ISO 10845-7:2011

Construction procurement — Part 7: Participation of local enterprises and labour in contracts

ISO 10845-7:2011 establishes a key performance indicator in the form of a contract participation goal (CPG) relating to the engagement of local enterprises and labour on a contract for the provision of services or engineering and construction works. A CPG may be used to measure the outcomes of a contract in relation to the engagement of local enterprises and labour or to establish a target level of performance for the contractor to achieve or exceed in the performance of a contract. ISO 10845-7:2011 sets out the methods by which the key performance indicator is measured, quantified and verified in the performance of the contract in respect of two different targeting strategies: targeting strategy A and targeting strategy B.

Marchés de construction — Partie 7: Participation des entreprises et de la main d'oeuvre locales dans les contrats

General Information

• Status: Published
• Publication Date: 12-Jan-2011
• ICS: 91.010.20 - Contractual aspects
• Technical Committee: ISO/TC 59/SC 18 - Construction procurement
• Drafting Committee: ISO/TC 59/SC 18 - Construction procurement
• Current Stage: 9093 - International Standard confirmed
• Completion Date: 30-Nov-2022

Standards Content (Sample)

INTERNATIONAL ISO
STANDARD 10845-7
First edition
2011-01-15

Construction procurement —
Part 7:
Participation of local enterprises and
labour in contracts
Marchés de construction —
Partie 7: Participation des entreprises et de la main d'oeuvre locales
dans les contrats




Reference number
ISO 10845-7:2011(E)
©
ISO 2011

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ISO 10845-7:2011(E)
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ISO 10845-7:2011(E)
Contents Page
Foreword .iv
Introduction.v
1 Scope.1
2 Terms and definitions .1
3 Requirements.4
3.1 Contract participation goal (CPG) .4
3.2 Achieving the contract participation goal (CPG) .4
3.3 Contract participation goal (CPG) credits.5
4 Compliance with requirements .6
4.1 General .6
4.2 Substitutions.7
4.3 Bona fides of targeted enterprises.7
5 Records .8
5.1 Submission of documentation.8
5.2 Monthly submission of supporting documentation .8
5.3 Certification of credits .8
5.4 Actions required upon completion of a targeted enterprise's contract with the contractor.8
6 Sanctions .9
Annex A (informative) Commentary.10
Annex B (informative) Preparation of targeting data associated with this part of ISO 10845 for
inclusion in the scope of work.19
Annex C (normative) Contract participation goal implementation plan (targeting strategy A).21
Annex D (normative) Letter of undertaking from a targeted enterprise to act as a subcontractor,
supplier, manufacturer or service provider.27
Annex E (informative) Examples of how contractors can fulfil their contract participation goal
(CPG) obligations .28
Annex F (informative) Tendered contract participation goal (targeting strategy A).30
Annex G (informative) Sample tender evaluation schedule where use is made of this part of
ISO 10845 .33
Annex H (informative) Contract schedules for targeted enterprises.35
Bibliography.39

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ISO 10845-7:2011(E)
Foreword
ISO (the International Organization for Standardization) is a worldwide federation of national standards bodies
(ISO member bodies). The work of preparing International Standards is normally carried out through ISO
technical committees. Each member body interested in a subject for which a technical committee has been
established has the right to be represented on that committee. International organizations, governmental and
non-governmental, in liaison with ISO, also take part in the work. ISO collaborates closely with the
International Electrotechnical Commission (IEC) on all matters of electrotechnical standardization.
International Standards are drafted in accordance with the rules given in the ISO/IEC Directives, Part 2.
The main task of technical committees is to prepare International Standards. Draft International Standards
adopted by the technical committees are circulated to the member bodies for voting. Publication as an
International Standard requires approval by at least 75 % of the member bodies casting a vote.
Attention is drawn to the possibility that some of the elements of this document may be the subject of patent
rights. ISO shall not be held responsible for identifying any or all such patent rights.
ISO 10845-7 was prepared by Technical Committee ISO/TC 59, Buildings and civil engineering works.
ISO 10845 consists of the following parts, under the general title Construction procurement:
⎯ Part 1: Processes, methods and procedures
⎯ Part 2: Formatting and compilation of procurement documentation
⎯ Part 3: Standard conditions of tender
⎯ Part 4: Standard conditions for the calling for expressions of interest
⎯ Part 5: Participation of targeted enterprises in contracts
⎯ Part 6: Participation of targeted partners in joint ventures in contracts
⎯ Part 7: Participation of local enterprises and labour in contracts
⎯ Part 8: Participation of targeted labour in contracts

