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CLEANING FRANCHISES FREE TO
SEEK GOVERNMENT BUSINESS

by Simon Lord,
last updated 23/06/2014

30 May 2014 - A change of procurement rules announced yesterday by Labour Minister Simon Bridges has opened up new markets for commercial cleaning franchises.

Franchises are among those allowed to tender for government cleaning contracts following a change to Government procurement rules announced by Labour Minister Simon Bridges yesterday. Under the previous rules, all businesses wishing to tender for government cleaning contracts were required to be members of the Building Services Contractors of New Zealand (BSCNZ).

‘The change means suppliers of cleaning services will no longer be required to join and pay for membership to the industry association to contract with Government,’ said Mr Bridges. ‘Instead, the Government will be able to contract with all suitable suppliers of cleaning services and award contracts on the merit of tenders.’

‘Consultation and analysis has been completed on the requirement for government departments to only contract with members of the Building Services Contractors of New Zealand for cleaning services. The findings show that the requirement has several negative implications, including that it acts as a barrier to some providers, and it is inconsistent with international and domestic procurement best practice.’

‘While the requirement was intended to help improve conditions of workers in the cleaning industry, few, if any, benefits have been achieved,’ said the Minister.

Impact on franchises

The announcement has been welcomed by the Franchise Association, which was one of several trade associations to make a submission on the process. In a release to members headed ‘Government Cans Cozy Cartel,’ FANZ Executive Director Graham Billings wrote, ‘These restrictions were also being applied by other bodies such as District Health Boards and we were aware of many instances where one of our members would have been the preferred supplier but had been eliminated because they were not members of the BSCNZ. Annual membership fees of this association were upwards of $20,000 p.a. for larger companies.’

Franchise Association members operating in this sector which made an individual submission include Paramount Services (also a BSCNZ member) and Crest Commercial Cleaning (not a BSCNZ member). Crest is also a prime mover in the political campaign aiming to change the controversial Part 6a of the Employment Relations Act.

The opening up of the procurement process is expected to create new business for franchises and, consequently, new opportunities for franchisees.

Contentious Issue

The BSCNZ membership requirement in Government procurement was introduced in 2008 as a means of endorsing the Principles for the Property Services Industry agreement, to which the Government is a signatory. The policy was described two years ago by Rodney Hide as a ‘shocking political rort’.The BSCNZ issued a response to his comments here.

Its demise has also been celebrated by Cameron Slater on his Whale Oil website, which has been attacking the BCSNZ for some time. In his latest post, Mr Slater writes: ‘Oh dear, all those 30 odd companies coughing up $20k a year should now be seriously asking themselves why they should be members of a completely dysfunctional organisation that the government has recognised as offering few, if any benefits.’

The BSCNZ has criticised the decision. In a press release, BSC president Patrick Lee-Lo said: 'Currently most companies contracted to clean Government buildings are BSC members who all pay their staff an agreed amount above the minimum wage. This is set annually through our MECA negotiations. This decision leaves the doors open for those who pay their staff the minimum wage to put forward cheaper tenders for Government work.'

A report on the consultation can be found on the Ministry of Business, Innovation and Employment’s website here.

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