DPC21/0301 DX 56201 B1037927 Tel 08 8226 3500 Fax 08 8226 3535

OFFICIAL

GPO Box 2343 Adelaide SA 5001

DPC21/0301 DX 56201 B1037927 Tel 08 8226 3500 Fax 08 8226 3535 www.dpc.sa.gov.au

Hon Kyam Maher MLC Parliament House North Terrace ADELAIDE SA 5000

Dear Mr Maher

Freedom of information (FOI) application

I refer to your request received by the Department of the Premier and Cabinet (DPC) seeking access under section 13 of the Freedom of Information Act 1991 (the Act) to:

All documents and data provided from government agencies to the South Australian Productivity Commission that were used in the preparation of Chapter 4 (Procuring Social and Health Services from the Not-For-Profit Sector) of the Inquiry into Government Procurement Stage 1.

Date range - 20/03/2018 to 16/02/2021

The South Australian Productivity Commission is a separate agency under the Act. DPC processes FOI requests on its behalf.

Under the Act, an agency has 30 days to respond to an FOI request. As DPC did not respond to your request within the time frame required, the department is deemed to have refused you access to all documents relevant to your application. However, I have determined to process the request as if the statutory time frame had been met.

The purpose of this letter is to advise you of my determination.

A total of 56 documents were identified as answering the terms of your application and I have determined as follows:

 I grant you access in full to 37 documents, copies of which are enclosed, and  I grant you access in part to 19 documents, copies of which are enclosed.

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Page 1 of 5 OFFICIAL

Please refer to the attached schedule that describes each document and sets out my determination and reasons in summary form.

Documents released in full

Documents 4, 7, 8, 10 – 26, 28, 31 – 33, 35, 39, 41, 42, 45, 47 – 49 and 52 - 56

Please note, document 31 has recently been rescinded by the Department of Health and Wellbeing and is no longer an extant document.

Documents released in part

Documents 1 – 3, 5, 6, 9, 27, 29, 30, 34, 36 – 38, 40, 43, 44, 46, 50 and 51

Documents 1, 2, 5 and 6

These documents contain information which, if released, would disclose details concerning a deliberation or decision of Cabinet. I have therefore determined to exempt this information pursuant to clause 1(1)(e).

Documents 6, 27, 29, 34, 36 – 38, 40, 43, 44, 46 and 51

Sections of these documents contain information relating to the personal affairs of a multiple third parties. Under clause 6(1) of Schedule 1 to the Act, information is exempt if releasing it would involve the ‘unreasonable disclosure of information concerning the personal affairs of any person’. I have considered that the application of clause 6(1) requires two elements, one that the information contains the personal affairs of that person; and secondly that disclosure would be unreasonable and contrary to public interest. I have determined that this information falls within the category of ‘personal affairs’ as listed under section 4(1) of the Act, thereby meeting the first elements of this clause. Further, I have considered whether the disclosure of this information would be unreasonable. In doing so, I have considered the relevance of this information to the public and the likelihood as to whether the person in question would consent to disclosure. I have concluded that this information was likely obtained in confidence and through measures which would otherwise make it unavailable to the public. I have considered the factors in favour of public interest and determined that these factors are outweighed by the need to maintain personal confidentiality in this instance. Therefore, I have determined that this information meets the requirements of clause 6(1) and is thereby exempt pursuant to this clause.

Documents 30

This document contains details of funding provided through significant procurements which involve a ‘commercial in confidence’ requirement. Release of this information would provide the other organisations with detailed knowledge of how the Department of Health and Wellbeing (DHW) distributes funds for contracted services and grants. In applying the public interest test, I have considered the object of the Act, which favour release. I acknowledge there is a strong public interest in the public knowing how much DHW spends on contracted services and grants, however I have determined this is outweighed by the need to ensure the government is able to scrutinise each organisations’ cause and apply funding how it sees fit. Release of this

OFFICIAL Page 2 of 5 OFFICIAL information could prejudice future supply of funds and could cause disharmony between the government and these organisations, especially by those organisations who feel they did not receive a fair apportionment. I have therefore determined to exempt this information pursuant to clause 7(1)(c).

Documents 2, 3, 6, 37 and 50

These documents contain opinions, advice or recommendations provided by the various state government agency employees to the Office of the SA Productivity Commission (OSAPC) in relation to the procurement of Health Services from the Not- For-Profit Sector. These employees deserve a safe space to have free and frank discussion about the strengths and weaknesses of their department’s procurement processes without fear of those opinions being publicly attributed to them. Further, the SAPC uses this information to drive improvement and it is not in the public interest for staff to feel that they cannot freely share information with SAPC without fear of it being made public. On the other hand, I recognise that there is significant public interest in scrutinising how the SAPC drives improvement, and whether agencies have robust procurement practices in place. On balance, I have determined in places to redact the initials of the staff making the comments pursuant to clause 9(1)(a)(i) to the Act.

Documents 2, 6 and 9

These documents contain information relating to the Department for Child Protection (DCP), the disclosure of which could reasonably be expected to have a substantial adverse effect on the effective performance by the agency of its functions. Release of this information would increase service provider leverage and substantially impact DCP’s effective performance of its contract management functions. While it is in the public interest for there to be transparency regarding the operations of government agencies in this sense, it is not in the public interest to release information that would impact on an agency’s ability secure best value for the public. On balance, I consider that the release of this information would be contrary to the public interest, and I have therefore determined it to be exempt pursuant to clause 16(1)(a)(iv) of Schedule 1 to the Act.

Exemptions

Clause 1 – Cabinet documents

(1) A document is an exempt document –

…

(e) if it contains matter the disclosure of which would disclose information concerning any deliberation or decision of Cabinet;

Clause 6 – Documents affecting personal affairs

(1) A document is an exempt document if it contains matter the disclosure of which would involve the unreasonable disclosure of information concerning the personal affairs of any person (living or dead).

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Clause 7 – Documents affecting business affairs

(1) A document is an exempt document—

…

(i) consisting of information (other than trade secrets or information referred to in paragraph (b)) concerning the business, professional, commercial or financial affairs of any agency or any other person; and

(ii) the disclosure of which—

(A) could reasonably be expected to have an adverse effect on those affairs or to prejudice the future supply of such information to the Government or to an agency; and

(B) would, on balance, be contrary to the public interest.

Clause 9 – Internal working documents

(1) A document is an exempt document if it contains matter—

(a) that relates to—

(i) any opinion, advice or recommendation that has been obtained, prepared or recorded; or

(ii) any consultation or deliberation that has taken place, in the course of, or for the purpose of, the decision-making functions of the Government, a Minister or an agency; and

(b) the disclosure of which would, on balance, be contrary to the public interest.

Clause 16 – Documents concerning operations of agencies

(1) A document is an exempt document if it contains matter the disclosure of which -

(a) could reasonably be expected -

…

(iv) to have substantial adverse effect on the effective performance by an agency of the agency’s functions

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FOI Disclosure Log

In compliance with Premier and Cabinet Circular PC045 - Disclosure Logs for Non- Personal Information Released through Freedom of Information (PC045), DPC is required to publish a log of all non-personal information released under the Act.

In accordance with this Circular, any non-personal information determined for release as part of this application will be published on the DPC website.

