Contracting to meet the Health and Safety in Employment Act 1992 -- draft guidance for principals
3. Contractor selection and negotiation of terms
Steps taken before work starts are often crucial. But thinking about health and safety from the beginning of a project and building considerations into design and planning is regularly overlooked.
Prosecution statistics suggest that principals are more likely to be found in breach of section 18 in relation to pre-site behaviour than afterwards. Case law has set a high standard for principals to include health and safety issues in the negotiation of contracts. A Court of Appeal judgment has stated:
".... in contract negotiations between principal and contractor or subcontractor - no matter how informal - safety is as critical factor as the contract price or duration. As between principal and employer who will supply and maintain safety equipment; who will bear any losses if that equipment fails or is unavailable, who will negotiate directly with the employees to ensure the safest working methods and conditions in the circumstances of the contract. If a principal lets a contract to an employer which does not incorporate and allocate responsibility for such features, the principal may well assume the burden of assuring that workers are not harmed. When negotiating any contract covered by the duty of section 18, the principal must turn their mind to the question of, and be satisfied that, the contractor is competent to perform the work being contracted for in a safe and healthy manner." (Central Cranes Ltd v Department of Labour [1997] 3 NZLR 694).
In that case, the Court of Appeal also approved a statement made in the original judgment that a principal cannot relieve itself of responsibility for the safety of workers on site by being physically absent from the site, or lacking specialised knowledge. For example, in this case a principal was held to be liable under section 18 for a sub-contractor's failure to observe safety precautions in the rigging of a tower crane, and was given general responsibility for supervising the site. The principal had a duty to ensure the contract terms included clearly defined duties for providing safety equipment and generally supervising safe practices.
It needs to be reiterated that simply employing a competent contractor will not usually satisfy the principal's duties under section 18, although it is a practicable step that's required to be taken. The principal may decide the contractor is able to perform the work in a safe and healthy manner by determining:
- whether or not they are a well-established and competent firm or person with a good safety record
- that the contractor and/or its employees is qualified to do the work (e.g. is the holder of the appropriate certificate of competence, such as a registered electrician).
As part of this process, the principal should consider evaluations from earlier contracts, references provided by the contractor from previous clients, or other evaluative material as appropriate.
There may be some circumstances where it is practicable for the principal to prescribe safety requirements in advance without subsequent monitoring, but this is dependent on the particular facts of any case. Clearly, if the principal is aware of an intention to adopt questionable safety standards, it is reasonably practicable to ensure proper standards are observed.
Example
High and Dry Ltd was a well-established roofing company. Based in one region, it employed in another region a regional manager, Brian, and conducted its business by employing subcontractors. It obtained a contract to supply and fix roofing and external cladding to an industrial building and subcontracted a roofing contractor, Mike, to perform the work. There was verbal negotiation and agreement was reached between Mike and Brian on how the work would be done, including health and safety issues, and particularly with regard to the height of the operation. Mato required a scaffolding truck to be provided for the installation of wall cladding, guttering and wire netting on site.
High and Dry Ltd had a health and safety policy which required, among other things, the use of safety harnesses. However, there was no requirement for supervision, or that High and Dry provide the recommended safety equipment. Mike had indicated to Brian that he did not support the use of harnesses when installing the long-run roofing. While standing on purlins and working with an employee laying building paper in preparation for the sheets of long-run roofing, Mike suffered a heart attack and fell through the wire netting to concrete 10 metres below. He died soon after from injuries suffered from the fall. High and Dry Ltd was convicted and fined under section 18 for failing as a principal to ensure the safety of a self-employed contractor.
Below is a brief discussion of some of the issues to be considered at each stage of the tendering process.
3.1 Pre-tendering
Contractor selection is particularly important in any tendering process. Principals and contractors need to share information and agree what has to be done, how it is to be done and who should do what.
Contract types include:
- projects, notably construction, installation or upgrade work (and sometimes within a segregated area for the duration of the contract)
- regular maintenance and repair activities (e.g. during off-season shutdown, painting contracts, or when contractors' and principal's employees may be working in the same area)
- routine service and/or cleaning contracts, where the work is almost intrinsic to the work of the principal.
The nature of the contract (and the significance of the hazards) will affect procedures and precautions required. Some tasks involve little risk, while others could lead to serious, even fatal accidents or major health effects to either the contractors' or principal's employees, or others.
The broad health and safety implications will need to be considered by the principal as they assess work to be carried out. The principal is responsible for advising on appropriate safety standards to be observed. Depending on the work being undertaken, where a principal is required to take all practicable steps to avoid harm to contractors and their employees, this should involve an awareness of the required standards. For example, the degree of prescription expected is high in cases such as the operators of a major electrical substation, or an oil depot, engaging contractors to carry out service work. It would be lower, on the other hand, in the case of a self-employed potter engaging an electrical contractor to install a pottery kiln. But even in the latter case, the principal cannot avoid taking the practicable steps necessary to ensure health and safety standards are met.
Example
Graham was employed in the evenings as a cleaner by the Perfect Cleaning Company, which had a contract to clean an export meat works, Exco. The work involved cleaning of machinery as well as work areas, surfaces and amenities.
Exco installed a large new skinning machine, which was used to remove membrane from meat. Meat was fed into it through rollers, the machine would grip the meat and a fixed blade would remove the membrane. The new machine became part of the cleaning contract, and Graham's job came to include the thorough cleaning of the new machine.
