Councils across Australia have been firmly warned that selecting the cheapest price on offer from security contracting firms could put them in breach of federal workplace law.

The federal workplace umpire the Fair Work Ombudsman has announced a series of random compliance audits for local governments amid escalating concerns that a focus on “getting security services for the lowest price is resulting in a race to the bottom among some security providers, who cut costs to stay competitive.”

It’s a timely investigation given that security services primarily deal in trust and protection.

The probes are part of a wider awareness and education campaign aimed at getting council procurement officers to ask much tougher questions of rival suppliers who sometimes offer cut throat rates to win government business.

The issue of such concern that national peak body the Australian Security Industry Association (ASIAL) is prominently backing the Fair Work audits in a clear effort to weed out cowboy activity and maintain the reputation of the sector.

According to ASIAL chief executive, Bryan de Caires, a level playing field is needed for security service providers bidding for council work, especially on minimum pay compliance.

“If the price is too good to be true, it probably means somebody is not compliant with workplace laws,” Mr de Caires said.

“Operators who are gaining unlawful and unfair competitive advantage are profiting at the expense of the workers and the legitimate operators who are doing the right thing.”

Fair Work Ombudsman Natalie James believes councils need to be cognizant about the impact of letting “low-cost contracts” and whether these are “contributing to the underpayment of employees working for their sub-contractors.”

“Contracting out labour is a legitimate approach to doing business, but councils need to consider whether their procurement processes and subsequent governance of those arrangements create an environment where workers are open to exploitation,” Ms James says.

Union United Voice is also backing the move.

To get a picture of just how big the problem is, the Fair Work Ombudsman says its investigation will run for a year “with a report on the outcomes anticipated by August, 2016.”

The industrial umpire is also citing evidence of interventionist approach of compliance auditing working as a tactic.

It said in 2009 a national audit sweep of more than 300 businesses “found that less than half were compliant with workplace laws.” A follow-up campaign in 2012 of 392 businesses 75 per cent of those audited met their obligations.