Could government tendering financial requirements become the new minimum financial requirements for licensing?
In a press release dated 1 March 2018 the Minister for Housing and Public Works Mick de Brenni announced that from 1 January 2019 contractors will again be required to satisfy mandatory financial reporting requirements.
In an article published in September 2017 entitled ’Crystal-balling the Minimum Financial Requirements for Contractor Licensing‘, I predicted that such a change would happen. I also outlined in this article a number of other possible changes to the current minimum financial requirements (MFR’s).
I stand by my previous observations in this regard, with one additional thought.
Contractors wishing to be eligible to compete for any Government building project estimated to exceed $1,000,000 in value must first be appropriately pre qualified (PQ) with the Department of Housing and Public Works.
PQ financial requirements, significantly much tougher than the MFR’s, stipulate that Net Tangible Assets (NTA) have to be legally and beneficially owned by the contractor. This is not the case with the MFR’s.
Furthermore as distinct to the MFR’s in relation to NTA calculations, the following are not taken into account:
- related entity loans and investments to a related entity, subsidiaries and associated entity, and
- Deeds of Covenant and Assurance.
Could government PQ financial requirements become the new MFR’s?
We at Helix Legal will keep you informed of relevant developments to this most significant industry issue. If you have any questions in relation to the MFR’s please feel free to contact Michael Chesterman at email@example.com.
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