Cleaning the machine involved hosing it down with hot water, then opening an in-feed guard to expose a toothed roller and blade while the machine was still running. One day, four weeks after the machine was installed, Graham was completing this cleaning when his glove was caught by the machine - but he avoided injury. He told his supervisor, Jed. A week later, his hand was caught in the machine and he lost the tips of two fingers.
Exco, as the owner of the machine and principal to the cleaning contract, was convicted under section 18(1)(b) for failing to take all practicable steps to ensure the safety of a contractor's employee. It had not adequately informed the contractor of the nature of the hazards involved in the newly installed machinery.
The Perfect Cleaning Company was also convicted under section 13 for failing to train Graham.
Pre-tendering steps
- At the pre-tender stage of a contract, principals should identify the work covered by the contract, and hazards likely to occur.
- Development of the tender documentation begins with consideration given to how health and safety issues will be included in the tender documents.
- At this early stage, any significant health and safety information available should also be provided to potential tenderers.
Where health and safety is determined to be a critical component of the tender and contract
- Potential tenderers might be expected to submit a health and safety plan.
- Principals may then ask potential tenderers questions to help assess their health and safety capability and competence for that work, and how they would manage health and safety.
Benefits of looking at the health and safety management of potential tenderers at the pre-tender stage are that it:
- emphasises from the beginning that health and safety is an important issue
- limits the number of tenderers, so that only contractors who have appropriate health and safety practices in place are invited to tender
- allows more time for assessing and negotiating the health and safety performance of tenderers.
Pre-qualification
Pre-qualification to establish a shortlist of tenderers need not be adopted in all cases, but where it is used there can be a number of benefits. Also, even where there is no pre-qualification process, the information will still need to be requested and examined during the following stages of the tender. A pre-qualification process is not only useful to contracting companies but the principles can also be applied to staffing agencies.
Pre-qualification is to determine competency
The sample pre-tender questionnaire at the end of this section contains a range of questions to help determine how well contractors manage health and safety. It asks the contractor to demonstrate an effective health and safety management system, as well as asking for information on the management of specific hazards.
Information required
Pre-qualification should look at the general ability and competence of the contractor for the work. Health and safety commitment and procedures should also be a part of the criteria. The level of detail required for pre-qualification should be appropriate for the type of project being undertaken and will depend on the project's size, type and complexity.
Broadly then, a pre-tender questionnaire will cover the following dimensions of health and safety:
- documentation e.g. health and safety plan for the type of activity concerned, existence of a health and safety policy, hazard assessments, method statements (and other procedures for ensuring the safety of the work) accident compensation, public liability, and other insurances
- personnel e.g. qualifications and training, demonstrating competence in the required areas
- subcontractors e.g. arrangements for assessing and appointing subcontractors
- health and safety performance e.g. employee participation systems, accidents, incidents, employee health monitoring, enforcement action, outcome of safety audits, etc.
Principals should be wary of pre-prepared or printed materials submitted at the pre-tendering or tendering stages and encourage specific answers to their questions.
Where the pre-tender questionnaire is asking about critical aspects of health and safety, e.g. essential accreditation of personnel, this should be indicated in the questionnaire itself.
Where contractors or subcontractors are needed quickly, a simplified form of capability assessment should have been completed beforehand. It is important for principals to have contingency plans and, where reasonably practicable, anticipate circumstances where contractors may be required at short notice. It is essential to remember commercial urgency will never be a defence to a flawed assessment.
Example
Highways Ltd had contracted to work on reconstruction of a realigned section of state highway. Part of the work involved felling a stand of trees adjacent to the site. One of Highways' managers engaged a fencing contractor at short notice to do the felling, even though neither the contractor nor his assistant had done this type of work on a paid basis before. The manager gave instructions to the contractor and one of his own employees who was an experienced tree feller. Once the work started, the Highways employee warned the manager that the contractors were working in an unsafe manner and removed himself from the job. Soon afterwards the driver of a passing vehicle was hit by a falling tree when the contractors were signalled to continue, but made no independent check that the area was clear. The failure to make this check was contrary to established practice in tree-felling. Highways Ltd was convicted under section 18. Among other things, it had failed to employ competent tree-fellers, due to its lapse in organising the work at the last minute. It had also failed to recognise the hazard and provide proper co-ordination of the various tasks of clearing, signalling and felling.
Using the pre-tender information
Satisfactory completion of the initial assessment will usually allow contractors onto a principal's list of approved/ preferred tenderers or contractors. Approval may be restricted to certain key tasks or occasional activities, depending on the nature of the work.
It should be stressed again that pre-tendering is concerned with determining the general capability of potential tenderers, whereas their ability to manage a particular contract is determined in the tendering process itself. Examples of questions that are more specific to a contract are given in the information for tenderer document in section 3.2 below. The information gained from that form may be recorded and, after the contract has been signed, used to develop and implement a health and safety plan. However, for some contracts it may be appropriate to gather the information at the pre-tender stage.
Benefits of pre-qualification for subsequent tenders/ contracts
As noted above, many organisations which regularly engage contractors use a pre-qualification procedure to help establish a shortlist of tenderers, or contractors, that they can use for contracts not requiring a tender process. This means any organisation which regularly contracts out work may be able to go directly to an already established shortlist of tenderers or pre-qualified contractors developed from past similar projects. This could result in considerable savings of time and expense during subsequent letting of contracts.
