LUNCH TIME WEBINARSGETTING CONTRACTING AND PROCUREMENT RIGHT!PETER SPENCE, DIRECTOR, SPANS

The QED Group

The QED Group

DISCLAIMER

This presentation contains information, statements and commentary by the Peter Spence of SPANS and Marissa Jank of Jank & Associates (“the Consultants”) , from publicly available material and from discussions held with ML stakeholders. The Consultants do not express an opinion as to the accuracy or completeness of the information provided, the assumptions made by the parties that provided the information or any conclusions reached by those parties.

The QED Group

KEY DIFFERENCES BETWEEN A CONTRACTOR AND SUBCONTRACTOR • A contractor is an entity directly contracted by the principal

to provide goods and services or perform particular tasks

• A sub-contractor is a third party hired by the principal’s contractor to provide goods and services or perform certain tasks as part of the contracted statement of works

• The sub-contractor is not liable to the principal for performance of the contract or part thereof – the contactor assumes all liability of the subcontractor as if the contractor was performing the goods and/ or services themselves.

The QED Group

KEY DIFFERENCES BETWEEN A CONTRACTOR AND SUBCONTRACTOR • According to the ML deed of funding, you are not permitted to

contract out the program to a third party

• Any tasks that you subcontract to a third party over the value threshold of $22,000 (Inc. GST) requires Departmental approval

• The primary deed and ML Accreditation Standards require certain minimum terms to be met and these terms should flow onto subcontracting arrangements – i.e. insurance, credentialing, accreditation

• You cannot divest your contractual obligations to a third party (subcontractor)

• Ensure your contract includes appropriate risk treatments to ensure you have the capability to comply with the primary contract

The QED Group

CONTRACTING AND PROCUREMENT LIFECYCLE

Compliance management

Contract Amendment

Recording and storing (contract

register)

Simple or ComplexClinical

Relevant Contract type and process (purchase order,

contract, RTF, RTQ, EOI )

Assess the risks – If and how you intend to accept, transfer, mitigate or avoid risks through the contract design

Obtain approval to contract and/or

tender in accordance with ML delegation of

authority

Contract audit and reporting

Review contract performance

Decide to renew or terminate

Contract Creation and Authoring – Drafting the

contract

Negotiate terms, conditions,

specifications and Statement of

Works

The QED Group

COMMONWEALTH GRANT GUIDELINES 2ND ED (JUNE 2013)

ML need to be aware of the guidelines which are written to promote proper use of commonwealth resources through collaboration with the non-government sector to achieve government policy outcomes. This guidelines include:

The legislative, policy and reporting framework for grants administration;

The seven key principles for better practice grants administration: robust planning and design; collaboration and partnership; proportionality; an outcomes orientation; achieving value with public money; governance and accountability; and probity and transparency; and

Agency specific grants administration practices.

You can find a copy of the guidelines at http://www.finance.gov.au/publications/fmg-series/3-commonwealth-grant-guidelines.html

The QED Group

CONTESTABLE TENDERING

• Medicare Locals are required under the MLA Standards to use contestable tendering processes.

• Contestable tendering is a process of understanding which services should be put out to competition and which services necessitate a co operative approach. It is about creating competition, where a choice of providers does not already exist, where services would benefit.

• The MLA Standards also recognise that in areas where the market supply is limited, it may be appropriate to establish preferred supplier arrangements that ensure effective and efficient service provision.

• The decisions on the level of contestable tendering should be contained in the ML delegation of authority.

The QED Group

ML DELEGATION OF AUTHORITY - ALIGNMENT TO CONTRACT MANAGEMENT• Your ML instrument of delegated authority should clearly

set out who is authorised to approve and manage contracts, contract variations and expenditure

• The instrument of delegated authority should also specify the organisation’s financial thresholds for determining the appropriate contract form (i.e. purchasing order, short form or long form contracts, tender).