Right to internal review

If you are aggrieved with this determination, you have a right to apply for internal review under subsection 29(1) of the Act. Pursuant to subsection 29(2), your application must:

 be in writing  be addressed to the principal officer, and  be lodged at an office of DPC, or emailed to [email protected] within 30 days after the day on which you receive this letter or within such further time as the principal officer may allow.

If you have any questions in relation to this matter, please contact Denise Cranwell, Freedom of Information Officer, on telephone (08) 8429 7312 or via email at [email protected].

Yours sincerely

Eamonn Maloney Accredited Freedom of Information Officer Office of the Chief Executive Department of the Premier and Cabinet

01 / 06 / 2021

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SA Government Not for Profit Funding Rules and Guidelines Update

20 June 2017

1 Introduction - Rationale

There was no single approach to funding Not for Profit organisations across government.

There was inconsistency in terms of: • contract term length • contract terms and conditions • application of indexation to funding terms greater than one year • data collection • reporting obligations

2 Project Commenced 2013 • DCSI working collaboratively with the NFP sector to identify key elements required for mandated funding rules and guidelines • Discussions re relevant government policy frameworks • DPC, DTF, State Procurement Board became involved • Agreement that two government policy frameworks apply

Procurement Grants State Treasurer’s Procurement Instructions Board

3 Consultation – Key Stakeholders

Not for Profit Sector representatives

Key agencies: • DCSI, SA Health, Department for Child procure from NFP sector Protection

• DCSI, SA Health, Department of Child Key agencies : Protection grants to the NFP sector • DEWNR, DPTI (Office of Rec & Sport), DSD (including Arts South Australia)

• SPB – Procurement Policies Key Across Government • DTF – Treasurer's Instructions Policy Areas • DPC - Premier and Cabinet Circular

4 Government Approvals

1(1)(e) Disclose deliberation of Cabinet

Cabinet Submission June 2016

1(1)(e) Disclose deliberation of Cabinet •

• • Cabinet Submission • June 2017

5 Policy Framework

Procurement or Grant?

From July 1 2017  Automatic Indexation  Removal of State Standard NFP Sector Funded Procurement DPC 044 Treasurer’s Board Services Agreement – SA Funding Instruction 15 Exemption for Procurements Policy for Grants Community the Not For & TI 11 Welfare Grants Profit Sector Agreement

State Procurement Board Policies

6 Funding Policy for NFP Sector (DPC Circular 044) supports and strengthens provides a consistent collaborative approach to all aspects partnerships between of funding government and the Key over- NFP sector arching document for reduces the procurements sets clear requirements administrative burden for public authorities and grants on NFPs with NFP sector

maintains independence of NFPs

7 DPC 044 - Key Principles Collaboration and Robust planning and DPC Circular based on partnership design • working collaboratively to • proportional to scale and best practice principles achieve shared outcomes risk of funding activity for government and NFP • longer term contracts • working together when (3+3+3 years) as planning funding strategies funding relationships appropriate

Proportionality An outcomes Achieving value with relevant • Simple robust, accountable orientation money processes. • Clearly defined realistic • working together to achieve value • Balancing complexity & risk for outcomes defined. for the community. all parties. • Outcomes reviewed • standardised, efficient processes • Reporting levels proportional to regularly. that do not impose burdensome risks & policy outcomes sought. requirements on NFP sector.

Governance and Probity and transparency Community development accountability • Funding activities meet principles • Clear governance and legislative & policy • Desired impact e seeking to accountability. obligations. achieve within the community. • Processes minimise red tape and • Funding decisions are • Funding activities advanced duplication and ensure consistency impartial, documented, only where desired outcomes across publicp authorities. publicly defensible & lawful. improved.p

8 Key Principles - Summary Collaboration Agencies and the NFP sector need to work together, collaborate and build strong, ongoing relationships for the benefit of the community and end clients. Simplicity and Red Tape Reduction The volume, detail and frequency of reporting requirements need to be proportional to the risks involved and policy outcomes being sought. Funding processes across government need to be standardised, efficient and effective and not impose burdensome requirements on the NFP sector. Outcomes Focus There needs to be a focus on outcomes with outcomes being realistic and clearly defined about what the funding is intended to achieve, both for beneficiaries and with regard to policy objectives. Community development principles need to be considered including consideration of the desired impact or change they are seeking to achieve within the community.

9 Grant or Procurement?

“Making this determination requires the exercise of judgement based on the public authority’s knowledge of the arrangement and may require additional advice from the Crown Solicitor’s Office for particularly complex cases.”

Simplify Day 2017 Definition of ‘Procurement Operations’ needs to be changed

10 Procurement Framework • State Procurement Board policies have been updated for NFP requirements: and to reflect relevant DPC044 principles. • Additional specific requirements when undertaking procurements with the not-for-profit sector have been added (shaded text boxes) • Six updated policies: – Procurement Policy Framework – Contract Management Policy – Acquisition Planning Policy – Supplier Selection Policy – Simple Procurement Policy – Market Approaches and Contracts Guideline

11 Acquisition Planning Policy definition of not-for-profit from the Australian Taxation Office added Identifying Needs: early stakeholder engagement with NFP sector and need to work together Planning the Procurement Strategy:  need to consider community development principles  contracting options for NFP sector – including moving to fee for service as far as possible instead of up front ‘block funding’  new section which applies to all procurements on ‘Determining the Contract Period’  determining contract period for NFP sector: 3+3+3 year contracts Contract Renewals: need to provide sufficient notice Reasons for Limiting Number of Suppliers: additional reasons added

12 Supplier Selection Policy

Policy updated to: – better reflects the stages of the supplier selection process – provide additional guidance on distribution and receipt of offers and industry briefings – removes duplication and streamline content. Evaluation Plan: – evaluation team membership for NFP procurements to including consideration for evaluation team member from NFP sector – evaluation criteria for NFP procurements

13 Contract Management Policy

Policy updated to – incorporate more of a partnership/relationship building focus – reorganise content to follow a similar format to other policies – remove duplication and streamline content Relationship Management – NFP sector – need to communicate and work collaboratively Contract Renewals: NFP sector – where there is funding certainty, a minimum of six months’ notice must be provided

14 Simple Procurement Policy Procurement Policy Framework

Simple Procurement Procurement Policy Policy Framework

• Updates similar to process • Updated to include policies references to the NFP policy updates • Includes reference to DPC 044

15 NFP Indexation Policy

1(1)(e) Disclose deliberation of Cabinet

16 Grants: Treasurer’s Instruction 15

• Initial update to reflect new grants agreement – June 30 2017 • Post June 30: more substantial update required

17 Payment of Creditors’ Accounts: Treasurer’s Instruction 11

• To be updated to allow up front payment for NFP organisations undertaking procurements

• Currently: TI11 – Payments in advance for goods that have not been received or for services not yet rendered may only be made as follows: • (d) the payment represents a deposit of 10% or less of the total value of goods to be received

18 Contracting Framework

Bespoke Contract • CSO advice to be obtained for high risk contracts or non- standard contracts Standard NFP Funded Services Agreement • low to medium risk standard procurement contracts with NFP sector >$33,000 Standard Grants Agreement • low to medium risk standard grants with all types of organisations including the NFP sector

19 Contracting Methods • Block Funding • Payment for Inputs • Payment for Outputs • Payment for Performance • Payment for Outcomes Require more commercial, sustainable contracting with NFP

20 Implementation

Implementation begins 1 July 2017 End of transition 1 January 2018

Review – late 2017 • Feedback from •NFP sector • public authorities Training • Procurement • Grants • Contract

21 Office of the SA Productivity Commission 2 Meeting notes

Meeting Department for Child Protection (DCP)

Time & Date 3pm – 4pm, 12 December 2018

Location Level 2 Education Building, 31 Flinders St.