Pre-tender/ pre-qualifying questionnaire
Below is an example of some of the health and safety issues and questions that might be added to a questionnaire for pre-qualification of tenderers, with sample questions for completion by a tenderer. It is extensive and appropriate to a significant contract, but all or part of its contents may be used by principals as a basis to developing their own checklists. Checklists or questionnaires on health and safety may be integrated with other materials or may stand alone.
The health and safety information gained - along with that on financials, credit ratings, contract performance, technical and other subjects - can be used to develop a profile of potential tenderers. In some situations it may not be appropriate to collect all the information, such as details on subcontractors, before tendering.
The purpose of the questionnaire is to help discover how effectively the contractor is managing health and safety. The information gained will be combined with project specific information and questions at the tender stage.
It is important to remember that supporting documentation will also need to be provided with the checklist as evidence health and safety procedures are in place and are carried out.
Note: Where a pre-qualification checklist is not used at the pre-tender stage, the information will still need to be requested, and questions below considered during the full tendering stage.
Subject |
Information required/expectations |
|---|---|
Tender title |
|
| Business Information | |
This category may include questions or invite respondents to provide information on: • the numbers of employees • corporate structure • a summary of experience relevant to the work being tendered for, and references. |
|
A principal should ask its contractors: "What do you expect from us as the client?" |
|
Key personnel |
Supply the name, qualifications and experience of the person proposed to be in control of the place of work for the project. Supply details of key employees on the project, and health and safety qualifications held. Name:__________ |
Insurance and accident compensation |
Provide details of: • public liability insurance held; and • accreditation in ACC injury prevention programmes. |
Compliance with standards |
Where relevant, contractors may be required to provide evidence of their conforming with ISO 9000, AS/NZS, or other standards for health and safety compliance. |
Associations/ memberships |
Provide details of the following memberships: • trade or employers' association • health and safety organisation Indicate the type and extent of health and safety information provided by the associations. |
Health and safety experience |
The principal must be made aware of the contractor's health and safety experience. Does the contractor have an employee participation system for dealing with health and safety issues? Which of the following safety records does the contractor maintain: • an accident register as required by the HSE Act? • a hazard register? • hazard information, such as Safety Data Sheets? Where necessary the contractor should supply records for the last five years of health and safety interventions, such as: • fatalities • lost days from injury to workers • accidents resulting in environmental damage or pollution • notices, warnings or prosecutions by an enforcement authority such as the Department of Labour. |
Health and Safety Management |
|
Policy |
• Is there a written health and safety policy? (if yes, provide a copy) • Is the policy signed by the managing director? • How is the policy communicated to employees? |
Subcontractors |
List subcontractors that will be used, and for which tasks. • Has their competence been formally assessed? • Was health and safety considered in their selection? • Is there an induction/orientation programme for new subcontractors and their employees? • Are there procedures for controlling the safety performance of subcontractors? |
Organisation |
Name the senior manager in charge of health and safety. Provide details of how the work is supervised, and who will be responsible for supervision. |
Arrangements |
An outline of the procedures in place to ensure a safe system of work. • Are there documented working practices and safety instructions? • How often are these audited? • Are there procedures for maintaining plant, equipment and vehicles in a safe • condition? • Are there procedures in place for employees to actively participate in the improvement • Is personal protective equipment supplied to all employees? |
Information, training and supervision |
Summarise the health and safety training and information managers andsupervisors receive to help ensure health and safety in the work they manage orsupervise. Summarise the health and safety information, instruction, and training employees have received in relation to their work and the equipment they use. • Is formal safety training given to employees? • Have the personnel who will undertake specific work received formal training in all relevant areas? • If so, what form does it take? • Is there an induction/orientation programme for new employees? • Are there health and safety representatives? |
Emergency procedures |
Provide details of emergency procedures and planning. • Does the emergency plan identify responsibilities and procedures to be followed? • Have all staff received training in emergency procedures? • Have emergency drills been carried out within the 12 months? |
Planning and setting performance |
More detail will be required for more complex or higher-hazard projects. |
Hazard assessment |
Are formal hazard assessments carried out and recorded? (The contractor may be asked to provide examples with related information e.g. method statements, explaining health and safety controls and other precautions.) • Where hazards are identified, is there a system to identify and assess significant • Are accidents and incidents reviewed for the existence or otherwise of significant hazards • Is there a system for identifying new hazards? • Are there procedures for eliminating, isolating or minimising significant hazards? |
Accident investigation |
• Is the accident register maintained and reviewed for hazard assessment • Is there an investigation into any accident that results in harm, or could have resulted in harm? • Do investigations include remedial action plans to initiate future prevention? • Are the following advised of accidents: - The employees and health and safety representatives? - Where there is serious harm, the Department of Labour? - The principal Describe the responsibilities for notifying specified work, and reporting illness or injury |
Hazardous substances |
List the hazardous substances used. • Are the key hazardous substances recorded? • Are there safety data sheets accessible for hazardous substances? • Are test certificates current for required sites? • Are there approved handlers for hazardous substances where required? • Are MOSHH assessments carried out and regularly reviewed? |
Plant and equipment |
Are plant and equipment, lifting gear, etc. inspected, tested, examined and maintained, and proper records available? |
Health monitoring/ surveillance |
Describe the monitoring/surveillance of employees and the workplace, particularly with regard to any specific hazards outlined by the principal. |
Measuring and improving health |
Describe how performance is systematically assessed by inspection, audits etc. Are there: • In-house safety meetings and/or safety committees? • Safety inspections or audits? • Other forms of employee participation? |
Review |
Describe what happens to the results of checks, investigations and audits. How will the principal be involved in the review process? |
Completed by |
Name: Contact details: Date: Signed: |
3.2 Tendering
Principals are required to give and receive information on hazards at the tendering stage, whether or not pre-qualification is used. This will normally take the form of the principal requiring tenderers to complete a health and safety questionnaire or checklist relating to the specific hazards of the contract, along with other tender documentation. This information is combined with any other gained from pre-qualification.