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ISO 10845-7:2011(E)
Introduction
Procurement is the process which creates, manages and fulfils contracts. Procurement can, as such, be
described as a succession of logically related actions occurring or performed in a definite manner and which
culminate in the completion of a major deliverable or the attainment of a milestone. Processes, in turn, are
underpinned by methods (i.e. a documented, systematically ordered collection of rules or approaches) and
procedures (i.e. the formal steps to be taken in the performance of a specific task), which are informed and
shaped by the policy of an organization. Methods and procedures can likewise be documented and linked to
processes.
It is becoming increasingly important to consider procurement-related deliverables other than those relating to
the primary purpose of the procurement itself, particularly those relating to poverty reduction, job creation,
local economic development and local industry development. Key performance indicators relating to the
engagement of enterprises, joint venture partners, local resources and local labour in contracts are needed to
set targets in contracts or to measure procurement outcomes. Processes, procedures and methods are
required to quantify, measure and verify a contractor's performance in relation to such indicators in an
auditable manner.

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INTERNATIONAL STANDARD ISO 10845-7:2011(E)

Construction procurement —
Part 7:
Participation of local enterprises and labour in contracts
1 Scope
This part of ISO 10845 establishes a key performance indicator in the form of a contract participation goal
(CPG) relating to the engagement of local enterprises and labour on a contract for the provision of services or
engineering and construction works. A CPG may be used to measure the outcomes of a contract in relation to
the engagement of local enterprises and labour or to establish a target level of performance for the contractor
to achieve or exceed in the performance of a contract.
This part of ISO 10845 sets out the methods by which the key performance indicator is measured, quantified
and verified in the performance of the contract in respect of two different targeting strategies: targeting
strategy A and targeting strategy B.
NOTE Annex A contains commentary on the clauses in this part of ISO 10845. Annex B provides guidance on how to
develop the targeting data for a procurement document using this part of ISO 10845.
2 Terms and definitions
For the purposes of this document, the following terms and definitions apply.
2.1
allowance
amount provided for in the contract by the employer relating to one or more of the following:
a) the performance by the contractor of work or services that are foreseen but cannot be accurately
specified at the time that the contract was entered into;
b) work or services to be performed, or goods provided, by a subcontractor who is either nominated by the
employer or is selected by the employer in consultation with the contractor after the award of the contract;
c) provision for price adjustment for inflation; or
d) other budgetary provisions intended to cover employer risks
[ISO 10845-5:2011, definition 2.1]
2.2
commercially useful function
performance of real and actual work, or the provision of services, in the discharge of any contractual obligation
which includes, but is not limited to, the performance of a distinct element of work which the enterprise has the
skills and expertise to undertake and the responsibility for management and supervision
[ISO 10845-5:2011, definition 2.2]
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ISO 10845-7:2011(E)
2.3
contract amount
financial value of the contract
a) at the time of the award of the contract, exclusive of all allowances and any value added tax or sales tax
which the law requires the employer to pay to the contractor (targeting strategy A); or
b) upon completion of all contractual obligations, exclusive of any value added tax or sales tax which the law
requires the employer to pay to the contractor (targeting strategy B)
[ISO 10845-5:2011, definition 2.3]
2.4
contract participation goal
CPG
amount equal to the sum of
a) the wages and allowances for which the contractor contracts to engage targeted labour; and
b) the value of goods, services and works for which the contractor contracts targeted enterprises in the
performance of the contract;
exclusive of any value added tax or sales tax required by law, expressed as a percentage of the contract
amount associated with the targeting strategy that is identified in the targeting data
NOTE Adapted from ISO 10845-5:2011, definition 2.4.
2.5
contractor
person or organization that contracts to provide the goods, services or engineering and construction works
covered by the contract
[ISO 10845-1:2010, definition 3.12]
2.6
employer
person or organization intending to or entering into the contract with the contractor for the provision of goods,
services, or engineering and construction works
[ISO 10845-1:2010, definition 3.17]
2.7
employer's representative
person authorized to represent the employer and named as such in the contract data or targeting data
