dealings with subcontractors.
  •  Not make spurious claims for additional payment or time.
  • Not approach any representative directly in connection with a contract, save for a legitimate purpose.
  • Not undermine the development objectives of the employer through tokenism or fronting.
  •  Not engage in collusive practices that have direct or indirect adverse impacts on the cost of the project to the employer.

It further requires that the “employer, his employees, or agent should:

  • Not invite tenders without having a firm intention to proceed with the procurement.
  • Ensure that the basis on which tenders will be evaluated is clearly set out in the
    tender documents and that tenders are evaluated and awarded accordingly.
  • Employ contractors only on the basis of fair and equitable written contracts.
  • Not accept gifts, favours or other considerations, of anything more than token
    value, from any other party to the procurement process.
  • Ensure that the procurement documents are clear and comprehensive and set out
  • the rights and obligations of all parties.
  • Not breach the confidentiality of information, particularly intellectual property,
    provided by tenderers in support of their tender submissions.
  • Not engage in unfair or unethical practices in dealings with subcontractors, including
    the practice of trading one subcontractor off against another in an attempt to
    obtain lower prices.
  • Ensure that all tenderers are fairly treated and that tender offers are evaluated without bias.
  • Ensure that transparency is maintained in the tendering process. This implies, under
    normal circumstance, inviting tenders as widely and publicly as possible, stating
    clearly any prequalification criteria and considering only those who qualify, opening
    tenders in public and reading out/making available key information, such as tender
    prices, basic award criteria and times required for completion, and, in due course,
    making known to unsuccessful tenderers the outcome of the evaluation process.
  • Ensure that his obligations in terms of contracts with contractors and agents are
    scrupulously and timeously met, particularly in regard to making payments and
    giving decisions.
  • Ensure that legal requirements and principles are upheld in relation to safety,
    health, the environment and sustainable delivery management.

 

The above is only limited extracts applicable to the contractor and the employer and a full copy of the CIDB Code of Conduct can be obtained and downloaded from the CIDB website or at the link below:

http://www.cidb.org.za/publications/Documents/Code%20of%20Conduct.pdf

This Code of Conduct can be enforced in terms of Section 29 of the CIDB Act (2000). In the event of a breach of the code, the Board may convene and conduct an enquiry. If any misconduct exists and is established, the CIDB Board can sanction the guilty party (or parties) by either issuing a warning or a fine, or refer the matter to the South African Police Services for further investigation, or worse, deregister a contractor for a period of time, which will mean that it cannot take part in any tendering process during that period, or maybe at all depending on the misconduct. This will not be an ideal position to find yourself, especially when you seek to grow your company within the Construction Industry.

Author Barry Herholdt, Senior Associate