Where pre-qualification has not been used, the principal will also need to gather information that allows assessment of the general competence of the contractor to manage health and safety. A decision to accept a tender cannot be based on price if it is at the expense of adequate provision for health and safety. It is also worth remembering that a tenderer's health and safety record may well be indicative of its business efficiency and reliability as a contractor.
The principal has a responsibility for contributing to hazard management
The principal should identify and describe hazards related to the contract with the tender documents. They should also indicate, for example, whether work is to be done when its employees are absent, any areas that need to be demarcated and kept clear, and other similar information. (For a suggested format for an "information for tenderer" document, see below.) The principal should also stipulate safety standards in advance, where practicable.
Example
Entale Ltd engaged several contractors to work on repairs in a tunnel. One of the contractors used a petrol-powered excavator. Several people working in the tunnel, including the contractor, experienced carbon monoxide poisoning due to the fumes created. Entale Ltd was convicted under section 18 because, among other things, the employees who had been responsible for drawing up health and safety plans for the project were not sufficiently experienced to recognise the full dangers presented by carbon monoxide emissions. No monitoring devices had been provided and the masks supplied were not adequate to protect against carbon monoxide.
Tender documents should outline arrangements to enable the contractor to work within the principal's health and safety management system (e.g. explaining and agreeing on appropriate points of contact and named individuals for reporting and monitoring progress).
The contractor will also be expected to describe their hazard management processes, and identify specific hazards which the principal may not be aware of.
Hazard assessment will include a competent examination of what in the work could cause harm to people or other damage, in order to weigh up whether enough precautions have been taken, or if more should be done to prevent harm. Often the principal, contractor and any subcontractors will need to discuss jobs together to ensure the necessary information is available. Job registration provides a typical checklist for such discussions (see below). More formally, permit-to-work systems are often used in high-hazard situations. These are specific, formal procedures used to control hazardous work (e.g. entry into confined spaces, hot work, plant, electrical work, and pipeline breaking).
Example
Zane Construction Ltd engaged electricians and carpenters as subcontractors to assist in a large construction project. A carpenter using a nail gun was fixing timber while an electrician was in the vicinity. A nail from the nail gun went through the timber and lodged in the electrician's head, causing permanent nerve damage and hearing loss. Zane Construction Ltd, which did not have an effective permit system for powder-actuated tools, such as nail guns, was convicted under section 18(1)(b).
In a controlled situation, permit-to-work systems may provide the most effective means of a principal managing exposure to significant hazards by contractors, employees and others. They are an essential feature of safe systems of work in many maintenance activities. For example, a principal was held liable when a contractor's employee was burned by an electrical flashover after exercising uncontrolled access to switchboard equipment that required controlled access and a permit-to-work.
Part 2 of A Guide to the Health and Safety in Employment Act 1992 has more information on hazard management requirements.
Including project health and safety information in the tender
This information describes known health and safety hazards and issues to be managed for a specific contract. It is generally issued with, or included in, the documents. It describes tenderers' minimum obligations with regard to health and safety, and enables allowances for health and safety to be factored into their tender.
The information for tenderer can be used as key material in the process of tender assessment, raising specific health and safety issues to which tenderers s respond to in their tenders. These responses in turn need to be considered by the principal in making a judgement as to whether potential contractors have both adequate provision for health and safety, and are competent to carry it out.
Those preparing the project health and safety information (whether the principal, or an agent such as a consultant engineer or architect), will need to determine its most suitable format. The project health and safety information should be drawn up to require specific responses to issues. There is little advantage in only outlining hazards or risks. What is needed is the contractor's responses to how they will manage them during the work in terms of elimination (where practicable), isolation (again, where practicable) or minimisation (if elimination and isolation, respectively, are impracticable). The contractor's responses to the information for tendererer document will in turn form the basis of the health and safety plan for the project.
The main purposes of the information for tenderer document are to:
- provide a focus for bringing the project health and safety issues and the design to the attention of parties
- enable contractors submitting tenders to be fully aware of the project's health and safety requirements
- provide a benchmark against which the tender submissions can be measured
- provide a basis for the development of the contractor's health and safety plan for the project.
The information will mainly come from:
- the principal, who provides the contractor with information relevant to health and safety, such as existing drawings, surveys, a description of hazards known specifically to them, their own health and safety requirements
- designers/advisers or agents of the principal, who provide information about the known hazards which will have to be managed by the contractor.
Subjects for inclusion in the information for tenderer document
The degree of detail required and the size and format of the information, will depend on a number of factors such as the nature of the project, types of foreseeable hazards, potential risks, and other requirements of the principal.
Obviously, some items listed below will not be relevant to all projects. Projects with minimal risk call for simple, straightforward approaches. On the other hand, large projects involving significant risk will require more detail. The health and safety information provided should be specific and tailored to the project, and the needs of those receiving the information.
