After successfully tendering for a government contract and taking the time to sign a well-drafted and considered contract, it is easy to put the contract documents away and get on with the job. But, oftentimes, effective project delivery and a happy partnership are driven by compliance with the details in the contract itself. And although these details are easily overlooked, a few simple strategies in place will go a long way towards setting yourself up for success and avoiding costly disputes.
In this publication, Moulis Legal Associate Lochlan Worrell outlines some common strategies you can use to sustain a prosperous (and dispute-free) partnership with the government.
Simple management prevents complex problems
With the essentials of entering into government contracts covered in our article Negotiating government contracts – you have more power than you think, it’s time to execute everything you’ve agreed to and maintain compliance with all the terms and conditions inked above that dotted line.
First and foremost, successful contract management begins with a clear understanding of each party's rights and obligations. This will essentially lay the groundwork for proactive compliance throughout the contract lifecycle. Whether overseeing a single contract or a portfolio of projects, appointing dedicated personnel to monitor process and performance is indispensable.
While seemingly obvious or simple, the fundamental elements that underpin successful contract management are often overlooked, including -
- Personnel – Key contacts nominated in the contract should be regularly reviewed and updated (as required) to ensure both parties are aware of all individuals who are suitably authorised to communicate on behalf of or who may bind the counterparty.
- Communication – Communication regarding contract management, compliance and variations, should only be made via prescribed channels. Day to day management and communications should only be delegated to the extent necessary for contract efficacy.
- Milestones – A well drafted contract will include well defined milestone criteria, timeframes and reporting requirements. Compliance with milestone criteria should be measured, documented, and reported in accordance with any specific contract requirements.
- Variation – Variations to contract milestones, processes or other obligations should only be made in writing, and in accordance with the variation process prescribed by the contract.
- Insurances – Contractors must ensure that valid policies of insurance are held throughout the period of the contract and that they comply with the type, value and insured parties.
- Disputes - Issues and disputes should be raised in accordance with the nominated dispute resolution processes, including the correct format, to the right person and within nominated timeframes.
Importantly, any of the above instances should be documented to the greatest extent possible, ensuring that all communications, variations, and milestone are recorded in writing, and stored in an accessible location.
Maintaining compliance during termination
Government contracting also attracts the intrinsic risk of changes in government, policy and legislation. While a well-drafted and considered contract will ordinarily contemplate each of those possibilities, and provide opportunities for variations, some changes may mean that it is in one or both parties’ interests to terminate the contract early.
Compliance during the termination process remains equally important as during primary performance of the contract. Common areas of dispute include -
- Failing to ensure pre-termination obligations have been satisfied, such as issuing a notice to remedy.
- Incorrectly serving notices, such as not sending notices within the prescribed period, not sending notices to the correct location, failing to use correct format or include the necessary information. In some cases, these failures are sufficient to render the notice ineffective.[1]
- Breaching confidentiality and or public comment – termination of large government contracts, especially when driven by changes in public policy or legislation, can often draw significant public scrutiny. Contractors should avoid public comments and take steps to reduce the risk of breaching confidentiality obligations.
Conclusions
Contracting with the Australian government at Commonwealth, State, or local level, is a dynamic journey that spans from complying with legislative and policy requirements, through to effectively delivering on what you agreed upon.
Whether it's ensuring you maintain quality standards, or how you deal with breaches or termination, each contract brings offers inherent challenges and opportunities.
In this article. we’ve covered all the basics, like utilising nominated personnel, and good contract management practices, to get you on the road to realising the full potential of your government contract.
For legal advice on managing government contracts, contact our team. Alternatively, if you’re in Brisbane on Tuesday 16 April, join us for the second of our Contracting with Government series, Managing government contracts - the blueprint to compliance.
[1] Vision Eye Institute Ltd v Kitchen [2014] QSC 260.,
