Regulation 12 – Choosing and using contractors

Objective of the regulation

Most building consent authorities (BCAs) will need to use contracted resources in the performance of their building control functions at some point in time. A BCA may contract private organisations or persons as their agents to perform building control functions on their behalf. These contractors need to be granted powers and authorities in the BCA’s organisational structure and delegation framework. Where this occurs, the contractor is an extension of the BCA. This is regardless of whether the contractor is an accredited organisation or other private organisation, works independently or on-site at the BCA.

Regulation 12 of the Building (Accreditation of Building Consent Authorities) Regulations 2006 (the Regulations) requires that a BCA has a system for choosing and using contractors that perform building control functions. This is to ensure that any private organisation or person performing building control functions has the skills and competency needed.

The requirements of regulation 12 are also intended to ensure that a BCA follows good contract management practice in engaging contractors, formulating contracts, and monitoring and reviewing contractor performance. There is an additional requirement in regulation 17(4)(b) that all contractors performing building control functions comply with a quality management system.

The regulatory guidance below has been developed to support understanding of the Regulations.

Regulation 12 is available on the Legislation website.

MBIE’s guidance on meeting the accreditation requirement

Checklist for regulation 12 outlines the minimum criteria for compliance.

Who does this regulatory requirement apply to?

These accreditation requirements do not apply to contractors who provide technical or specialist expertise. This includes expertise that contributes to the processing of and decisions on consent or code compliance applications, the development of compliance schedules, and the issue of notices to fix, where their advice is on a single matter, and given under specific direction or by special request.

Contractors may also carry out certain activities or functions such as writing policies and procedures, or performing competency or quality assessments. These contractors are not performing building control functions, or providing technical or specialist advice related to the performance of a building control function, and are outside the scope of the regulations.

If the accreditation requirements are met through a BCA’s parent organisation’s procurement system, the accreditation body will require access to that system for the purposes of an accreditation assessment. The assessment team will be aware that procurement processes and contract negotiations are commercially sensitive. The team have an obligation to maintain all confidences.

It is good practice for a council-controlled BCA that is part of a territorial or regional authority to apply the Government Rules of Sourcing to its procurement processes. The Ministry of Business, Innovation and Employment (MBIE) provides detailed advice on how to apply the rules, which is available online. However, the use of the rules is not an accreditation requirement.

The policies, procedures and systems required by Regulation 12 must, at minimum, cover:

• establishing and assessing contractors’ competence, and recording their qualifications
• engaging contractors
• making agreements with contractors
• monitoring and reviewing contractors’ performance
• annually assessing contractors’ competency.

MBIE recommends that a BCA link its contractor procurement system to its capacity and capability map required by regulation 8 of the Regulations and work allocation system required by regulation 9. This should help a BCA identify if contractors are needed to boost capacity, and the competencies they require. Compliance with regulation 9 should ensure contractors are allocated work for which they are competent.

Establishing a prospective contractor’s competency and qualifications

When entering into contract negotiations, a BCA must establish and record the competency of all prospective contractors. A BCA should request an organisation provide them with a list of all staff that may perform building control functions, and evidence of their current competency and qualifications. Evidence of a private person’s current competency and qualifications must also be sought.

The accreditation requirements of regulations 12(2)(a) can be satisfied by:

• requiring the organisation or person provide their own assessments using the National BCA competency assessment system (NCAS)
• a BCA undertaking its own competency assessment of prospective contractors using the NCAS
• using an alternative mechanism to ensure the organisation or person has the competency needed.

Where a prospective or current contractor that is not an accredited organisation undertakes their own assessments using the NCAS, they should provide evidence of their effective use of the system such as copies of the assessment plan, evidence collected and record of outcome.

The use of an alternative mechanism may be the most practicable approach at contract negotiation stage, as the organisation or person may not be familiar with the NCAS, and may not have immediate access to the skills or resources to undertake an assessment using the system. Any alternative mechanism used to initially determine current competency should consider each prospective contractor’s:

• qualifications
• experience and expertise which may be evidenced through:
  • a detailed resume
  • examples of work
  • professional references
• professional registration, and any scopes of competency or limitations
• professional memberships or affiliations.

A BCA using an alternative mechanism to determine competency would benefit from using a template or checklist to collate the information and evidence needed to satisfy itself of the competency of any prospective contractor. This would help ensure any decisions, the reasons for them and any outcomes are recorded and comply with regulation 6 of the Regulations. Ultimately, a BCA should be:

• satisfied that prospective contractors are competent to perform the functions it needs
• able to include any prospective contractors in its workforce planning and work allocation systems.

Engaging contractors

The Principles of Government Procurement are:

• plan and manage
• be fair to all suppliers
• get the right supplier
• get the best deal for everyone
• play by the rules.

It is good practice for a council-controlled BCA to follow the Principles of Government Procurement, and as noted above, apply the Government Rules of Sourcing to all procurement processes. However, reference to the principles and use of the rules is not an accreditation requirement.

A BCA must have a system that enables it to come to a reasonable decision about contractor selection that covers:

• defining the scope of services and deliverables required from the contractor
• the criteria against which a prospective contractor will be assessed
• the establishment of the contractor assessment team or person, and decision-making authorities
• how prospective contractors will be sought (for example, through direct approach or tender)
• how contract negotiations will be undertaken, and any rules or criteria that will apply.

Making written or electronic agreements with contractors

MBIE has developed a set of standard conditions of contract for routine government purchases. These conditions are called Government Model Contracts – standard and Lite (GMCs). The GMCs may provide a useful foundation for BCAs making agreements and developing contracts. But, the use of the GMCs is not an accreditation requirement.