Conveying the tender information
Health and safety information for tenderers can be included in tender documents in a number of ways, depending on what is appropriate. It can be included as part of the specifications for a project, as a totally separate document, or as a documented discussion with potential contractors on particularly small jobs. The key point is it needs to be appropriate to the project, so health and safety requirements are effectively built into tender documents and the project in some form -- addressing health and safety from the beginning of the process, clearly defining and acknowledging the safety requirements in the tendering and award process.
Template for an information for tenderer document
The template below will help the principal record job details and related hazards, as preliminary information for the contractor. The form may be completed by the principal either before, or with, tender documents. It provides an example only, and indicates the likely content and format of such documentation. Some of the information will be intrinsic to other tender documentation, but wherever possible it should be made clear as a matter of health and safety.
| Subject |
Information required/expectations |
|---|---|
Tender title Ref no: |
|
Description of job/project |
Describe the nature and extent of the project (location, type of work, timetable, performance standards, etc.) Outline the design of the project as required for the tenderer to be aware of all the health and safety issues involved. This may include information on the project beyond the scope of the work being tendered for. |
Hazards relevant to the job |
Detail the hazards likely to be associated with the job under tender. Hazards described may be proximate to and not necessarily part of the tender itself |
Site/place of work |
Describe the site/ place of work with regard to location and relevant issues, and including such factors as provision of services, existing or coinciding uses, adjacent premises, access and traffic systems and restriction, ground condition, atmospheric conditions, etc (e.g. underground services, drains, overhead lines or cranes, machinery or vehicles, work at heights, electrical or chemicals hazards, etc). |
Materials/ equipment to be used |
The description need not repeat the tendering specifications, but should draw the tenderer's attention to any particular materials or equipment that presents health or safety issues. This includes materials, equipment or plant supplied, or specified by the principal and to be used/installed by the contractor (e.g. flammable, toxic, substances, heavy and/or bulky items). |
Work processes |
This includes, for example, welding/hot work, electrical, confined/restricted spaces, |
Special requirements |
Detail any restrictions on working hours, vehicle access, difficult or restricted access • Is there provision for the health and safety plan to be incorporated into an existing health and safety plan for the site? • What other site-wide factors are there (for example: are there any special client needs such as access for school children, elderly or disabled persons in the vicinity; the positioning of the site access or exit points; location of unloading, or layout and storage areas; temporary site accommodation; traffic/pedestrian routes and so on)? |
Other information provided by the principal |
|
Design information or specification Drawings Principal's rules for contractors Emergency procedures |
Available? Yes ◻ No ◻ Provided? Yes ◻ No ◻ Detail the relevant information that is available to the tenderer. Available? Provided? Yes ◻ No ◻ Detail the drawings that have been prepared by the principal for the tender, and any pre-existing drawings, plans, specifications or other documents that are relevant. Provided with invitation to tender? Yes ◻ No ◻ • What site rules relating to the principal does the contractor need, such as emergency procedures, permit-to-work rules and so on, when work takes place at the principal's premises? • Will there be any overlap with the principal's own activities during the project, Describe the principal's emergency procedures for the site/ place of work. Detail the emergency procedures required of the tenderer to resolve any anomalies or points of conflict. |
Contact and liaison |
Describe a process for liaison and coordination for health and safety that is appropriate to the project. Include a procedure for dealing with design changes after the work has started. Detail the responsibilities for notifying work or reporting accidents or serious harm to the Department. Provide details of how the work methods are supervised, and who will be responsible for supervision. Name of tenderer's contact employee: Senior manager: Tel: Fax |
Completed by |
Name: Position: Contact details: Date: Signed: |
3.3 Tender review, evaluation and contractor selection
Tender submissions (or pre-tender documents) should be received, evaluated and assessed by the principal to ensure potential contractors have complied with the tender documents, including the requirements relating to health and safety for the project, and are competent to carry out the contract.
Assessing health and safety competence
Assessment of the appropriate level of health and safety competence is an important element of contractor selection and appointment. To be consistent and fair, the principal needs to give full consideration to the information gained from tenderers at the pre-tender and/or tender stages.
Where possible tenderers should be advised in advance of essential conditions required before they are considered competent to complete the contract.
The principal should evaluate the tenderer's ability to manage specific issues contained in the information for tenderer document or otherwise provided by tenderers. The level of detail required for a decision will depend on the nature of the project and risks involved.
Compliance with health and safety requirements must be a precondition to any tender being successful. Where there is any deviation from required standards, these should be addressed before acceptance of the tender.
Past performance in health and safety is a significant issue, but should not be the only consideration. Also competency assessment should not be limited to one deciding factor, particularly tender price. The courts have made it clear that safety is just as important as tender price when entering into a contract. Issues that focus on the health and safety requirements for the project need to be raised, and answers sought.
Capability
Principals to contracts will be expected to judge the capability (or competence) of contractors where this is safety critical. In order to do this, they will judge the health and safety capabilities of short-listed contractors according to information about the:
- contractor's management systems and practice
- contractor's experience in the type and complexity of the work to be carried out
- extent to which the risks of the contract will be minimised by suitable precautions.
This may be based on information gained through the pre-qualification process, but companies will often develop permit systems tailored to the particular tasks and hazards their contractors will encounter. An example of a permit-to-work system used in a manufacturing setting is provided in appendix 3.
Accreditation under sector specific, ACC or other health and safety management programmes are a useful indicator of performance, but should not be used alone as a proxy for health and safety capability. Instead, assessment should be made with reference to particular hazards and processes.
However, principals themselves will need to have the appropriate training and competence at least to the level of being able to exercise good judgement.