Jennifer Browne (JB), Peter Evans (PE), Deborah Odgers (DO), Kristal Attendees Camedow (KC), Matthew Butlin (MB), Gerard MacDonald (GM), Aaron Witthoeft (AW) Item Items Action No. The discussion was structured around a PowerPoint presentation delivered by PE,

“Contract Management Reform – Project Overview”.

9(1)(a)(i) The following key points were discussed by (unless expressly indicated otherwise):  At DCP we had issues with a practice of people in the Dept entering into contractual arrangements without the appropriate authority. We found deficiencies in every aspect of our contract management.  Our reforms are about not only reforming practices and procedures but how to contract for new models of care. Our contracts were historically generalised in their expression and non-specific so it wasn’t clear what we’d purchased - we’ve struggled to track inputs and outputs + outcomes.  We have triggered an independent review of what a provider is delivering to determine if the intervention successful – this will shape what the future contract looks like. One particular review has come back as good, but the contract in that instance will still need to be a lot more specific going forward. Also, we are looking at our own recording and reporting mechanisms to track whole-of-life care data.  We have had to do reconciliations on providers reporting in terms of what was being delivered – this has been a source of complaint from the sector as it has not been past practice. This approach is new for DCP – I’ve managed grants in the past (at SA Health) and always had this type of reporting arrangement in place. 16(1)(a)(iv) Adverse effect on agency functions   Moving towards a commissioning model, presently trying to nail what outsourced services are for the next year with treasury.  Our contract management was previously paper-based or with excel “work around” approaches across the department. Took a while to firm up what contracts we had in the organisation. The benefit of being in this situation is we can take a generational leap with our CMLS reform – looking at docu-sign For Official Use Only – I1 – A1 1 Office of the SA Productivity Commission Meeting notes

– two-way interaction with the NGOs etc. Aiming for best practice. Our system will be tailored to incorporate our unique requirements.

9(1)(a)(i)  – our procurement strategy is identified as a strategic input to our contract management reform program – this is in an attempt to smooth out the procurement program over time and the forward estimates from a budget perspective i.e. 85% of contracts are due for renewal at the end of FY – this creates a large burden for both the sector and the department.  Contracts have historically been rolled over – we are trying to better plan – moving to review of specified services so we can consider co-design and more accurately determine what the population needs are etc i.e. undertake a deliberate piece of work in support of a better process and better outcomes, and a more commercial approach. Previously we lacked flexibility from a procurement/contract perspective to provide the care required by particular classes of child clients. Focusing now on contracts we got really wrong in the past.

9(1)(a)(i)  – where are you up to in terms of progress on this more deliberate and commercial approach?  Have been doing our due diligence, separating underperforming staff, recruiting new staff and are now ready to execute reforms – we are going to market soon on commercial care.  Doing a commissioning piece for out of home care – kids have become stuck in commercial care – we needed to grow family-based placements – got 1(1)(e) Disclose deliberation of Cabinet – working with NGOs to deliver more family-based placement and we’ll pay for that.  Payment terms/paying on time: I need to convince treasury to pay – we underestimated the poor quality of NGO returns – was a long time before we made growth payments because we found errors in their returns. Not always clear if our records or their records is where the issues are – reconciliation on a quarterly basis so there is some lag to time of payment.

9(1)(a)(i)  – we’ve had some feedback on this from the sector who have shared a view about it taking up to 5 months to pay – not sure if DCP or other agency.  I’ve indicated if an NGO is in deficit that I’m prepared to pay “mid-point” payments. I’ve done this for one organisation recently.

9(1)(a)(i)  – we’ve heard about another complicating factor – NGOs that aren’t incorporated under the Corporations Act 2001 (Cth) and are therefore excluded from the automatic late payment interest provisions of government. They feel a thread of exploitation.

For Official Use Only – I1 – A1 2 Office of the SA Productivity Commission Meeting notes

 We are trying to move to a more commercial approach – doing that in the disability space. If NGOs are receiving grant payments, there isn’t a late payment fee.  NSW has recently done a good actuarial piece on the impact of care including for example identifying the top 4% of clients absorbing very significant resources.  Have a look at our Industry Day references re our intent to grow aboriginal controlled entities.  Note also new NFP Service Agreements are better for us than old convoluted contracts that contradicted themselves. The new agreements provide for a more facilitative approach and call up other sources, negating the need for extensive variations and burdensome administrative tasks when amendments are required.

9(1)(a)(i)  – to date our engagement strategy has been either industry wide or with individual providers. We are now in a position to be able to go to the next level on specific topics on an industry-wide basis.

For Official Use Only – I1 – A1 3 Office of the SA Productivity Commission 3 Meeting notes

Meeting Department for Child Protection (DCP)

Time & Date 3:15pm – 4pm, 18 December 2018

Location Level 1 Education Building, 31 Flinders St.

Cathy Taylor, (CT), Fiona Ward (FW), Matthew Butlin (MB), Tyson Attendees Miller (TM) Item Items Action No.

1 SAPC’s current inquiry - procurement 9(1)(a)(i) – [ToR and Issues Paper provided by hand]. SAPC is undertaking consultation with agencies on the inquiry and this meeting is the first step in the process. SAPC will release a draft report based on evidence and stakeholders’ experiences by mid-March with a final report by May.

1.1 Procurement inquiry – DCP issues 9(1)(a)(i) – The procurement function of DCP, done previously when the child protection function was part of DECD, is now done by Strategic Procurement in DTF. The observations of the CE in her time in South Australia is that there is a very formal procurement environment here with influences predominantly being about supplier burden, risk and return. There is a lack of maturity amongst the NGO-sector here and there are barriers, such as legislative ones constraining the procurement process.

9(1)(a)(i) – Issues raised by SACOSS around the segmentation of government care services, from a procurement perspective, are valid and seem inefficient.

9(1)(a)(i) – There is an intersection of procurement with contestability, a significant amount of social services are delivered by government, not just on behalf of government and DCP has spent considerable time thinking about its service provision and purchase offerings.

9(1)(a)(i) – SA is only 1 of 2 jurisdictions ( the other being WA) to internally manage residential care services. There are currently 220 funded places for children and 700 staff with some of the buildings owned by government (others leased) for this purpose.

9(1)(a)(i) – The procurement capability of DCP is low but are conscious of trying to lift this (including ‘procurement literacy’) and the design of solutions within the department persists as an issue to address. DCP would support recommendations in our draft report building agency For Official Use Only – I1 – A1 1 Office of the SA Productivity Commission Meeting notes

capability and capacity and the support system for agencies, particularly smaller agencies to improve their procurement functions.

