Modern slavery and procurement

The Australian Government has established a national strategy to address modern slavery. This includes:

• the Modern Slavery Act 2018 (Cth), in force since 1 January 2019, establishes a practical risk-based framework to directly target modern slavery practices in global supply chains and support the Australian business community to identify and address their modern slavery risks.
• comprehensive slavery and human trafficking offences in the criminal code.
• requirements under the Commonwealth for certain entities with $100 million or more of annual consolidated revenue to submit modern slavery statements. These can be found on the Register for Modern Slavery Statements.
• National Action Plan to Combat Modern Slavery 2020–25 (PDF), which agencies can consider when managing the risk of modern slavery in procurement.
• commonwealth guidance (PDF) in relation to modern slavery risks.

The NSW Modern Slavery Act 2018 was passed in 2018. Following an inquiry, the Modern Slavery Amendment Bill 2021 was passed in 2021.

Under the Act, the Anti-Slavery Commissioner advocates for action to combat modern slavery, monitors risks and supports victims.

The Act requires reasonable steps to be taken to ensure that goods and services procured by and for government agencies are not the product of modern slavery.

In their annual reports, agencies must include:

• which steps they took to ensure procurements weren't product of modern slavery
• action taken to any issue raised by the Anti-Slavery Commissioner
• how they addressed recommendations of the Anti-Slavery Commissioner.

The Anti-Slavery Commissioner may evaluate an agency’s response to their recommendations.

• Adopt a risk-based approach to the procurement and supplier, as well as during the engagement.
• Emphasise the importance of transparency and demonstrate a willingness to work with suppliers to address any issues.

• Embed ethical buying practices in business processes and organisational culture.
• Update policies, procedures, and systems to reflect the agency’s commitment to addressing modern slavery risks.
• Use statutory declarations and contract provisions to ensure suppliers understand the agency’s approach to modern slavery.
• Encourage whistleblowing to identify breaches of policy and contracts.

• Focus on training and awareness tailored to relevant roles.
• Communicate with buyers and suppliers so that everyone understands the part they can play in eradicating modern slavery.

• Balanced actions can be taken that are tailored to a specific agency and procurement. Developing an effective response to modern slavery risks may take time.
• Procurement and contract management activity should be proportionate to the level of risk, noting that modern slavery offence violations or non-compliance with the Supplier Code of Conduct may result in termination of the contract.
• Agencies may consider the burden on small and medium enterprises (SMEs) and ensure that any information or evidence requested is proportionate to the risk.

• Agencies are encouraged to work together and share resources and experiences to make a bigger impact and build capability. A consistent approach helps everyone to do the right thing.

If you’re part of a covered entity then it’s expected you’ll follow the instructions under section 31 of the Modern Slavery Act 2018 (NSW).This includes reporting on the:

• action taken by the agency in relation to any issue raised by the Anti-slavery Commissioner during the financial year ended concerning the operations of the agency and identified by the Commissioner as being a significant issue; and
• steps taken to ensure that goods and services procured by and for the agency during the financial year then ended were not the product of modern slavery within the meaning of the Modern Slavery Act 2018.

Under section 25A of the Modern Slavery Act 2018 (NSW), State owned corporations (SoCs) must:

• volunteer to comply with the Commonwealth Modern Slavery Act 2018, including the making of modern slavery statements.
• publish commonwealth modern slavery statements on a publicly available website kept by the corporation.

The Modern Slavery Register resources provide further information about complying with the Commonwealth Act.

Annual reporting requirements for local councils are found in the Local Government Act 1993 (NSW). Councils should review the legislation to understand their duties and obligations.

Modern slavery risks refer to the potential for an agency to cause, contribute to, or be directly linked to modern slavery through its operations and supply chains (as set out in the UN Guiding principles on business and human rights (PDF)).

Agencies should assess the level of modern slavery risk as far down the supply chains as reasonably practicable.

Responsible procurement principles should be embedded into category management strategies for high-risk categories.

Agencies should prioritise actions informed by the outcome of the risk assessment, and where modern slavery risks are likely to be most significant and most severe.

An agency’s procurement spend may help identify where the agency can make the most impact. However, high procurement spending should not be the sole factor in guiding its response.

Action should be tailored to the procurement, taking a balanced risk-based approach and not impose any unnecessary burdens that would deter a diversity of suppliers, including small and medium-sized enterprises (SMEs), from working with NSW Government.