Subcontractors will usually be expected to meet selection criteria which match those used for selecting the main contractor.
The competence of individuals will usually need to be assessed
Individual competence is judged according to a combination of training and experience.
The contractor's managers and supervisors will need to demonstrate they have received adequate health and safety training for managing the work, and have access to appropriate competent advice.
Health and safety certificates of competence or "passports", such as those issued by SiteSafe in the construction and retail sectors, provide another source evidence regarding appropriate basic training and competence in a particular industry or setting. Health and safety representative training is another important indicator of awareness and consistency in the contractor's workforce.
Considerations in selecting contractors
In summary, notwithstanding the above discussion, in selecting a contractor the principal should consider the candidate's ability to manage, implement and monitor health and safety procedures, including:
- insurance and accident compensation ratings
- compliance with standards
- associations/accreditations
- health and safety experience
- policies and procedures
- subcontractor selection and management
- organisation and arrangements (including assignment of responsibility for health and safety issues, employee participation, etc.)
- information, training and supervision
- planning and setting performance standards
- hazard assessment
- accident reporting, recording and investigation methods
- performance monitoring processes
- review methods
- safety record.
Subcontractors
Principals are advised to also monitor the selection of subcontractors. In some situations health and safety requirements, such as a permit-to-work system or particular hazards, may mean the principal nominates particular subcontractors as a condition of the contract.
The selected head contractor will need to supply potential subcontractors with information about the project, the site, relevant parts of any existing health and safety plans, and any other relevant information. Much of this information will be relayed from the tendering or pre-tendering materials supplied by the principal, and includes:
- arrangements for the health and safety management of the project
- monitoring arrangements
- workplace/site rules and procedures (such as wearing personal protective equipment, training or competency requirements)
- processes for giving information and improving health and safety management in the workplace
- procedures for further subcontracting.
Requirements for health and safety need to be made clear at the pre-tender and tender stages. This means tendering contractors, who are in fact principals themselves in relation to subcontractors, have enough information to ensure site-specific provision for health and safety is included in their own tender submissions, demonstrating they are competent in health and safety matters relevant to the project.
It is a truism that in all tendering situations, price is only one factor and a low contract price does not necessarily lead to value or efficiency in the performance of the contract. The courts have made it clear cost savings or time reductions should never be sought at the expense of safety. Many successful prosecutions have concerned cases where unsafe practices arose from perceived commercial pressures.
Health and safety being overlooked can lead not only to accidents and injuries, but also delays, difficulties, and increased costs that may be borne by contractor and/or principal.
Evaluation
Principals need to ensure that:
- tenders are assessed by those with skills and knowledge relevant to the health and safety requirements of the project
- tender evaluation includes adequate consideration of health and safety requirements
- adequate time is allowed to assess the health and safety requirements of tenders
- the proposed schedule for the project would not adversely affect health and safety
- the health and safety performance of potential contractors and organisations tendering for the work has been adequately assessed
- all tenders are thoroughly reviewed, benchmarking the potential contractor's health and safety competence against tender requirements.
3.4 Awarding the Contract
Information-sharing between the principal and contractor should begin immediately. Depending on the type of contract, once the contractor is appointed a contract-specific health and safety plan should be developed by the contractor and provided to the principal.
Project health and safety will often be managed by the contractor, but the plan provides an important means for the principal (in conjunction with the contractor) to monitor the contractor's health and safety performance.
For a substantial contract, the principal may ask the successful tenderer to give a detailed presentation on their work activity plan. As discussed above, this would include providing an outline of the health and safety plan prepared for the project, and an opportunity to answer further questions on health and safety arrangements.
Where necessary, post-tender meetings should be held with potential contractors on a one-to-one basis to further assess their competence and aptitude for managing health and safety.
This could, of course, coincide with any discussions and clarification of other aspects of the tender. For example, principals monitor contractors constantly to ensure they are conforming to contractual specifications in other respects, and to monitor work quality. Health and safety should be no different.
Documentation
Health and safety requirements should be documented and become part of the written contract wherever practicable. Usually this will involve reference to the management of the project's specific hazards, conformity with standards, co-ordination and reporting requirements and other project-specific information obtained in the tender documentation. The health and safety plan may also form part of the contract documentation.
Principals will be expected to act on information in their possession at the relevant time. For example, the courts have found that when a principal learnt that a contractor allowed its employees to decide on the use of safety equipment, it had a duty to ensure the contract terms included clearly defined duties for the provision of appropriate safety equipment and supervision of work practices.
Briefing the contractor
Where appropriate, contractors and their employees should be given induction training regarding the workplace or site, and the opportunity to ask about hazards and risks. The nature of induction training will vary according to the types of hazards and associated risks. In some cases, basic induction training will be sufficient, where in others training will need to be more rigorous. The principal's conditions for contractors, whether general or for defined tasks, may be discussed, agreed and specified as part of 'job registration'.
To help identify risks and to plan the work safely, the principal may use job registration forms, or checklists specific to the project (see the sample job registration form in section 3.5 below). This helps to assess the risks associated with the activity and define control measures and precautions required (e.g. safe systems of work, method statements, use of specific equipment). The number and type of questions will depend on the work complexity and hazards involved.
3.5 Information-sharing between principal and contractor
Information sharing between principals and contractors will be closely related to the monitoring of contractor performance. What is appropriate will vary according to the circumstances.