2 Further consultation with DE A meeting is 9(1)(a)(i) to occur – Suggested that he and the CE meet again in late January to talk about areas of interest and opportunities for reform. Given the reduced role in procurement of DCP, the most beneficial form of engagement would be for DCP to identify NGO’s (procurement counterparties); these would be very useful stakeholders the Commission to talk to in terms of the findings so far off the inquiry and what improvements can be made to the procurement process. 9(1)(a)(i) – If DCP have thoughts on any future inquiry topics then they are encouraged to advise the Commission.

For Official Use Only – I1 – A1 2 Office of the SA Productivity Commission 4 Meeting notes

Department for Human Services(DHS)

10:30am – 12:00pm, 20 December 2018

Level 4, Ugly Building, 45 Grenfell Street

Caroline Lock (CL), Jody King (JK),Emmanuelle Sloan (ES), Tyson Miller (TM)

Items

1.1: DHS sometimes approach the market before a tender process commences, however this is not done very often and is certainly not part of any formal departmental process. They may speak to a business or an NGO for the purposes of market research or for early engagement in the process but no formal paperwork is required. This has happened recently in DHS with IT, funeral arrangements and pharmaceutical contracts. In addition, there is a requirement in the DPC circular on NGO procurement to undertake co-design in the acquisition planning process with potential suppliers. 1.4 It is a fact of working in an agency with a multitude of demands on those form whom you seek approval (Ministerial and Executive) , however, this aspect of the process is lengthy and generally less timely than other steps in the process. There are conflicting legal views on the use of electronic signatures on contract documents. The roll out of electronic approval systems is a logistical exercise that the department is still trying to come to grips with. 1.5 DHS will generally undertake direct negotiations due to the following factors: corporate requirements , such as for records management, or to meet other requirements government has – particularly in IT or, as is most often, there is little choice in the market you will be approaching. 1.6: Across government contracts are seen as beneficial to the department, they certainly help stream line the process (as contract terms are pre-agreed) and it also reduces the time in the process to undertake procurement. It enables the department to control expenditure. DHS does use secondary suppliers as it had a varied list of mandated products that only a sole supplier could provide. It was the first department to use this arrangement for the across government contract on stationery and in doing so was able to pass on information and lessons learnt from doing so to other departments when they implemented this arrangement. They also use sole supplier arrangements for employee assistance counselling. DHS are thinking of using more panel arrangements so that SMEs can engage in the procurement process but also enabling DHS to meet their needs – this will happen with disability enterprise development contracts, human service centre site cleaning contracts and security guards. DHS is able to do this by leveraging the current department of health contract. The problem with this type of arrangement being used more broadly is that the contracts start to become larger across more than one department which is good from the perspective of gaining efficiencies but this is not always compatible with growing local business. For smaller agencies, as the additional work is in percentage

For Official Use Only – I1 – A1 1 Office of the SA Productivity Commission Meeting notes

terms not that much more than the main department contract, the price for leveraging off a larger agency does not usually provide savings. DHS also had a joint procurement arrangement with DPTI on indigenous employment outcomes. 2.4: Feedback tends to be on an as-required basis, is informal and is usually driven by disgruntled businesses that are not successful in the tender process. Criticisms of the feedback process are generally anecdotal. The DHS Strategic Procurement and Grants Committee (SPGC) takes an active interest in feedback and complaints made to the department. Tender de-briefs are another avenue where feedback comes, however this is usually concerned with trivial details and no substantial ones to do with process fairness or transparency. 3.2: Across government contract data on some contracts is compiled (or was up until the recent changes to strategic procurement removing the data analytics function in DTF) by the analytics group, particularly for use of temporary staff and government travel contracts – this was actual expenditure data. 3.3: DHS make clear in the procurement process that there is a primary (preferred) provider and secondary providers in their panel arrangements. There have not been any instances of businesses securing all the work for similar products; the split in business has been more along the lines of suppliers providing particular goods and services. An example is maintenance panels, which are zoned regionally for particular products. 3.4 Yes, DHS does use examples of these arrangements e.g. housing trust maintenance contracts. A head contractor who subcontracts out for a $100 million contract (40,000 properties). Also the APY lands housing maintenance. Both examples use multi-trade contracts – some regions it works well in, others it doesn’t. Also horticultural maintenance (Independent Review of this contract was paid for by SAHT). Also promotes interesting discussion on the relationship between public authorities and prescribed authorities when procurement is done on an agency’s behalf – application of SPB guidelines and rules. 4.2 Have had some non-compliance issues with not-for-profit (NFP) procurements such as delays in getting the contracts signed through the department/Minister or having services commencing before the contracts are in place. Sometimes the delay is a result of delays in Federal funding. In terms of corrective actions or redress of these instances; DHS procurement provides regular reports to agency executive about upcoming major contracts as well as the SPB process for reporting on future procurement. This helps to guide decision makers about timelines and impacts of contract slippage. DPC Circular 44 also makes agencies more accountable for engaging in contract renewal early – the circular enforces the six-monthly reporting of upcoming contracts. 5.3 The SPGC is very engaged in the procurement processes of the agency, with a focus on contract management and its functions are primarily around approving new procurements. The SPGC meets weekly and its membership comprises 3 executives of the department.

For Official Use Only – I1 – A1 2 Office of the SA Productivity Commission Meeting notes

5.5 Accreditation appears to be a one-size-fits-all approach, when in reality the differing business focus of agencies does not accommodate such an approach. An example of this the analytics of spend and contracting activity for use of category management. This analysis is beneficial for heavy users of category management such as SA Health or DPTI but not for agencies such as DHS. 5.6 The internal audit officer of DHS is the contact for business if they have a complaint and this contact information is made available to every business at the commencement of the tender process. DHS does have a documented internal complaints process and does remove jargon contained in templates (by modifying those issued SPB) to minimise confusion and a potential source of complaint. 6.1 DHS are very mindful of having to be able to demonstrate probity and mollify any perceptions of poor processes, as such there is an element of caution in their approach, particularly for market approaches, perversely selective or direct approaches minimise the probity issues that can arise, in comparison to market approaches. DHS are cautious because of (usually) vexatious complaints and appoint external probity advisors where the perceived probity issues are prevalent, usually for high- value contracts. In a perfect world, the approach would be to engage all businesses at appropriate parts of the tender processes, selecting known suppliers to approach and using a 2-stage process. However, there is a fear around this approach, particularly for decision makers and those who are accountable for decisions. Capability of agencies would need to be increased to attempt or make successful such an approach. 8. Businesses have a valid point on their complaints about allocation of risk – there is a general view that risk is passed on to business from government and government understand that this may result in a risk premium being charged and prices being raised accordingly. There is a tension around the liability cap, there are examples of businesses quoting unrealistic liabilities for small-scale risks. The head-of-liability clause of the contract terms is something that government cannot get out of. In terms of managing risks, there is so much to comply with in terms of DPC Circular’s, TIs, ICAC, AG’s – the natural course for all agencies is to minimise risk to minimise exposure to this level of scrutiny. 9. In DHS’ view, the ECT/IPP doesn’t make a difference in the tender process, mainly because of differences in the respective prices and quality/capabilities of bids and suppliers, when comparing local to interstate/overseas. A lot of the services, as they are provided locally, naturally are provided by local companies. However, in all other cases for procurements of large scale or are specialist in nature, the IPP is of little use because the local companies either do not possess the capability or are too expensive. There is only one example, that DHS can recall, where the ECT/IPP scoring made a difference to the outcome; DHS have also had an example where the IPP had good outcomes. DHS have never had any feedback or analysis from OIA/DIS on all the data that has been submitted or from procurements undertaken. DHS staff don’t see or have a say in the ECT, yet they are required to use the ECT in the procurement process. Where relevant, DHS already have local content criteria that is used for some contracts, particularly for social inclusion, service location and local jobs.

