Welcome to part 2 of this overview webinar of the Streamlined contracting with NGOs contracting
framework. In the first part of this webinar we looked at the contracting framework in
the different documents and tools that form the framework. We went through the Government
Agency Agreement and explained what it is and the commitments that agencies and MBIE
make when they sign that agreement. In the second part of this webinar we're going to
look at the framework terms and conditions. If you've not already viewed part 1, please
do so before you view this part. This is important as we cover a lot of terminology and important
background and contextual information in part 1. The framework terms and conditions are
the standard terms and conditions that are incorporated by reference into all outcome
agreements. Together, these framework terms and conditions and the outcome agreement form
a contract between the agency and the provider for the services described in each outcome agreement.
It's important to understand the framework terms and conditions as they are
the backbone of the contractual relationship between agencies and providers. So, what do
they say? The framework terms and conditions embed relationship principles that sit across
the sector and set the tone for whole of sector engagement by Government Agencies. Those relationship
principles focus on the agency and provider agreeing to work together to achieve the desired
outcomes and act honestly and in good faith; communicate openly and in a timely manner;
work collaboratively and constructively; recognise each other responsibilities; encourage quality
and innovation to achieve positive outcomes; maximise value for money to government; and
ensuring flexibility so that services can be adapted following discussion between the
agency and provider to meet identified and agreed needs. These clauses describe what
a government agency must do to use the contracting framework, and note which parts of the contracting
framework create legally binding obligations. There are two preconditions to using the contracting
framework. The agency must sign the Government Agency Agreement which commits the agency
to acting consistently with obligations described there. The first part of this webinar describes
that agreement. And it must also sign an outcome agreement describing service to be performed
by the provider. The agency also commits to acting consistently with the framework terms
and conditions, each outcome agreement, and each outcome agreement management plan it
enters. The final clause in this section confirms which documents and parts within the contracting
framework create legally binding obligations between the agency and provider. Any remedy
plan entered by an agency and provider to remedy any non-performance issues is legally
binding, as are the obligations contained in the Government Agency Agreement. The
outcome agreement management plan does not create any legally binding obligations as
it's intended to be a contract management tool to help maximise the benefit of the relationship
between the agency and the provider. The services section requires the providers to perform
the services as described in the outcome agreement and importantly creates the link between the
provision of services and a contribution to desired population or community outcomes recorded
in the outcome agreement. That link is really important in establishing whether the services
are effective at contributing to those outcomes. Under 'payment', the agency will pay the provider
to deliver the services, the times and amounts for payment are recorded and written into
the outcome agreement. The next section of the framework terms and conditions is about
how the contract will be managed. The underlying principle is that the agency will follow best
practice contract management. This means making sure that the contract management requirements
are proportionate to the nature and value of the services and associated risks to the
agency and clients. The focus should be on evaluating the effectiveness of services and
whether the desired client and population or community outcomes are being achieved.
Both the provider and agency must communicate regularly with each other so that they can
monitor performance and encourage ongoing improvements and identify any issues or problems
early on and work together to resolve them. To ensure that someone is responsible for
this, both the agency and provider nominate a relationship manager for each of their outcome agreements.
The contract management section also covers what reporting is required and
when special enquiry requests may be made, and confirms that statutory audits may be
undertaken. In addition to the regular communication described in the previous slide, the provider
will provide regular reports to the agency as described in the outcome agreement. If
the agency believes that the provider may have breached the term of an outcome agreement,
it can ask for information to establish whether there has been a breach and if there has been,
why it happened, or conduct an audit as to whether it was a one off incident or more
systematic failing. This right is described as a special enquiry right. In addition to
the special enquiry right, some agencies may be required or permitted by law to audit the
services or the provider. The audit right is referred to as statutory audit right. If
an agency is required or permitted by law to audit the provider or the provision of
services, and the agency knows the anticipated dates when the statutory audits will be undertaken,
it should record those in the outcome agreement. Underpinning the entire contract management
approach are the principles of coordination and cooperation, especially where an outcome
agreement has multiple agencies and one provider. These principles are embedded in the framework
terms and conditions and outline how the parties are expected to work together. The agency
will work with the provider and other agencies who are also parties to the same outcome agreement
to minimise the amount of reporting the provider has to produce by trying to align and consolidate
reporting requirements of the different agencies as much as possible. Give the provider reasonable
notice if they want further information in relation to a special enquiry request, or
undertake a statutory audit of the provider and limit requests for further information
and statutory audits based on managing identified risks. This section is about conditions that
may be included in the outcome agreement. When we refer to conditions here we mean a
clause that requires one party to the outcome agreement to do something, generally by a
certain date, with a known consequence for not performing by that date, and, addresses
something that is not already included in the framework terms and conditions. For example,
something that is necessary for a single contract but will not be required for all contracts
between Government agencies and providers. Some conditions need to be satisfied or performed
before the outcome agreement is entered, where others may required ongoing performance throughout
the term of the outcome agreement. The framework terms and conditions and outcome agreement
specify a range of consequences for not performing any conditions which include agreeing to a
remedy plan to address the non-performance, suspending the services or taking specific
action described in the framework terms and conditions, or outcome agreement. Both the
provider and the agency can negotiate to include conditions that the other must meet. The guiding
principle with requesting the inclusion of conditions is that the condition must be necessary
to manage or mitigate a risk identified by either party. The decisions support tool, which
we discuss later in this webinar, is a useful aid to determining whether any additional
conditions should be included in an outcome agreement or the outcome agreement management
plan. This section is about information that the provider must give the agency. The provider
must tell the agency, in writing, if it changes it's legal structure or the provider or any
of it's personnel or contractors are investigated for or have been charged with a criminal offence
that could impact on delivering the services. That includes offences that could damage the
providers or the agencies reputation. In both situations the agency and provider will discuss
what an appropriate response should be since there won't be one right approach that should
apply in all circumstances. An agency may offer incentives for the provider in addition
to paying for the services. Examples of incentives could be offering a longer contract term
in return for good performance, or relaxing or reducing reporting requirements over time.