[ISO 10845-5:2011, definition 2.8]
2.8
main contractor
contractor who subcontracts part of his contract
[ISO 6707-2:1993, definition 3.8.13]
2.9
target area
geographic area defined in the targeting data
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ISO 10845-7:2011(E)
2.10
targeted enterprise
sole trader, partnership or legal entity which is
a) a business within the target area,
b) engaged in the performance of the contract, and
c) defined as the target group in the targeting data
NOTE Adapted from ISO 10845-5:2011, definition 2.15.
2.11
targeted labour
individuals who
a) are employed by the contractor in the performance of the contract,
b) are defined as the target group in the targeting data, and
c) permanently reside in the target area or who are recognized as being residents of the target area on the
basis of identification and association with and recognition by the residents of the target area
2.12
targeted manufacturer
targeted enterprise that operates or maintains a factory or establishment that produces on its premises
materials or goods required by the contractor for the performance of the contract
2.13
targeted supplier
targeted enterprise that
a) owns, operates or maintains a store, warehouse or other establishment in which goods are bought, kept
in stock and regularly sold to wholesalers, retailers or the public in the usual course of business, and
b) engages, as its principal business and in its own name, in the purchase and sale of goods
2.14
targeting data
data, provisions and variations applicable to a particular contract
[ISO 10845-5:2011, definition 2.18]
NOTE See A.2.3 and Annex B.
2.15
targeting strategy
an approach which is pursued to make a contract participation goal an obligation of contract
[ISO 10845-5:2011, definition 2.19]
2.15.1
targeting strategy A
targeting strategy which
a) involves the granting of tender evaluation points by the employer in the evaluation of tender offers in
return for the tendering of a contract participation goal or an undertaking to attain a specified contract
participation goal at the time that tenders are evaluated, or
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ISO 10845-7:2011(E)
b) requires a contractor to achieve a minimum specified goal in the performance of a contract, or
c) involves both (a) and (b)
[ISO 10845-5:2011, definition 2.19.1]
2.15.2
targeting strategy B
targeting strategy which
a) involves the payment of a financial incentive to a contractor for the attainment of a specified contract
participation goal, or
b) requires the contractor to record and report on the quantum of work generated for targeted labour
NOTE Targeting strategy A bases the contract participation goal on the tendered amount minus allowances, i.e. on
the expenditure which the contractor can commit to at tender stage. This strategy allows the employer to adjust the
contract participation goal to take account of any failure to achieve such goal in the performance of the contract due to
factors which are beyond the contractor's control or are unforeseen at tender stage. Targeting strategy B measures the
contract participation goal based on the final contract value. Targeting strategy A accordingly measures the performance
of contractors in the engagement of targeted labour in relation to that which can be committed to at tender stage, whereas
targeting strategy B does so in relation to that which is finally achieved.
[ISO 10845-5:2011, definition 2.19.2]
2.16
weighting
number which, depending on its value, is used to introduce a bias in favour of or against a specific target
group in the calculation of contract participation goal credits
3 Requirements
3.1 Contract participation goal (CPG)
The contractor shall engage targeted labour and targeted enterprises directly in the performance of the
contract to the extent that the total monetary value of such engagements, exclusive of any value added tax or
sales tax required by law, is not less than the contract participation goal (CPG) for the targeting strategy
specified in the targeting data.
The contractor shall, in the case of targeting strategy A, submit details of a plan to achieve the contract
participation goal on the contract participation goal implementation plan form contained in Annex C, within five
working days of being instructed to do so. If no such instructions are given, these plans shall be submitted
before the submission of the first claim for payment.
NOTE The information contained in the contract participation goal implementation plan facilitates, in the first instance,
the monitoring of the performance of the contractor in terms of the contract participation goal obligations and, in the
second instance, the making of any adjustments to compensate for quantitative underruns, the elimination of items, etc.
(see Clause 6).
3.2 Achieving the contract participation goal (CPG)
3.2.1 General
A contractor shall achieve the specified contract participation goal (CPG) by one of two methods, unless
otherwise specified in the targeting data.
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ISO 10845-7:2011(E)
a) Method 1
1) Using Method 1, the contractor shall achieve the specified CPG by