For Official Use Only – I1 – A1 3 Office of the SA Productivity Commission Meeting notes

A representative from OIA used to sit on the SPGC, however it is DHS view that the IPP is not well integrated into SPB policies, SPB have to some extent but it hasn’t gone the other way. IPP not receptive to feedback. 10. Request for quote proposals are impacted by probity concerns (co-design and innovation doesn’t really occur with these processes). In reality, time restrictions and delivery requirements have an impact on planning and innovation. ICT Projects are a good example; these often involve multiple stages and demonstrations. It is costly to a department to employ dedicated resources for this type of role and in any event they are reluctant to change specifications or alter arrangements in the name of innovation. (It is more cost-effective and prudent to contract and independent probity advisor to take up this role as required. Example, debt recovery contract.

For Official Use Only – I1 – A1 4 5

Cranwell, Denise (DPC)

From: Witthoeft, Aaron (OSAPC) Sent: Friday, 1 February 2019 11:04 AM To: Witthoeft, Aaron (OSAPC) Cc: MacDonald, Gerard (OSAPC) Subject: T/A Greg Fenn re DCP human services procurement - 1 Feb 2019 @ 1015

AW called Greg seeking Greg’s views on DCP’s procurement spend on NFPs; Greg indicated as follows:

 There isn’t any neat data sets in relation to DCP’s procurement spend but Greg can consider further – consider also Justin Sara and 9(1)(a)(i) Opinion or advice in terms of obtaining access to tender documentation; 1(1)(e) Disclose deliberation of Cabinet  DCP are going to market in the next couple of weeks to procure residential care arrangements; 9(1)(a)(i) Opinion or advice  That tender is being run by with assistance from Strategic Procurement;  To date DCP have not effectively engaged the market, nor have they achieved VFM;  Historically DCP has sought bloc services which have not achieved VFM – the market has ben “too cosy”;  This tender is expected to put some rigour into the sourcing of these services and test the market nationally;  It has also been a challenge to reform the DCP contract management function;  This tender is expected to receive bids from NFPs and for profits.

AW thanked Greg for his insights and indicated would speak directly with DHS first before considering anything further from Greg in terms of data and spend for DCP, and will discuss with Gerard whether Commission inclined to comment on DCP specifically.

End call.

Aaron Witthoeft Principal Inquiry Economist | Office of the SA Productivity Commission State Administration Centre, Level 6, 200 Victoria Square ADELAIDE SA 5000 | DX56201 T 08 8226 7107 E [email protected] W www.sapc.sa.gov.au

Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised.

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Cranwell, Denise (DPC)

From: MacDonald, Gerard (OSAPC) Sent: Monday, 4 February 2019 11:43 AM To: Butlin, Matthew (OSAPC); Tembel, Adrian (OSAPC) Cc: Witthoeft, Aaron (OSAPC) Subject: Child Protection Procurement

On Friday afternoon, I had a phone discussion with 9(1)(a)(i) Opinion or advice. 1(1)(e) Disclose deliberation of Cabinet In our meeting with NGO’s I believe this new arrangement, in particular unit pricing, has been a topic that has frustrated some NGOs.

9(1)(a)(i) Opinion or advice indicated 16(1)(a)(iv) Adverse effect on agency functions She also indicated that 9(1)(a)(i) Opinion or advice

For example, one service providers had a contract to deliver 40 foster care places; however, compared to the average price for those services, the total value of the contract suggested that 50 places should be provided. The services providers had only provided 4 places and there was no plan in place to mitigate the issue. This put added pressure on the agency to use commercial care which has much higher costs and much poorer outcomes for the children placed in that type of care.

In an effort to move forward, DCP decided to put incentives in place to grow the number of foster care spaces, which involved developing a unit price for foster care based on interstate benchmarks and only paying for growth in the number of places. They also notified existing contract holders that future contract would be based on the unit price. This frustrated a number of the NGOs that were accustomed to more block funding arrangements that did not require much reporting on actual results.

9(1)(a)(i) Opinion or advice I’ve asked to provide some of the background documents that led to the development of the new arrangement and to meet with us on the subject. She will send some suggested times this week as well as selected papers that explain and support the new arrangements.

Gerard MacDonald Director | Office of the SA Productivity Commission Wakefield House, Level 16, 277 Wakefield Street ADELAIDE SA 5000 | DX56201 6(1) Personal affairs T 08 8226 7069 E [email protected] W www.sapc.sa.gov.au

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Cranwell, Denise (DPC)

From: Witthoeft, Aaron (OSAPC) Sent: Tuesday, 5 February 2019 2:26 PM To: Witthoeft, Aaron (OSAPC) Subject: T/A Mark Carey - Late Payment of Government Debts (Interest) (Automatic Payment of Interest) Amendment Bill - NFPs excluded

Mark advised:

 S3(1) of the Late Payment of Government Debts (Interest) Act 2013 i.e. the definition of a “qualifying body” was amended by s5(2) of the Late Payment of Government Debts (Interest) (Automatic Payment of Interest) Amendment Bill 2018, to ensure interest payments were not going to be made to other Crown entities by SA Govt.

 The change was from: (a) a corporation incorporated under the Corporations Act 2001 of the Commonwealth; or (b) any other body corporate constituted under the law of the Commonwealth, the State or another State or Territory.

to:

“means a corporation incorporated under the Corporations Act 2001 of the Commonwealth”.

 The change was made on the presumption that NFPs are generally incorporated under Corporations Act 2001.

 It was an unintended consequence that NFPs were excluded.

 Further legislative amendment would be required to capture NFPs, but continue to exclude Crown entities not intended to be eligible for interest payments by SA Govt.

1 Office of the SA Productivity Commission 8 Discussion Outline

Department of Human Services – NFP Procurement & Grants

12:30pm – 2:00pm, 7 February 2019

DHS Offices, Level 4, 45 Grenfell Street

Caroline Lock (CL), Jody King (JK), Patrick Maher (PM) – Deputy Director

Engagement and Grants, Francis Thomson (FT), Aaron Witthoeft (AW)

Items

1. Has there been a shift in the provision of human/community services from services provided “by” the government to services provided “for” the government.

a. Changes in policy positions by government’s (direct or indirect i.e. as a consequence of a shift to outsourcing services generally; or specific human services policy directions?). b. Data to support this – number of tenders to the NFP sector increasing? Value of those tenders increasing? Any trend in the number or types of services being provided by the NFP sector increasing? PM – yes there has been an increase in human services procurements over the years. CL – procurement framework changes over time have supported NFP procurements i.e. lifting the agency threshold from 4.4m – 15m. Also direct negotiation – we do more of that in the NFP space which is justified by the market research that we do. JK – we don’t want business units to roll over contracts, they need to understand their markets – this challenge is not confined to the NFP sector at DHS, applies also to for profit procurements.

