Almost universally within NSW State and Commonwealth Government, the internal legal teams of departments and agencies are under significant stress resource-wise and may often be unable adequately and properly to support their internal procurement teams as well as the NSW Procurement Reforms seem to envisage.
An aspect of procurement contracts of both public and private sector organisations, in fact most contracts, is that not much thought is given to what happens at the end.
For some contracts, it does not matter.
For many, especially those relevant to an ongoing enterprise, such a public sector entity, it does. From my observations, often sufficient thought of retiring and replacing contracts for supply of goods and services not given early enough.
It should be!
One of the best illustrations of that, and I mean illustration, is as page 3 of the 2012 Commonwealth of Australia Better Practice Guide “Developing and Managing Contracts” “Getting the right outcome, achieving value for money ” at http://www.anao.gov.au/html/Files/BPG%20HTML/Developing%20and%20Managing%20Contracts/resources/ANAO-DevelopingManagingContracts-BPG.pdf, there is a great schematic which, for me, says it all,very succinctly and in a way which reflects the cyclic nature of procurement.
In House Team Role
Interesting, though that cyclicality chart is, the issues for in house legal teams is what, practically can they do, given that most legal teams are short on resources, particularly time.
More relevantly to public sector in house lawyer teams, with the devolution of responsibility for most, particularly day to day, procurement to agencies, is how to provide the best professional support.
Legal teams will have to take great care clearly to defin their role so far as concerns procurement exercises undertaken by their employer department/agency. Responsibility for agencies (especially those which are comprised within a different legal entity) which “piggyback” on a main contract is problematic, at best.
Oone of the NSW Procurement Board templates has talked in terms of the Government Principal being able to “novate” the contract to other government departments and agencies. One can only hope that the use of the word “novate” was not intended to convey the technical meaning understood by lawyers which is clearly inappropriate to arrangements between government departments which are all themselves the one legal entity – the State of New South Wales.
Legal teams will have to clearly identify their role in the terms of engagement relating to the role so far as concerns procurement exercises undertaken by their employer department/agency.
That will include, I suggest:-
- clear specification of minimum notification and turnaround times. The last thing needed by an overstretched internal legal team is a request from the Procurement section of the department/agency giving 24 hours or less time to consider and advise on what will often involve very large contract documents with a considerable amount of support – explanation papers;
- finding time to settle agency templates well before they are needed and refine them from time to time to keep them up to date;
- recommending apt process to deal with the Workplace safety issues which can arise in procurement contracts;
- clear specification of the need to give consideration to the liability cap and indemnity provisions in the standard documents;
- acceptance, almost as due diligence exercise, but particularly in light of new workplace safety legislation, that there is a need to consider all aspects of the location of the performance of the services as relevant to who is in control for the purposes of that legislation and “PCBU” issues rather than, as may historically have been the norm, simply to rely on broad-brush indemnities which do not now adequately deal with the situation;
- consideration whether proper “milestones” and/or “performance criteria” have been identified and adequately provided for in the contract documents;
- finding time to settle agency arrangements to apply where the particular agency is to be the lead agency in respect of which other agencies can “piggyback”, consistently with the new Procurement Policy, when the “lead agency” may not be particularly familiar with the requirements of “piggybacking” smaller agencies; and
- development of agency specific risk management profiles and how they link to the relevant provisions of the approved templates.
Careful Review of Relevant Templates
Careful review and refinement of various procurement templates, as a matter of prudent risk management, is needed to avoid problems I frequently see, such as;-
- definitions are adopted, but the definition is not used in the substantive text of the substantive part of the contract document;
- the substantive part of the contract uses words and expressions which require definition but are not defined;
- the linkage between the Definitions and the Substantive part of the contract with various schedules is not thought through adequately with the consequence that a number of issues may fall through cracks;
- indeed, in some, the linkage between the substantive contract provisions and the goods or services to be specified with in a supply schedule the format of which is not always provided;
- the liability and particularly liability cap provisions are not properly understood by those in some agencies who are involved in putting the contract together;
- things like Performance Criteria are alluded to but not properly outlined, let alone measured.
In one or two, the “performance criteria” and performance milestones involved more filing reports as to performance, than actual performance or compliance with milestones. Indeed, in one contract template the words “performance criteria” do not appear in the reference to “milestones” appears in the schedule is not picked up in the substantive text