Published reports involving Ace Body Corporate Management have raised questions about transparency in contractor tendering.
The reports concern allegations that a branch manager sought a payment from a contractor in connection with major works at a Geelong apartment building.
For Owners Corporation (OC) Committees, the incident raises a broader governance question: how can a Committee be confident that contractors are being assessed fairly and that a recommendation genuinely serves the building’s interests?
This article examines what was reported, how alleged kickbacks can affect Committees and people living in strata and what should be verified before major works are approved.
- The Ace Body Corporate Management report highlights why Committees need visibility over how contractors are selected, assessed and recommended.
- An undisclosed payment can affect contractor selection, building expenditure and owners’ confidence in how their funds are managed.
- Before approving major works, Committees should review the original proposals and understand any interests connected with the recommendation.
What was reported about the alleged contractor kickback?
According to published reports, a contractor was tendering for approximately $200,000 worth of major works at a waterfront apartment building in Geelong.
During a recorded phone call, a manager from an Ace Body Corporate Management branch allegedly sought a payment equal to 10 per cent of the contract value, or approximately $20,000, in connection with helping the contractor secure the work.
The allegations have not been established as findings of fact.
They relate to the reported conduct of an individual manager and should not be treated as evidence of similar conduct by other Ace Body Corporate Management branches, employees or the wider network.
Ace Body Corporate Management said it investigated the recording, confirmed that the manager involved was no longer with the business and stated that secret vendor commissions were prohibited under its franchise model.
The report also stated that Strata Community Association Victoria had referred the Ace Body Corporate Geelong franchise operation for an urgent investigation by its independent professional standards and membership advisory group.
How can contractor kickbacks affect Committees and people living in strata?
Contractor kickbacks can affect more than the fairness of a tender.
They can shape the options placed in front of the Committee, influence how those options are presented and create uncertainty about whether the final recommendation genuinely serves the building’s interests.
Committees may not receive a fair comparison
A Committee may believe it is comparing contractors objectively when the process has already been influenced behind the scenes.
This can affect which contractors are invited to tender, how their proposals are presented and why one option is recommended over another.
As a result, the Committee may be making a significant decision without a complete or balanced view of the available choices.
Owners may carry the financial impact
The consequences may ultimately be felt by owners.
If an undisclosed payment is built into a contractor’s pricing, owners may bear the cost through higher project expenditure, annual fees or special levies.
Even where the price is not directly increased, owners may still be paying for work that does not offer the strongest value, capability or fit for the property.
Residents may experience the practical effects
The impact is not limited to finances. If the selected contractor:
- delivers poor-quality work
- causes avoidable delays
- fails to manage disruption properly
residents may experience ongoing inconvenience, unfinished works or repeated building issues.
Victorian OC managers must:
- act honestly and in good faith
- avoid improperly using their position to gain an advantage for themselves or another person
- take reasonable steps to obtain goods and services on competitive terms and at competitive prices
They also have disclosure obligations relating to certain supplier relationships and benefits received under proposed supply arrangements.
These obligations help support a fair and transparent process for Committees, owners and residents.
For Committees, the key question is not simply how many quotes were presented. It is whether the process behind those quotes was fair, transparent and free from undisclosed influence.
What should Committees verify before approving a contractor?
An OC manager may prepare the scope, contact contractors and collect proposals, but the Committee still needs enough information to understand how the recommendation was reached.
Before approving the work, the Committee should verify five key matters.
1. Every contractor received the same scope
Each contractor should receive the same information about the work required.
If the scopes differ, the quotes may not be directly comparable. Any exclusions, alternative methods or proposed variations should be identified before the Committee makes a decision.
2. The original quotes are available for review
A comparison prepared by the manager can make the tender easier to assess, but it should not replace access to the original proposals.
The Committee should be able to review each contractor’s pricing, inclusions, exclusions, warranties and conditions.
3. The preferred contractor was assessed against clear criteria
The lowest price will not always provide the best outcome.
A contractor may offer stronger experience, better warranties or lower project risk. The recommendation should still be supported by clear criteria that relate to the work and the building’s needs.
4. Any payments or supplier relationships were disclosed
Committees should ask whether the manager or any related party has a financial or beneficial relationship with the contractor.
Under Victorian law, an OC manager must disclose specified beneficial supplier relationships and any commission, payment or other benefit the manager is entitled to receive under the proposed supply arrangement.
A commercial arrangement is not automatically improper. The concern arises when it is not disclosed or may influence the recommendation without the Committee’s knowledge.
5. The decision was properly recorded
As a governance measure, the Committee minutes should record the proposals considered, the basis of the decision and any declared financial or beneficial relationships.
A clear record supports accountability and helps owners understand how significant expenditure was approved.
How can a Committee tell if a tender may have been influenced by undisclosed interests?
A tender may need closer review if the Committee cannot clearly see how contractors were selected, why one proposal was preferred or whether any payments or supplier relationships were involved.
Missing documents, vague explanations or undisclosed interests may point to a broader transparency issue with the current OC manager.
Experiencing concerns with your OC manager?
Concerns about transparency, contractor selection or decision-making may point to broader issues with how an OC is being managed.
If your Committee is questioning its current management arrangement, Strata Management Consultants can help you assess the concerns, review the arrangement and understand the options available.
Call (03) 9007 2618 or message us here to speak with our team.