2. Data illustrating the size of the procurement/grants spend on NFP services:

a. Total public sector (DHS) spend on human services contracted through NFPs; b. A breakdown of this by service type (e.g. homelessness, gambling help, financial literacy etc); and c. Any trend data on this spend over the last 5 years [JK had a number of data download documents for discussion and provided AW with one document to take-away indicating value of number of new NFP contracts struck in 2017/18 (need to confirm) – follow up and additional request required]

3. How many contracts with NFPs have been struck since the SANFRAG reforms came into operation (i.e. that are subject to PC044 and new Funding and Grant Agreements etc)?

 Only a few. Although PC044 has been out a while the “standard contracts” have only been available since January 2019.

 We’ve been putting guides together to assist DHS business units to comply with PC044. A number of our homeless and gambling help programs are already using PC044 – Community (Pat Maher’s group) is also using it now. Community are the most progressive business unit in

For Official Use Only – I1 – A1 1 Office of the SA Productivity Commission Discussion Outline

DHS in terms of using contemporary practices and innovative procurement approaches; particularly in terms of market engagement and continuous improvement.

CL – There are challenges with services funded through Cth in terms of us meeting the 6-month notification requirement under PC44.

4. From the Department’s perspective, what is the more effective way of funding NFP human/community services – grants or procurements?

PM – either can work, our grants framework mirrors the procurement f/work. By having rigor in our grants process it helps us to know what we want. [elaborate]

PM – evidence-based practice across many human services fields is not clear, or there are varying perspectives about what is best practice; nonetheless we should have rigor around what we ask for and what the NFPs will do. In terms of an outcomes-based approach – we do need to specify key components in terms of what we are seeking by way of outcomes and for reporting purposes. Engaging more effectively with the market from this perspective is a developmental area for us – SANFRAG reforms are supporting improvement in this area.

PM – important to note that not all NGOs are high performers, some have less than optimal governance arrangements – the best approach is a partnership approach where we work through things with the sector; this works well [example please]. It is incumbent on DHS to know what we need to acquire to meet government’s expectations – it is public money. Further, government procurers in the human services space have a broader view of the whole community sector, whereas NGOs often have a specific focus or cover a specialised area of service provision so don’t necessarily have an appreciation of government’s total need or requirement.

5. Has the Department received any feedback regarding SANFRAG reforms in terms of the impact on for-profits with an interest in the human services space?

a. E.g. an uneven playing field, or unfairly advantaging the NFPs, particularly in those service areas where NFP and for profits are competing or may compete in future?

CL – we don’t structure procurement processes differently for NFPs as opposed to any other procurement, so procedurally don’t see that PC044 or any other NFO specific requirement has any adverse impact on for profits.

JK – we might have more direct negotiations with NFPs than other non-community sectors – nature of human services provision.

PM – sometimes providers just do what’s more convenient for them, rather than what we have indicated is required (in contract?).

[more comment required, particularly in those areas where for-profits may be competing against NFPs now or into the future]

6. Is there anything that the recent SANFRAG and associated reforms didn’t capture that would be beneficial to procuring with/granting NFPs?

a. Obtain: Social Procurement Action Plan (part of 18/19 Strategic Plan projects).

For Official Use Only – I1 – A1 2 Office of the SA Productivity Commission Discussion Outline

b. SPB accreditation submission (p. 16): Reduction in red tape associated with procurement of services from the NFP sector – PGU and Community Services Division (DHS) have jointly initiated a project to reduce red tape associated with tendering. Key stakeholders (which includes the 9 peak organisations for community services) have been identified; they will provide feedback and input to this project.

PM – “placed based” approaches are advantageous, especially for small geographical areas where multiple services are required and more cultural requirements met e.g. STAY program/aboriginal community programs.(?)

PM – see Cth PC Human Services report 12 months old – should we consider individualised approach like NDIS – PM doesn’t believe this is appropriate at this time.

PM – need more feedback from clients about service design – I’m running focus groups on their experience to capture this. I’m calling on people who have been through the system and can talk to what worked and what didn’t. We also need to check population data and indicators and hear from suppliers and work out what all this means – this is what a “commissioning framework” should look like – we are trying to move to this.

For present process see STAY service to aboriginal youth program – consulted various data sets including youth justice and geographical hot spots – consulted with service providers and cross- checked their feedback to how we procure services [case study – more detail/slideshow from Pat]

CL – we would be happy to rescind current contracts and let new goods and services contract using the new Standard Services Agreement if an NFP requested that.

7. Does procurement/grants with NFPs require wider/more complex/additional considerations compared to other procurements?

a. If yes, what are these considerations and are they supported by the current procurement process and procedures?

b. Is the Forward Procurement Plan published publicly and regularly?

c. Obtain: Contract Management Handbook and Procurement Instructions.

PM – hard to achieve outcomes, politically sensitive, community awareness i.e. I could make a case for a program that is not politically palatable eg food relied – people are on this for average of 7 years, can be counter-productive. We need to increase our evidence-based approach and strategic approach.

PM – our feedback from NFPs is that SPB’s training is not applicable for them and doesn’t address their specific needs [what are these needs?]

PM - don’t want to give unfair advantage to suppliers but we need to discuss with current providers – repeating feedback from service providers to them – concerned this could breach probity if those new suggestions feature in new procurement specs in a subsequent tender process.

For Official Use Only – I1 – A1 3 Office of the SA Productivity Commission Discussion Outline

PM – want to start changing services over the course of the contract as part of our commitment to continuous improvement journey – the contract is the “baseball bat” for me re enforcement but I don’t like to bring that out.

PM – when I do an evaluation I also identify areas for improvement – performance management framework; relational contract management is my preferred approach and it supports service delivery improvement [more on this]

PM – I start early having roundtables with providers and looking for their ideas.

JK – business units are concerned at upsetting non-performing NFPs – can lead to poor outcomes. Poor contract mgt and poor contract reporting. Individual performance issues can also affect this in terms of the agency person managing and reporting on the contract. The contemporary approach being used in the Community Services branch (Pat) is what we are trying to replicate in other areas of DHS.

CL – have not got good contract management tools and guides etc. Historically NFPs weren’t caught in contract reporting arrangement for DHS [more on this]

CL – we can do variation to contract to reflect change in contract specification arising from Pats approach to continuous improvement [any data on how often this happens and process/procedure]

JK – is about drafting sufficiently flexible contract provisions to enable changes to the way services are delivered.

8. Are there impediments or influences that impact upon the Department’s ability to collaborate and design services with the NFP sector in a procurement or grant context?

See above.

9. Does procurement process and procedure support or detract from the Department’s ability to fund human and community services in line with government’s policy priorities?

a. Obtain: PGU Business Plan (see DHS SPB accreditation submission)?

JK – I note from their inquiry submission that SACOSS still unhappy about contract reporting. We had examples of fraud and money not going to the right place e.g. service provider using 40% of block funding for administration, contract specifies 18% - a contract enforcement issue.

