An informative presentation on getting Contracting and Procurement Right in Medicare Locals.

1. LUNCH TIME WEBINARS
GETTING CONTRACTING AND PROCUREMENT RIGHT!
PETER SPENCE, DIRECTOR, SPANS
The QED Group

2. 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

3. 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

4. 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

5. CONTRACTING AND PROCUREMENT LIFECYCLE
Simple or Complex
Clinical
Relevant Contract
type and process
(purchase order,
contract, RTF, RTQ,
EOI )
Contract audit and
reporting
Review contract
performance
Decide to renew or
terminate
Compliance
management
Contract
Amendment
Recording and
storing (contract
register)
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 Creation
and Authoring –
Drafting the
contract
Negotiate terms,
conditions,
specifications and
Statement of Works
The QED Group

6. 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 nongovernment 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-grantguidelines.html
The QED Group

7. 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

8. 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

9. ADHERENCE TO ML CONTRACT AND
PROCUREMENT POLICIES AND PROCEDURES
Any 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

10. 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

11. 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

12. 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

13. THE CONTRACTS REGISTER
•
Contract performance reporting schedules
•
Contract risk management and performance tasks
•
Confirmations (attach or link to evidence) of credentialing and recredentialing, 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. DEED VS SIMPLE CONTRACTS
DEED
CONSIDERATION
CONTRACT
X
X
OFFER AND ACCEPTANCE
X
X
INTENT TO BE LEGALLY BINDING
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
X
MINIMUM 12 YEAR LIMITATION PERIOD TO ENFORCE THE AGREEMENT *
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

22. FOR MORE INFORMATION
•
Thanks for attending, if you would like more information please contact:
•
02 9925 4022
•
Email: info@kwelasolutions.com
The QED Group