• Do all ML contracts align with the ML delegation of authority? Without this alignment the organisation’s control over contract standards, probity, legal affect, risk management and exposure may be compromised.

The QED Group

ADHERENCE TO ML CONTRACT AND PROCUREMENT POLICIES AND PROCEDURESAny ML contracting arrangements that deviate from the organisation’s contract and procurement policies and procedures (ML Accred. Standard 1.4.7) as well as instrument to delegated authority (ML Accred. Standard 1.2.4) leave the organisation exposed to:

• Allegations of Fraud and Corruption

• Poor due diligence and probity

• Risk of financial mismanagement

• Poor contract management

• Inconsistencies in the affect and application of contracts across the organisation

• Potential financial, reputation and stakeholder relationship costs associated with unauthorised and/or poor contracting processes

The QED Group

ML CONTRACT PERFORMANCE MANAGEMENT AND REPORTING REQUIREMENTS• ASSIGN CONTRACT MANAGEMENT ROLES AND

RESPONSIBILITIES

• RELATIONSHIP MANAGEMENT – Specify in the contract, communication protocols and mechanisms, Complaint and Dispute Resolution processes

• CONTRACT MANAGEMENT PLAN – assign responsibilities, tasks, communication strategy, performance review and reporting schedules; Determine work to be performed

• CONTRACT MANAGEMENT SYSTEM – develop or select a CMS that enables you to record, assigned management responsibilities and tasks; credentialing and insurance; monitors, reviews and reports key compliance and payment dates; performance deliverable schedule; contract value; variations and reviews

The QED Group

ML CONTRACT PERFORMANCE MANAGEMENT AND REPORTING REQUIREMENTS • CONTRACT REVIEW – Review contract

compliance – performance deliverables and milestones, invoicing, reporting

• RISK MANAGEMENT – Record, Assess, Monitor and Review Risks as part of the contracting and procurement cycle; Manage the risks by drafting contract terms and conditions that will enable you to either avoid, transfer, accept or reduce the identified risks

• REPORTING – Ensure the contract performance reporting schedule, mechanisms and processes to report are clearly outlined in your contract. Set up a contract register or reporting system, with reminders, to ensure timely reporting against the delivery schedule to meet your contractual obligations

The QED Group

THE CONTRACTS REGISTER

The ML should maintain a contracts register (ML Accred. Standard 4.1.1) that records and contains details of all contracts and contracted entities. It is recommended that your contract register should at a minimum assign:

• An authorised individual or work group to manage the register

• System controls to limit unauthorised persons from accessing, amending and/or altering contract details

• Identification of each contract manager

• Identification and details of the contractor (and where appropriate subcontractors)

• Attachment of copies or links to copies of the contracts

The QED Group

THE CONTRACTS REGISTER

• Contract performance reporting schedules

• Contract risk management and performance tasks

• Confirmations (attach or link to evidence) of credentialing and re-credentialing, certificates of insurance confirmation, accreditation and other key contract terms and conditions

• Reminders and reporting functions (if automated)

• All original contract copies should be centrally filed within the organisation under control of the contract manager (copies retained by authorised staff)

• Scan and attach copies of each contract with your contracts register (provides risk management backup, ease of access to review and confirmation)

The QED Group

WHAT CONTRACT MANAGEMENT MEANS

Contract Management involves the management of contracts with third parties, including suppliers, funders, partners, customers and employees throughout all steps of the contracting and procurement lifecycle. The contract manager is responsible for:

• Authoring (drafting) the contract• Negotiating the terms and conditions of the contract• Obtaining approval for the contract to be awarded• Execution of the contract• Ensuring compliance with terms and conditions of the contract• Authorising any variations or amendments to the contract

during implementation or execution• Managing the contract documentation (contract register, filing,

required certificates/documents etc.)• Audit and Reporting on contract performance

The QED Group

WHAT YOUR CONTRACT SHOULD INCLUDE• Contract Particulars – details representatives, term of contract, start

and end date.