CL – we are in a position to be able to discuss these issues with you because we have good oversight now [example of recent changes to support this]

For Official Use Only – I1 – A1 4 9

16(1)(a)(iv) Adverse effect on agency functions

Cranwell, Denise (DPC)

From: Carey, Mark (DTF) Sent: Thursday, 14 February 2019 7:53 AM To: Witthoeft, Aaron (OSAPC) Subject: RE: NFPs and the Late Payment of Government Debts (Interest) Act 2013

Hi Aaron,

Apologies for the delay – I have been looking through the various late payment interest documents to locate details/recommendations about changing the definition of “qualifying body”.

There isn’t any detailed discussion about this matter in the key documents, however I have extracted the following from a Minute approved by the Treasurer regarding drafting amendments to the Bill.

“In addition to the above, it also recommended that invoices issued from one public authority to another are excluded from the scope of the Act. Section 5(2) of the Bill amends the definition of a “qualifying body” to exclude State, Local and Commonwealth Government authorities from being entitled to receive interest payments.”

As indicated in our discussion, the exclusion of NFPs not incorporated under the Commonwealth Corporations Act was an unintended consequence of adopting the above recommendation.

I have separately been requested to work with the Parliamentary Counsel about what would be required to enable interest to be paid to all applicable NFPs under the Act.

Should any further information be required please let me know.

Regards

Mark Carey A/Executive Director| Government Services Branch

Wakefield House, Level 9, 30 Wakefield Street ADELAIDE SA 5000 t 8226 5102 | e [email protected] | w sharedservices.sa.gov.au

Information contained in this e‐mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised.

From: Witthoeft, Aaron (OSAPC) Sent: Tuesday, 5 February 2019 2:26 PM To: Carey, Mark (DTF) Subject: NFPs and the Late Payment of Government Debts (Interest) Act 2013

Hi mark,

Thanks for the quick chat this afternoon – very helpful.

1 As discussed, if you have a previous briefing or instructions to Parliamentary Counsel on this that you can share for context, and that sets out the reasons for the change to the definition of “qualifying body” I would be most grateful.

Also, given legislative amendment would be required to address the issues raised by NFPs is there any work proposed in that regard i.e. an amendment?

Many thanks.

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Cranwell, Denise (DPC)

From: King, Jody (DHS) Sent: Monday, 18 February 2019 10:35 AM To: Witthoeft, Aaron (OSAPC) Cc: Thomson, Frances (OSAPC); Maher, Patrick (DHS) Subject: RE: SA Productivity Commission - Procurement Inquiry - Follow Ups Attachments: 2018 STAY Forum_External Evaluation Summary Report (A20394498).doc; NFP Procurement Processes - STAY Example - PowerPoint Presentation with notes.pptx; Draft SANFRAG Implementation Guide Jan 2019 (A20388630).pdf; SANFRAG Fact Sheet.docx; Contract Management Handbook.docx; Case Studies - Relational Management.docx; Information - Variations due to continuous improvement.docx; Unpacking-Relational-Contracting_v19 IACCM (A20399150).pdf; Procurement Instructions.doc; PGU Annual Business Plan 2018-19.docx; Divisional Plan - Fin- Finance and Business Services.docx; DHS Social Procurement Action Plan - January 2019.docx

Hi Aaron

Please see below (and attached) some of the information as requested.

I know that Pat is still finalising some of his information and I think we might need to discuss question 5 to completely understand what we need to provide.

In the meantime please let me know if we have forgotten something, or would like any further clarification. I will be in the office all day Wednesday if you would like to discuss anything

Regards Jody

Jody King A/Director, Procurement and Grants Finance and Business Services

Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000

T: (08) 8124 4015

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From: Witthoeft, Aaron (OSAPC) Sent: Monday, 11 February 2019 2:54 PM To: Lock, Caroline (DHS) ; King, Jody (DHS) ; Maher, Patrick (DHS) Cc: Thomson, Frances (OSAPC) Subject: SA Productivity Commission ‐ Procurement Inquiry ‐ Follow Ups

Hi everyone,

Thank you for taking the time to discuss the procurement inquiry candidly last week – it was a very constructive discussion and we are grateful for the time and information you can share.

As discussed, I have identified some data and documentation following our discussion that would be advantageous to the Commission’s inquiry if you could make it available. I would be happy to discuss the data request further if that would be of assistance. I have listed a couple of examples of potential case studies that arose during our discussion – these are really important from the Commission’s perspective so if you can assist that would be highly valued. I have

1 also listed “issues to elaborate on” that arose during the discussion that would benefit from some additional detail. I have listed them in order of importance from my perspective. Some of them are probably better considered by Pat, others by Caroline and Jody, and some probably with input from both.

I would be happy to meet again and discuss with you if that would be advantageous; otherwise some additional dot points or provision of existing briefings or documents would be great.

Given the timeframes associated with the publication of our draft report I would be most grateful if you could offer any response no later than Friday 15 February 2019. If there is anything you expect to be able to provide but cant meet this timeframe please let me know.

Data  Total public sector (DHS) spend on human services contracted through NFPs i.e. total value of contracts under management where NFP is supplier. (Please see attached report)  A breakdown of this by service type (e.g. homelessness, gambling help, financial literacy etc). (Please see attached report)  Data showing the time to respond to tender for contracts NGOs are competing for We done have any specific data on this. Different tenders (value and risk) have different response timeframes. Recently, the STAY program was open for 5 weeks, the Youth Support and Development 4 weeks (low value under $550k); the Consumer Credit select tender was open for 4.5 weeks. Guidance from procurement instructions business areas should be allowing the 6 weeks instead of minimum 4 weeks.

 Data supporting/not supporting the contention that over the last 5 years there has been a shift in the provision of human/community services from services provided “by” the government to services provided “for” the government i.e. an increase in the number of NFP contracts. We do not have any data on this. There has been consistent types of services tendered over the last few years. There have been new funding for certain projects, but we have legislative programs, including gambling help services that have not changed.

Case Studies  Challenges with NFPs: Can you please provide information to support a case study regarding where “providers just do what’s more convenient for them”, rather than what is expected by the agency or what they are contracted for. The discussion regarding a supplier continually seeking to acquit 40% of their funding against administrative costs notwithstanding the contract provides for 18% is a good example. It would be even more persuasive if you could provide an example where services are not being met as contracted for, and what issues are at play.

1. Service was tendered for provision of services/advice, total cost just over $400k per year. Tendered budget confirmed no more than 18% of budget to be costed to non-service delivery administrative costs. Acquittal issues of organization acquitting almost 40% as admin. Through contract management, following their performance review and data analysis a performance improvement plan was develop. All PIP actions were addressed, and resubmitted expenditure and budget in line with tendered requirements. Following this KPIs were met.

2. In 2017-18, EFAP funds provided the following assistance to individuals and families experiencing financial crisis: 61% food, 7% transport, 2% utility bills, 30% ‘other’. A further exploration of the data which captures the breakdown of 30% ‘other’ EFAP expenditure was introduced with EFAP providers. This included EFAP providers providing a list of their top ‘other’ categories. As a result, the following additional categories have been added ‘education expenses’ including school fees, uniforms, IT equipment and stationary; clothing/shoes, ‘household items’ including whitegoods, furniture, bedding, appliances, ‘household starter kits and housing stability’ such as contribution to rent, storage/removalists, skip bin hire, and lawn mowing. The EFAP providers welcomed this change, as it allows for additional trends to be identified, and opportunities for service providers to explore arrangements with third parties to negotiate to receive bulk goods (e.g. household whitegoods) at a reduced price.