i) virtue of the contractor's targeted enterprise status, provided that not less than 50 % of the
wages and allowances paid to employees in the performance of the contract is in respect of
targeted labour; and, if so desired,
ii) subcontracting one or more targeted enterprises to perform work in the performance of the
contract at a subcontract level.
b) Method 2
1) Using Method 2, the contractor shall achieve the specified CPG by
i) engaging targeted labour, or
ii) engaging one or more targeted enterprises to perform commercially useful functions in the
performance of the contract, or
iii) a combination of (i) and (ii).
3.2.2 Verification of the status of targeted enterprises
Contractors shall submit completed targeted enterprise declaration affidavits and, where targeting strategy A
applies, letters of undertaking to act as subconsultants, subcontractors, suppliers, manufacturers or service
providers (see Annex D), in respect of each and every targeted enterprise and targeted partner whose
contribution shall be counted towards the contract participation goal. These documents shall, unless otherwise
specified in the targeting data, be submitted to the employer's representative before the submission of the first
claim for payment.
3.3 Contract participation goal (CPG) credits
3.3.1 Granting of credits
Using Method 1 or Method 2, credits towards the contract participation goal shall be granted by converting the
value of the following (exclusive of any value added tax or sales tax required by law) to a percentage of the
contract amount and multiplying such values by the appropriate weightings for the different target areas and
different categories of targeted enterprises and targeted labour, if any, provided for in the targeting data.
a) Method 1
In the case of a contractor who is a targeted enterprise, the sum of the monetary value of the work
performed using the contractor's own employees and resources, and the monetary value of the work and
services subcontracted to targeted enterprises, subject to the provisions of 3.2.1 (a).
b) Method 2
In the case of a contractor who is not a targeted enterprise:
1) the total monetary value of the contributions made by targeted enterprises (other than targeted
suppliers) in fulfilling contractual obligations, subject to such targeted enterprises not subcontracting
more than 15 % of the value of their contributions to non-targeted enterprises;
2) 50 % of the expenditure on goods required for the contract, which are obtained from targeted
suppliers, subject to such targeted suppliers not subcontracting more than 15 % of the value of their
contributions to non-targeted enterprises; and
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ISO 10845-7:2011(E)
3) the total monetary value of wages and allowances paid by the contractor and any non-targeted
enterprise subcontractor to targeted labour.
NOTE 1 The total value of expenditures made to targeted manufacturers can be claimed.
NOTE 2 The weightings referred to usually range between 0,5 and 1,5. Where no weighting is indicated in the contract,
the weighting is assumed to be unity.
NOTE 3 Where targeted enterprises subcontract more than 15 % of the value of their contribution to non-targeted
enterprises, the credits are limited to the actual value of the contributions made by targeted enterprises.
NOTE 4 Annex E provides illustrative examples as to how a contractor can fulfil contract participation goal obligations.
3.3.2 Denial of credits
3.3.2.1 General
No credits shall be granted when the contractor
a) makes a direct payment to a supplier, manufacturer or plant hire or lease company on behalf of a
targeted enterprise when such payment is recovered by making deductions from payments to the
targeted enterprise in connection with the contract,
b) fails to enter into written contractual agreements with targeted labour, or
c) fails to enter into written contractual agreements with targeted enterprises.
3.3.2.2 Contractual agreements
Credits claimed towards the contract participation goal shall be denied if written contractual agreements
contain clauses which are not in accordance with the provisions of the contract and, where targeted
enterprises are contracted, contain provisions for
a) a right to set off in favour of the employing contractor not provided for by law,
b) authoritarian rights given to the employing contractor or the contractor's agent, with no recourse to
independent adjudication in the event of a dispute arising,
c) payment procedures based on a pay-when-paid system,
d) a dispute resolution process which does not include inexpensive alternative dispute resolution (ADR)
procedures, such as mediation or adjudication, but only makes use of formal proceedings such as
arbitration or litigation, or
e) conditions which are more onerous than those which exist in the main contract.
Credits shall be denied should targeted enterprises not adhere to statutory labour practices or fail to perform
commercially useful functions.
4 Compliance with requirements
4.1 General
The contractor shall enter into written contractual agreements with all the targeted enterprises cited in the
contract participation goal implementation plan and shall, as soon as is practicable, furnish the employer's