• Formal instrument may list what is included in the contract and the execution page noting execution is in accordance with the delegation of authority

• Schedule for Scope of Services/ Goods (can include performance assessment and KPIs or have the performance assessment in a separate schedule

• Schedule for Technical Specification

• Schedule of Fees

• Schedule Of Deliverables

• Schedule for Specific ML Policies/ Procedures

• Schedule for negotiated terms & conditions

• General condition of contract for the specific contract.

The QED Group

WHAT IS AN MOU

• An MoU is generally considered ‘an agreement to agree’ or an agreement to enter into a more specific and comprehensive contract or agreement at a later time after further negotiations. 

• An MoU will typically establish a framework for the collaboration between the organisations and express the common goals or vision of the parties to the MoU. In general, an MOU will not deal with the specific details of particular projects.  An MOU is therefore usually more of a 'high level' agreement.

The QED Group

APPROPRIATE USE OF AN MOU

• When organisations wish to work together and/or share information with each other, allowing each to make the most of the other's specialist skills or knowledge.  

• When there is a need for a formal agreement to clarify the parties intention of working together,

• When one or more of the parties are not legal entities

• When the agreement is not intended to be legally binding or enforceable (MoUs are generally intended to have an administrative and not legal affect)

• As a preliminary agreement between parties to work toward (and prior to entering) a formal contractual relationship

The QED Group

IN APPROPRIATE USE OF MOU

• Where intellectual property is involved and an agreement is required on the ownership and rights to the use the property

• Confidential Information needs to be protected

• Privacy or personal information needs to be protected under the Commonwealth Privacy Act (1998)

• Clinical safety, Work, Health and Safety and other legislative responsibilities must be complied with

• Offer and acceptance of consideration is involved

The QED Group

USE OF MOU

MoU’s should include:

• Particulars of the ML/ organisations or persons entering into the MOU;

• Objectives of the arrangement and goals or expected benefits;

• Agreed actions, services areas of support;

• Strategies and mechanisms for dealing with common issues;

• The term of the MoU (an agreed start and review date);

• The agreed roles of each ML/ organisation;

• The naming of a position in each ML/ organisation as a central point of contact for the MOU; and

• A communication plan or dispute resolution statement.

The QED Group

USE OF MOU

• MoUs should not include provisions such as indemnities, liabilities and warranties that purport to have legal effect.

• To help avoid any uncertainty about whether a MOU is legally binding, your ML should make sure the MoU contains a specific statement to the effect that it is or is not intended to create legally binding.

• If your ML wants to enter into an arrangement that is legally binding on the other party, an MoU is typically not a suitable arrangement. Your ML should consider entering into a contract with the other party.

The QED Group

DEED VS SIMPLE CONTRACTS 

DEED CONTRACT

 CONSIDERATION 

 X

 OFFER AND ACCEPTANCE 

 X  X

 INTENT TO BE LEGALLY BINDING 

X  X

 IN WRITING 

 X

  

 WITNESSED BY AT LEAST ONE PARTY WHO IS NOT PARTY TO THE DEED 

 X

 

 EXPRESSED TO BE A DEED 

 X

 

 DELIVERED TO THE OTHER PARTY/S 

 X

 

 EVIDENCE TO SUPPORT THE PARTIES INTENT TO EXECUTE THE DOCUMENT AS A DEED AND BE LEGALLY BOUND BY IT

 X

 

 MINIMUM 12 YEAR LIMITATION PERIOD TO ENFORCE THE AGREEMENT *

X   

 SIX YEAR LIMITATION PERIOD FOR ENFORCEMENT OF BREACH OF CONTRACT

   X

When the existence of consideration is in doubt, a deed may be the preferable option as it remains enforceable without the existence of consideration.

The QED Group

FOR MORE INFORMATION• Thanks for attending, if you would like more information please

contact:

• 02 9925 4022

• Email: info@kwelasolutions.com