Action 1.1. Reflect modern slavery risks in the procurement strategy

The procurement strategy should reflect the outcome of the risk assessment and identify opportunities to address modern slavery risks. It can also address:

• scope of modern slavery concerns that will be considered during the procurement process
• the standard required from suppliers
• how the agency will manage the risk of modern slavery in the procurement process
• roles and responsibilities for the modern slavery component of the procurement.
• Modern slavery statements published on the Australian Border Force's modern slavery statement register can help identify baseline actions and risk mitigation measures in a particular industry.

Action 1.2. Raise awareness when engaging the market

Market engagement opportunities, such as supplier forums and market soundings can be used to raise awareness of modern slavery risks and legislative obligations. They can also help an agency:

• assess the level of market maturity in responding to modern slavery risks
• ensure that agency and suppliers’ understanding of modern slavery risks are aligned
• update on any modern slavery risks not already known.

Action 1.3. Emphasise suppliers' response to modern slavery risks

Agencies can consider including in the request for tender, conditions of participation relating to modern slavery risk mitigation, remediation and due diligence.

Action 2.1. Understand suppliers’ responsible business practices

Agencies should communicate with suppliers about expectations relating to modern slavery throughout the procurement. This can include discussions about how the agency’s own expectations and demands may contribute to the risk of modern slavery.

Agencies can ask suppliers to complete the model tender schedule DOCX, 40.31 KB . The model helps agencies understand a supplier’s risk management processes.

Agencies should consider how a response to the model tender schedule (or equivalent) will be evaluated. The Small and Medium Enterprise and Regional Procurement Policy sets a 10% non-price sustainability criterion which can be used to assess response to modern slavery risks, as well as other government objectives.

Responses to the model tender schedule should be transparent, complete and candid, and demonstrate a supplier’s willingness to improve modern slavery risk mitigation strategies over time.

Action taken by suppliers to address modern slavery risks can vary across industries. Therefore, supplier action should be tailored and effective for the relevant industry.

A tender price that is far below reasonable expectations could indicate modern slavery risks. This should be discussed further with the supplier and considered in the evaluation as appropriate.

Action 2.2. Keep suppliers accountable with a modern slavery clause

Model contract clauses DOCX, 68.65 KB (short and long-form) are available to help agencies manage modern slavery risks during the term of a contract and keep suppliers accountable, including to notify agencies of any actual or potential instances of modern slavery.

While the model clauses should be tailored to specific contracts, a consistent approach across government will make it easier for suppliers, especially SMEs, tendering for multiple government contracts.

Avoid using contract clauses or statutory declarations that require suppliers to guarantee their supply chains are ‘slavery free’. This approach may be counterproductive and impact the transparency of a supplier’s response to meet the requirements. It may also be unrealistic for a supplier to make this guarantee.

Agencies responsible for managing whole-of-government schemes and panels should consider how modern slavery risks will be addressed. This can involve:

• updating scheme rules
• discussions with suppliers
• by agreement, a contract variation to include the model contract clause
• including the model contract clause as part of any additional requirements.

Agencies buying off a whole-of-government arrangement are responsible for understanding due diligence processes under the arrangement and determining whether they are an effective response to modern slavery risks.

This may include requesting additional information from a supplier where necessary, such as a response to the model tender schedule.

Action 2.3. Work with suppliers to agree on KPIs relating to modern slavery

For high-risk procurements, agencies can consider including key performance indicators (KPIs) in the contract.

KPIs should provide an agreed minimum standard of supplier performance and support the continuous improvement of the supplier’s response to modern slavery. KPIs can cover:

• specific actions the supplier has committed to, including any action plan
• outcomes and relevant evidence of improved business practices to address modern slavery risks, for example, measuring changes in awareness of modern slavery among key suppliers
• for suppliers that are more mature in their response to modern slavery risks, evidence that findings from ongoing monitoring and review processes have fed into business practices and improvements
• a supplier’s audit, inspection, and review practices.

Certain KPIs in a contract may increase the risk of modern slavery. For example, relating to tight production deadlines which may unintentionally increase pressure on workers who are producing the goods on production lines.

Action 2.4. Request a modern slavery action plan for high-risk procurements

Agencies can require suppliers to develop an action plan to address modern slavery risks for high-risk procurements, with measurable outcomes and deadlines, to monitor progress and review impacts.