All incentives are at the agencies discretion and are entirely optional but they are included
to encourage agencies to consider whether offering an incentive will improve the relationship
with the provider and or the outcomes being achieved by the provider. If the provider
or the agency thinks there is a dispute, they must raise it in writing. The first step is
for the relationship managers to try and negotiate a solution together. If they can't resolve
the dispute within 21 days, then either the agency or provider may refer the dispute to
mediation. Both negotiation and mediation should be tried before formal legal proceedings
are commenced. Litigation should be a last resort, but the clauses provide flexibility
to ensure that neither party is prevented from taking urgent legal action necessary
to preserve it's respective rights. This section is about how confidentiality will be maintained
and how confidential information will be handled. The general rule is that all information relating
to or in connection with an outcome agreement is confidential. This is deliberately wide.
If either party wants to disclose confidential information, they need the consent of the
person who owns or provided the information. Confidential information includes personal
information which is information about an identifiable individual. Personal information
is always confidential. If the provider or agency wants to disclose someone's personal
information, they need that individuals written consent. Sometimes, disclosing confidential
information is allowed. For example, if the provider or the agency is required by law
to disclose it; if the provider or agency has to disclose it to be able to comply with
the outcome agreement; if the information is made public and both the provider and agency
agree that it no longer needed to be kept confidential; or both the provider and agency
agree that the confidential information may be disclosed to certain third parties, for
example an auditor who has first signed a confidentiality agreement. This section is
about who owns Intellectual Property, or IP as it's commonly known, and when the non-owning
party may use that IP. Any IP that either party owned before the outcome agreement starts
remains their's. The starting position is that all new IP that the provider develops
while they're delivering the services belongs to them, unless the parties agree a different
arrangement in the outcome agreement. Both the provider and agency must agree on how
any new IP will be used by the part who doesn't own it. That is referred to as a licence to
use new IP. Irrespective of who owns the new IP, the owner of the new IP grants the other
party a limited licence to use that new IP for any purpose connected with performing
it's obligations under the outcome agreement. That means the provider and agency will need
to agree when and how that new IP will be used. If they can't agree about this, then
the starting position is reversed and the new IP will belong to the agency that paid
for it's creation, with the provider having a licence to use that new IP. The framework
terms and conditions covers when and how an outcome agreement may be terminated. Either
party and stop participating or terminate the outcome agreement by giving 90 days written
notice. If one of the parties breaches the outcome agreement they have 14 days to rectify
the breach unless an alternative period is agreed. If they don't then the outcome agreement
can be terminated. If there has been a breach, the parties have the option to put a remedy
plan in place. A remedy plan is an action plan which describes the steps that will be
taken including time frame to put the breach right. Both parties must comply with their
respective obligations in any remedy plan. If the breach is not put right in the time
frame described in the remedy plan, the outcome agreement may be terminated. So, what happens
if the outcome agreement is terminated? The provider must stop delivering the services on
the day of the termination; final payment will be made, or refunds discussed if the
provider has been paid in advance and not all services have been performed. Both parties
will work together to agree a transition plan to transition the services to a new provider,
if applicable. If there is more than one agency, and one of them wants to stop participating
in the agreement, but the others want to continue, then they can terminate just their portion
of the agreement and the rest of it will carry on without them. If the provider delivers
services which are unsatisfactory and they don't meet the targets or satisfy conditions
described in the outcome agreement, then the agency may ask the provider to make a repayment
if they were paid in advance and not in arrears, reduce the amount they pay next time, or suspend
or delay payment until a remedy plan is agreed and it's obligations performed. If the agency
does any of these, the amount reduced, withheld or repaid must be reasonable given the services that have been
provided and the circumstances giving rise to the non-performance. Under indemnity, if
the provider breaches the agreement, and because of that breach the agency ends up getting
sued by a third party, the provider must meet the full cost of the agency's losses associated
with that law suit. The exception is if the agency has caused or contributed to those
losses by it's own negligence, breach of outcome agreement, or wilful misconduct. And finally,
the general terms section, which covers a number of important but relatively small areas,
like relationship between agencies who are party to the same outcome agreement, that
is an agency can't represent other agencies; variation process; subcontracting and assigning
processes; comply with laws; notices; conflict of interest; and more. To recap, the framework
terms and conditions are standard contractual terms that apply to all outcome agreements
between agencies and providers. They're incorporated into each outcome agreement by reference.
The framework terms and conditions sets out the obligations of the provider and the purchasing
agencies for the services being purchased under each outcome agreement. That's the framework
terms and conditions and the end of part 2 of this webinar. The last part of the webinar
will look at the remainder of the framework, the decisions support tool, outcome agreement,
and outcome agreement management plan.