Some infrastructure tender contracts include clauses dealing with variations in cost due to fluctuations in the prices of raw materials. The amount can be adjusted after the tender is awarded.
But because town councils "lock in" contract prices for as long as five years, cleaning firms have no room to adjust and some go bust ("Long-term contracts 'hurt cleaning companies'"; last Tuesday).
Electricity tariffs are adjusted quarterly and public transport fares increase regularly in response to market forces. This should also apply to the cleaning industry.
The town councils can adopt the formulas used by the Public Transport Council and the Energy Market Authority to allow for increases in cleaning costs.
Our Government should also step in and create additional funding, like the Wage Credit Scheme, to help town councils cope with the higher costs without raising service and conservancy charges.
The tender system should have two components.
First, have a transparent fixed minimum wage for cleaners that bidders must comply with.
Second, have a flexible key index that allows bidders to adjust their price peg according to a formula determined by the town councils. This would allow bidders to bid more accurately, without worrying about the rising cost of fuel, levies, Central Provident Fund contributions and so on.
Locking cleaning companies into long-term contracts will inevitably lead to corners being cut, which will affect the standard of estate maintenance.
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