In a situation where the contractor is employed for their particular expertise and the principal has little effective control over the place of work, the principal might not be expected to take detailed operational steps in relation to the contractor's specialised functions. This may reduce the need for information sharing to a context of careful planning, selection and induction.
As an example, a principal that had subcontracted building work was held not to be liable for failing to ensure on site supervision was provided where it was seen to have taken all practicable steps in relation to contractor selection, providing safety information prior to work actually commencing that identified the specific hazard, and installing an adequate induction process. In another case, a principal who had carefully stipulated appropriate requirements for confined space entry in advance, made extensive contractual provision for health and safety, and checked its contractor's safety procedures, was held not to be liable when members of the contractor's specialised confined entry team were involved in an accident arising from defects they had noticed on site.
This is in contrast with a situation where the nature of the work may be well known to the principal, or where the principal may exercise a high degree of control over the place of work - perhaps providing specialised plant or equipment for the use of the contractor - and there is associated information sharing.
Examples
The owner/ manager of a farm was held liable as a principal, when the employee of a contractor was killed after becoming entangled in a power take-off shaft attached to a tractor. The duty applied because the farmer was present on the farm and not "off- farm", was involved in the overall operation, and had provided machinery with dangerous parts unguarded.
A principal provided a "cherry picker" for a contractor and their employees to gain access to a roof. When the cherry picker broke down and wasn't replaced or repaired in a timely way, the contractors' employees began to gain access to the roof in an unsafe way. After an accident involving one of the contractor's employees the principal was held to be responsible for maintaining the equipment and developing a procedure to follow if the equipment failed.
A building contractor engaged a subcontractor to provide scaffolding as part of their contract. They failed, as a principal, to tell the subcontractor that the scaffolding was to be used to support a free-standing wall. When the wall and scaffolding collapsed, they were held to have breached the Act.
Whatever the situation, effective information is critical and the principal and contractor should share and discuss information about the work and the area where it is to be carried out. Above all, the information needs to be effective. For example, simply providing information about the unsafe state of plant on a hazard board placed in a busy office was held to be insufficient, when the evidence indicated that it would have been practicable to attach information to the plant itself.
Effective information sharing
Effective information should include the following details:
Nominated contact persons for both the principal and contractor
Representatives nominated should have the appropriate level of knowledge for the role, and be at a level of authority within the organisation that allows them to be effective. They should also be resourced and available to carry out the role effectively.
The planning and running of joint meetings
Meetings should be regular, and conducted in a format allowing a free and open exchange of information. It may be efficient to incorporate safety and health issues in other administrative meetings, but only where appropriate personnel and resources are available, and the forum allows sufficient coverage of the subject. The outcome of any meetings should be recorded in writing.
Procedures for reporting hazards
Although principals are required to take all practicable steps to monitor and manage hazards, there may be situations where they are reliant on the contractor to report hazards. Alternatively, there will often be situations where a contractor is dependent on the principal's control of hazards, or on their provision of hazard information. For effective hazard management, there needs to be efficient transfer of information between the parties. This can only be achieved with any certainty through clearly designated reporting lines.
Contractors or principals who are employers are required to follow the formal hazard management processes of sections 7-10 of the HSE Act. These are discussed in 2.3, of the Guide to the Health and Safety in Employment Act 1992, covering hazard management responsibilities. Although these steps are not directly applied to the duties of principals under the Act, the courts have held they are relevant when considering the scope of the principal's duty to take "all practicable steps".
Responsibilities where work is notifiable to the Department of Labour
The Health and Safety in Employment Regulations 1995 require employers to notify the Department of Labour of certain categories of work at least 24 hours before work begins. Much of this type of work, such as construction and forestry operations, is commonly performed by contractors. For a list, see the definitions at the back of this guide, under "notifiable work". The section 18 duty requires the principal to any contract involving such work be aware of the notification requirements, and ensure the contractor complies.
Method for reporting accidents and incidents to the principal
As noted above, employers, the self-employed and principals all have responsibility for recording, investigating and reporting accidents in the workplace under section 25 of the HSE Act. The principal should ensure they are advised by contractors of all accidents and incidents, whether or not these arise from hazards or potential hazards over which the contractors exercise control. This includes accidents that actually cause harm, or incidents or events which in different circumstances might have caused harm.
Involvement in employee participation
Where a principal or contractor maintains an employment participation system there may be scope for shared arrangements with meetings and processes for improving health and safety in the workplace.
Information to be given by the principal about the workplace or procedures
The section 18 duty also means there is a duty to inform of any foreseeable hazards, even when the principal is not an employer. Information to be given by the principal is discussed at 3.2, above, but may be summarised as including the following categories:
- hazards that are known to exist in the place of work and may affect the contractor or their employees
- restricted areas
- any work permit procedures, e.g. hot-work permits
- any company rules that the contractor will be required to comply with during the contract
- emergency procedures that exist and first-aid facilities available
- specific job instructions and work methods.
The practicable steps are unlikely to include instruction on any specialised work for which the contractor has been employed. This means that, for example, having taken sufficient care to engage a competent diving contractor to inspect the piles of an estuary bridge, and the work is notified to the Department of Labour, a principal would not usually be expected to provide instructions on diving practices or equipment. However, the principal would be expected to advise on such matters as traffic volumes over the bridge, the likelihood of flash flooding, or peculiarities in the method of construction that may create hazards for divers.