A BCA must have a system that enables it to come to a reasonable decision about the matters to include in a written or electronic agreement with a contractor, regardless of whether they are a private organisation or person. That system must cover decisions on:

• the scope of services and deliverables required from contractors
• the contractors’ performance standards, and how they will be monitored and reviewed
• measures to be taken in the event of unsatisfactory performance
• reporting requirements
• quality assurance (to meet the requirements of Regulation 17(4)(b))
• the selection of staff within an organisation that will perform building control work (if applicable)
• the powers and authorities granted to any contracted staff
• managing conflicts of interest
• managing internal and external communications, including engagement with media
• annual competency assessments.

An agreement must also cover the contractor’s obligations to:

• adhere to the BCA’s policies, procedures and systems or their own
• comply with all relevant building-related legislation, including the Building Act 2004.

Possible performance standards, and monitoring and review requirements

Monitoring and reviewing contractors’ performance

Regulation 12(2)(e) requires a BCA to have a system for the monitoring and review of contractors’ performance. This must be against defined standards. And, the standards must be documented in their contract.

It is MBIE’s expectation that monitoring and review requirements will be undertaken to a level that is appropriate for the building control functions a contractor performs, and their approach to performing it. For example, a BCA may satisfy the requirements of regulation 12(2)(e) by requiring:

• a copy of an accredited organisation’s accreditation report and its responses to any non-compliance identified, assuring itself that accreditation has been maintained
• a contracted organisation that does not have accreditation but is working independently of the BCA to submit monthly reports against its specified performance standards, and for the reports to be reviewed within the BCA
• contractors working within a BCA to be managed (and therefore monitored) as part of ‘business as usual’ with their work captured as part of the BCA’s peer review, quality review and audit systems.

If a contractor’s performance is found to be unsatisfactory as the result of any monitoring or review, appropriate measures must be taken by the BCA to ensure the matter is addressed. The measures should have been detailed in the contract or agreement. They may include, for example, that if:

• an accredited organisation is found to have seriously non-complied with accreditation requirements, and does not address the non-compliance expeditiously, their performance of the relevant building control function on behalf of the BCA is suspended
• an organisation without accreditation is found to be generating a significant number of complaints related to the building control work it performs, it provide evidence of the steps it will undertake to address the issue and when they will be implemented
• a person working within a BCA is found to have breached a policy, procedure or system, they are advised of the BCA’s concern, given training and appropriately supervised for an agreed length of time or their contract is terminated.

Annually or more frequently assessing a contractor’s competency

Regulation 12 requires, at minimum, an annual assessment of the competency of all contractors performing building control functions. A BCA may choose to comply with this requirement every 12 months from the date a contract was agreed. It may be more useful, however, for the assessment process to align with the BCA’s workforce planning process. An appropriate annual assessment date can be negotiated.

The requirement to assess contractors is not linked to the length of their contract. For example, engaging a contractor on a series of six-month or 11-month contracts does not enable a BCA to avoid an assessment. The requirement to assess a contractor is based on the length of time the contractor has been contracted to the BCA. A two-week or four-week break between contracts will still require an assessment as part of establishing the contractor’s current competency.

Assessing contractors’ competency where they are staff of an accredited organisation

A BCA may rely on a private organisation’s ongoing accreditation as evidence that it is regularly assessing its staffs’ competency. The list of staff, their competency level and qualifications should, however, be updated and provided to a BCA every 12 months to contribute to the regulation 8 workforce planning process.

Assessing contractors’ competency where they are staff of an organisation without accreditation

Where a contracted organisation does not have accreditation the BCA may require:

• it to assess its employees’ current competency and provide evidence of its effective use of the system by providing copies of the competency decision outcome and record for each staff member performing a building control function
• all its staff performing building control functions for the BCA to participate in its own annual assessments, effectively taking responsibility for the assessment process itself.

Assessing contractors’ competency where they are a private person

BCAs should assess any private person’s competency as part of its own annual competency assessments. However, there are other options. The person could also seek an independent assessment of their competency and provide evidence of this to the BCA. By “independent assessment”, MBIE means an assessment by a third party; the person cannot assess themselves. Ultimately, a BCA should be satisfied that the assessment undertaken was robust (and would meet its own standards).

The Building Act 2004 is available on the Legislation website.

Government Rules of Sourcing, Principles of Government Procurement , Government Model Contracts; standard and Lite and Procurement advice can be found on the Government’s Business and Procurement websites.

National BCA competency assessment system has further information.

Contractor and technical or specialist expertise and advice definitions can be found in the glossary.

Where facilities, equipment or services are provided external to a BCA

A BCA may make arrangements for the provision of facilities, equipment or services to support it to perform its building control functions with one or more:

• external organisations
• teams or functional units within its own parent organisation.

The arrangements might include, for example, the provision of:

• human resources support, such as recruitment or training
• IT support, such as the provision and maintenance of building control software
• records management support, such as the provision of offsite file storage and retrieval.

Any arrangements must enable a BCA to maintain accreditation requirements, and procedures, policies, and systems that are appropriate for purpose and consistently and effectively implemented. Where the arrangements are for technical resources regulation 14 requires their “continuing appropriateness”. It would be prudent for a BCA or its parent organisation to have a contract in place with all external facilities, equipment and service providers. However, this is not an accreditation requirement. Nor is a BCA required to enter into a contract with teams that provide facilities, equipment or services within its own parent organisation.