representative with copies of such agreements and the written acceptances thereof. The contract to be
performed by the targeted enterprises shall, in the case of targeting strategy A, thereafter neither be reduced
in scope, nor terminated without the prior written approval of the employer's representative, which shall not be
unreasonably withheld or delayed.
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ISO 10845-7:2011(E)
The contractor who makes use of targeted labour for the purpose of securing credits shall enter into written
contracts with all the individuals classed as targeted labour and, during the performance of the contract,
furnish the employer's representative with copies or pro formas of all contracts entered into.
4.2 Substitutions
Where targeting strategy A applies and in the event that, through no fault of the contractor, a contracted
targeted enterprise is found to be
a) unable to perform,
b) unable to perform on time,
c) unable to produce acceptable work,
d) unwilling to perform work required, or
e) not fit to perform the service,
the contractor shall notify the employer's representative of the apparent necessity to reduce or terminate such
a targeted enterprise's contract, citing the reasons.
In the event that the employer approves the contractor's request to be relieved of the obligation to make use
of a contracted targeted enterprise, the contractor shall either provide a substitute targeted enterprise to take
over the contract, or engage a targeted enterprise on another aspect of the contract so as to secure the
required credits to achieve the contract participation goal. The contractor shall, in such circumstances, submit
to the employer a targeted enterprise declaration affidavit in respect of the proposed substitute targeted
enterprise, and supply details of the nature and value of the contract which shall be performed by such an
enterprise.
Contracts with contracted targeted enterprises may only be terminated and new contracts entered into with
substitute targeted enterprises for the purpose of securing credits towards the contract participation goal, with
the employer's approval, which shall not be unreasonably withheld. Where the employer approves such
substitutions, the contractor shall comply with all the requirements of this part of ISO 10845.
The employer may, at the employer's sole discretion and upon the basis of evidence submitted by the
contractor in support of fruitless efforts in good faith to secure substitute targeted enterprise participation,
grant a waiver in respect of contract participation goal obligations.
NOTE Subclause 4.2 is only applicable where targeting strategy A applies.
4.3 Bona fides of targeted enterprises
Where, in the case of targeting strategy A, an enterprise under contract was initially considered to be a
targeted enterprise but is later discovered not to be so, or is found not to be creditable towards contract
participation goals, the employer may consider a partial waiver of the contractor's obligations towards the
achievement of the contract participation goal in respect of such a targeted enterprise, should the contractor
satisfactorily demonstrate that he was justified in believing the enterprise to be a targeted enterprise and that
eligibility standards were not violated.
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ISO 10845-7:2011(E)
5 Records
5.1 Submission of documentation
The contractor shall submit all the documentation required in accordance with 3.1, 3.2.2, 4.1, 4.2 and 5.2 in a
timely manner and, together with a programme of activities, a schedule which indicates clearly the expected
commencement and completion dates of work and services to be performed by all the targeted enterprises
engaged on the contract for the purpose of securing credits towards the contract participation goal. This
schedule shall be updated by the contractor whenever a change in date occurs.
5.2 Monthly submission of supporting documentation
The contractor shall prepare and submit monthly to the employer's representative, on or before the date
specified in the targeting data, in a form approved by the employer's representative, the following:
a) a brief report which describes the commercially useful functions performed by the targeted enterprises in
the performance of the contract, both over the interim period and on a cumulative basis;
b) a schedule reflecting the estimated total value of the contracts, the cumulative value of the contracts and
the value of goods provided or work and services performed (or both) over the period for which payment
is claimed in respect of each and every targeted enterprise performing commercially useful functions;
c) a schedule which lists the names, identity numbers, gender, trade/occupation, period of employment,
employment number and the like, as directed by the employer's representative, together with the
respective wage rates and allowances payable in respect of targeted labour, including the monetary value
of wages and allowances paid both on a cumulative basis and over the period for which payment is
claimed; and
d) a schedule of wages and allowances paid to all employees, indicating the status of such employees,
where the contract
...