Example
Enda Ltd engaged a contractor to work alongside technicians it employed manufacturing resin. The technicians saw the contractor, but failed to warn him that they were about to begin manufacturing the resin, which gave off phenol vapour. The contractor had gone away before the process began but, on returning, was overcome by fumes. Enda Ltd was convicted. It should have had an effective system in place for preventing the contractor from entering the area of manufacture and adequate warning systems about the commencement of the process and should have ensured better communication about the scheduling of work between the technicians and other people in the plant.
Where a principal is also an employer and is required to manage hazards in the workplace, it would be expected any information on hazards acquired in this process would be readily made available to contractors. See also section 2.3 of the Guide to the Health and Safety in Employment Act 1992, for a discussion of hazard management responsibilities.
Information to be given by contractor about the workplace or procedures
Information to be given by the contractor is described in section 3.2 above, and will be contained in the health and safety plan for the project. For any significant contract the contractor should submit a plan of how they intend to manage health and safety in relation to the proposed work, before the contract is formed. What is a significant contract will depend on the circumstances. For example, in the forestry industry a contract to fell and remove several trees from an isolated farm paddock would probably not require a formal plan. However, clearing a similar stand of trees from beside a busy highway or extracting a woodlot by a cable-logging operation would each require a detailed plan. Similarly, in the construction industry, the building of a single office partition might require elementary health and safety considerations, but for the refitting of an entire floor of an office building or the construction of a new building, the courts would likely require a detailed plan.
The health and safety plan will often have been prepared as part of the tendering process and may then be added to or improved as project planning proceeds. It should as a minimum contain the following details:
- hazards identified and control measures to be taken
- emergency procedures
- training, experience and qualifications of employees (including certificates of competency where required)
- procedures for reporting and recording of accidents/incidents
- means of involving employees in the improvement of health and safety.
The health and safety plan or policy needs to be adequate and appropriate to the hazards and circumstances of a particular contract. As mentioned above, this means a standard policy intended to apply to all contracts is unlikely to be appropriate. The plan should describe the lines of accountability and responsibilities for supervision.
The plan should contain the following information on hazard management, in addition to any other topics raised by the information for tenderer:
- information on hazards that the contractor is bringing onto or may be creating on site,
- e.g. hazardous substances, noise, dust, electrical hazards, etc
- safety provisions for other people who may be affected by the work, including people in the vicinity and the public
- safety equipment that may be necessary, including means of access to an appropriate standard
- restricted areas, security and control of access to the work area.
The contractor will need to provide regular updates on progress with the health and safety plan.
Using a job registration process
Job registration can be a useful communication tool between principal and contractor. It provides an opportunity for risk assessment and control by the principal.
The questionnaire below contains questions and relevant issues to be addressed following tender once the contract has been awarded. It is a means of the principal checking that the contractor is aware of specific health and safety issues, and may be used as a checklist with which to compare the content of the health and safety plan submitted by the contractor.
The plan will contain the detail of how the contractor proposes to deal with the specific hazards of the contract raised in the "information for tenderer" and any further safeguarding the contractor deems necessary.
Specific arrangements regarding hazards will need to be agreed to by both parties.
Sample job registration form
This sample questionnaire particularly relates to "high hazard" work (e.g. roofing, construction, excavation, or entry into confined spaces). Work will be carried out according to the principal's conditions for contractors, which will also be described, discussed, and agreed as part of the "job registration" process. This form might also be adapted for less hazardous work.
Responsibilities
i.e. the senior manager with responsibility for health and safety, and the names of those
responsible for different aspects or areas of work activity, and the agreed lines of communication.
Hazardous conditions
◻ Roof work
◻ Overhead working
◻ Excavation/demolition
◻ Entry into ductwork
◻ Confined spaces/pits
◻ Electricity
◻ Noise
◻ Isolation of services
◻ Heavy/complex items to handle
◻ Falling objects
◻ Dangerous machinery
◻ Other (state)
Work equipment
◻ Ladders/ access equipment
◻ Lifting equipment
◻ Vehicles
◻ Welding/cutting equipment
◻ Grinding equipment
◻ Powder powered tools
◻ Lasers
◻ Portable electric equipment
◻ Pneumatic equipment
◻ Machinery
◻ Others (state)
Materials/substances
◻ Asbestos
◻ Explosives
◻ Flammable substances
◻ Toxic substances
◻ Corrosives
◻ Solvents
◻ Adhesive/sealants
◻ Ionising radiation
◻ Irritant substances
◻ Compressed gases
◻ Epoxy materials
◻ Other substances liable to give rise to fumes, vapours etc.
Requests to use principal's services
◻ Electricity
◻ Water
◻ Steam
◻ Compressed air/stream
◻ Waste disposal
◻ First aid
◻ Transport
◻ Forklift
◻ Scaffolding/access equipment
◻ Trucks
◻ Other equipment
◻ Principal's personnel or services
Any other special hazards?
◻ Yes (describe)
◻ No
Are permits to work required?
◻ Yes (describe)
◻ No
Site arrangements (to be explained and agreed)
◻ Hours of work
◻ Site boundaries
◻ Vehicle restrictions
◻ Emergency procedures
◻ First-aid facilities
◻ Accident/incident reporting
◻ Permits to work
Some of this information may be covered by the principal's general procedures for visitors and contractors. At this "job registration" stage, contractors will also be expected to provide evidence of:
◻ Relevant hazard assessments
◻ Health and safety plan(s)
◻ Agreed, safe systems of work/method statements (arising out of risk assessments)
◻ Competence of personnel involved (including details of relevant training)