SOPA disputes on Commonwealth funded projects need to be reported to the ABCC

So many will be surprised to know that under Code for the Tendering and Performance of Building Work 2016, any contractors and subcontractors who have expressed interest in or tendered for Commonwealth funded building work since 2 December 2016 are covered by the Code as the funder is a ‘code covered entity’ in relation to payment of Progress Claims under the Security of Payments Act (“SOPA“).

Whilst this sounds confusing, in layman terms it means that if you are working on a Commonwealth funded project and enter into a payment dispute under SOPA, this dispute must be reported to the Australian Building and Construction Commission (“ABCC“) by the head contractor.

Any disputed and delayed payments to subcontractors must be reported to the ABCC as soon as practicable after the date that payment is due. Further detail on reporting obligations and a security of payment reporting form are available on the ABCC website, but this came into force on September 1 2018.

This reporting obligation was initially announced in July at the commencement of the ABCC’s security of payment campaign aimed at creating awareness of payment obligations and rights under the Code for the Tendering and Performance of Building Work 2016.

The campaign also asks code covered contractors to:

  • make payments in a timely manner
  • resolve disputes reasonably and cooperatively
  • document and follow their dispute settlement process
  • not coerce or pressure subcontractors regarding payment
  • comply with any adjudication determinations.

A breach of the Code of failure to disclose a SOPA dispute could lead to removal of the contractor from the tendering of any further Commonwealth funded projects.

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