For example, an action plan may include supply chain mapping and set out the supplier’s commitments over the next 12 months and align KPIs with those commitments.

Action 3.1. Support suppliers to develop an approach to managing modern slavery risks

A positive and collaborative relationship, where an agency proactively engages with suppliers, can encourage transparency and help improve a supplier’s response to modern slavery risks.

Where a contract was entered into before 1 January 2022, agencies are encouraged to embed discussions about modern slavery risks into existing contract management processes. The agency may also incorporate the model contract clause into any contract extensions, upon agreement with the supplier.

The Supplier Code of Conduct also sets out expected supplier behaviour. Suppliers must provide a fair and ethical workplace that is free from bullying, harassment, victimisation and abuse. Suppliers must also take reasonable action to ensure that businesses within their supply chain are not engaged, or complicit with, human rights abuses such as forced or child labour.

Failure by a supplier to comply with the code may result in:

• termination of contracts
• loss of future work
• suspension or removal from prequalification schemes and panel arrangements
• referral for criminal investigation.

Action 3.2. Monitor modern slavery risks on an ongoing basis to identify new concerns

Discussing modern slavery risks at review meetings is an opportunity for the agency to become aware of new issues, including any weaknesses identified in the supplier’s initial response to managing modern slavery risks.

Agencies can seek input from suppliers to monitor the risks of modern slavery in procurement, through one or a combination of the following:

• The simple modern slavery risk assessment DOCX, 37.52 KB to help assess the effectiveness of supplier action and identify any new modern slavery risks during the term of a contract.
• The supplier questionnaire in the model tender schedule DOCX, 40.31 KB to help ensure suppliers are taking seriously the need to develop their response to modern slavery. Responses to the model tender schedule or similar self-assessment questionnaires (covering statistics on employment, complaints, monitoring, and measures to improve human rights protections) can be used to identify areas for improvement. An agency can ask a supplier to include supporting documentation with its response.
• Audits or site inspections (random and scheduled, usually undertaken by a third party) to better understand what is happening in practice. Agencies can discuss with NSW Procurement any coordinated processes for audits and site inspections.

The agency’s priority must be to act in the best interests of the suspected victim and prevent further harm.

Where there is a risk of immediate harm agencies may involve law enforcement. Call the Australian Federal Police (131 237) or call triple zero (000).

Generally, information about a victim should only be disclosed with that person's informed consent. Some actions could have unintended negative consequences for the victim, such as industry blacklisting, so it is important to carefully consider the response.

It is also possible the agency is not fully aware of all victims involved. There could be unintended consequences for others, for example, exploitation involving victims on other sites or factories of a supplier.

Where a child may be at risk of significant harm, comply with the mandatory reporting guidelines and call the Child Protection Helpline on 132 111.

As well as providing informed consent to any action that involves them, victims of modern slavery should be provided with independent advice and the person's privacy should be protected.

The agency working with the supplier can develop a plan to address instances of modern slavery, highlighting any audit findings and root causes and giving the supplier the opportunity to implement an appropriate response.

The plan should include:

• specific actions (corrective and preventative) to remedy any finding, including responsibilities
• deadlines or milestones
• verification of completed actions and potential consequences where the action is not taken.

Agencies should monitor the response and consider whether it is effective and meets contractual requirements.

Depending on the situation, different roles within an agency (for example, procurement officers, contract managers, human resources and legal teams) may need to work together.

Agencies can also seek advice from the Anti-Slavery Commissioner.

Agencies should report any actual or suspected instances of modern slavery in procurement to NSW Procurement to support a coordinated NSW Government response, particularly where a supplier works with more than one agency or where the suspected modern slavery has occurred overseas.

The response may involve partnering with a trusted NGO or civil society group that understands the local context.

The United Nations High Commissioner for Human Rights has produced a list of organisations, including NGOs and foundations who work to counter modern slavery in high-risk industry sectors and countries. For more information, visit the OHCHR website.

A supplier's identification of an instance of modern slavery may reflect the effectiveness of the supplier's policies and procedures to identify, assess and address modern slavery.

Terminating a contract reactively can lead to suppliers withholding information and put victims at greater risk.

Maintaining transparency of issues and risks is important, and where modern slavery is identified, the aim is to work together to respond to and remediate modern slavery.

Terminating a contract should be a last resort, reserved for situations where, despite the repeated efforts from the agency, the supplier fails to engage in the required due diligence process or demonstrate a willingness to address modern slavery issues.