 DHS Innovation: Can you please provide some additional detail/briefing/PowerPoint presentation regarding the “place based” approach (I think this was the STAY program). Our discussion regarding the approach DHS took i.e. data interrogation (including youth justice), geographical hot spots, consulted with service providers and cross-checked their feedback against procurement process makes a good example of innovative and contemporary procurement practice. If there is another example I would be happy for you to provide that instead.

See attached report on External Evaluation STAY forum, PowerPoint process, SANFRAG Fact sheet (still being finalised)

Issues to elaborate on 2

1. In reference to Pat’s comment that not all NGOs are high performers, can you please elaborate on what the “partnership approach” with the NFP market entails? In particular in the context of the discussion around it being incumbent on DHS to “know what we need” to meet expected service and policy outcomes. Still waiting on further information

2. Can Pat share anything further regarding his comments about adopting a “relational management” approach to support identifying areas for service delivery improvement, and how this is integrated into the procurement process? Please see Draft Implementation Guide, Contract Management Handbook, Case Studies Relational Management

Articles that have been used by DHS:

 Forbes article - https://www.forbes.com/sites/katevitasek/2016/11/30/relational‐contracting‐on‐the‐rise‐ with‐the‐success‐of‐the‐australian‐navy/#4818ac4a303a  IACCM Unpacking Relational Contracts and https://www.iaccm.com/services/relational-contracting/

3. In the context of the comment that DHS applies the same rigour to its grants processes that it does its procurement – can you elaborate on how the DHS grants framework mirrors the procurement framework? -Same planning process: Procurement and Grants Unit works with BU on requirements, outcomes needed -Completion of the same documents: use of AP and tender documents (which are modified to fit within grant information). The AP has to clearly set out what the grants are to achieve, how DHS will receive submissions/proposals, how these will be assessed (evaluation matrix, mandatory criteria, weightings), funding guidelines, how they will be managed (formal contract management, site visits, acquittals/proof of expenditure for project outcomes). If needed, also capture if only certain part of the community can access the grants and justification. Policies still apply, such as late responses, evaluation principles etc A purchase recommendation is also to be completed confirming process undertaken, detail of scores/evaluation summary (signed by delegate with Procurement approval) Contract management reports (or contract closure report only depending on length of agreements)

4. How often are contract variations done to reflect change in contract specification arising from the continuous improvement approach Pat mentioned? What process/policy is followed in these cases? We don’t have any data on how often we vary a contract due to continuous improvement compared to other types of variations, but we have information when we have

Please see attachment: Information on variations due to continuous improvement

5. In relation to the brief discussion regarding NFPs not always having been caught in contract reporting arrangement for DHS, can you indicate why, when and how this has changed? May need some more guidance about this question

6. Can you offer additional feedback regarding NFPs advice to the department that the State Procurement Board’s training offerings are not applicable for them, especially in terms of where they are reporting its missing the mark? Waiting on further information

7. Can you offer any further feedback regarding any unintended impact of the SANFRAG reforms in terms of creating an uneven playing field for for-profits in those service areas where for-profits and NFPs are or will be competing? Generally our procurement processes for community welfare services have been open process, which would allow any organisation (for profit or NFP) to apply. There are certainly tender processes where we have done a select call to certain parts of the NFP Sector. However, these ‘open’ tender processes often require specific requirements that would not appeal to a for profit, for example the organisation must demonstrate their relatable experience, linkage to community, referral services etc, as well as operate in a tight budget. We do have a for profit organisation providing gambling help services, which has previously been provided by and NFP and the rest of the contracts are held by NFPs. In this case the for profit was the best suited organisation and are achieving very good outcomes for vulnerable clients. Similarly, our Linen and Laundry contract is help by Minda and our previous provider was Spotless. After conducting an open and competitive tender process Minda was the overall preferred tenderer taking into account their service delivery model and price.

Documents  Social Procurement Action Plan (part of 18/19 Strategic Plan projects) Attached 3

 Any documents or briefings regarding the progress of the red tape reduction project between PGU and Community Services Division regarding procurement of services from the NFP sector, including reference to the extent of engagement with the NFP sector. I have included our communication plan. We are just starting talking with our Communication team about developing a video to assist NFPs in applying for tenderers, FAQs and writing in plain English. Also, the Procurement Unit and Community Services is discussing how we approach the Peak bodies about some of the barrier to tendering, and how we can provide guidance to the sector. This is still in early planning.

 Contract Management Handbook and Procurement Instructions Attached  PGU Business Plan PGU Business Plan, plus our part of the Divisional Business Plan

Many thanks and happy to discuss with you.

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Service to Aboriginal Youth Community Services - Overview of External Consultation

Background The Department of Human Services (DHS) Service to Aboriginal Youth (STAY) program provides funding to non-government organisations to deliver flexible and ongoing support and programs for young Aboriginal and Torres Strait Islander people living in rural and remote areas. The current STAY program provides support to vulnerable young Aboriginal and Torres Strait Islander people aged between 10 and 25 years and links them to programs and interventions that will have a positive influence on their lives. The existing service agreements with the organisations listed below expire 30 June 2019.

Service Provider Service Name Aboriginal Family Support Services Limited STAY Coober Pedy Anglican Community Care Aboriginal Youth Services - Riverland Anglican Community Care Aboriginal Youth Services - Murray Bridge Ceduna Aboriginal Corporation Ceduna Position Koonibba Aboriginal Community Council Koonibba Aboriginal Youth Service Plaza Youth Centre Plaza Youth Services - Whyalla Port Augusta Youth Centre Port Augusta Youth Services Raukkan Community Council Raukkan/Meningie Aboriginal Youth Services Yalata Community Inc Aboriginal Youth Services - Yalata

Ongoing STAY performance reports and contract management discussions highlighted a disparity between the various STAY programs across the regions relating to areas such as:  the types of programs being delivered  community and individual successes  connectedness between STAY providers  governance and organisational capacity  quality assurance, compliance and reporting In a bid to understand the reasons behind this disparity in more detail, DHS decided to host a series of Regional STAY Forums. These forums would provide a platform for service providers and young Aboriginal and Torres Strait Islander people to come together as a group to share good practice, capture the participant’s view and suggestions for improvement and showcase successful achievements. In addition, the information gathered during these Forums would be used to inform the next STAY procurement process for new contracts from 1 July 2019 as well as updating the STAY Guidelines. Discussion In preparation for the Regional forums, Regional Coordinators engaged with all STAY service providers to seek their support and suggestions for the most appropriate way to deliver the forums for their respective communities. Using their feedback a proposal was prepared and subsequently approved to host three Regional STAY forums in the locations detailed below. 1. Port Augusta - to include Port Augusta Youth Centre, Plaza Youth Centre, and Aboriginal Family Support Services. 2. Murray Bridge – to include ac care Riverland, ac care Murray Bridge, and Raukkan Community Council. 3. Ceduna – to include Ceduna Aboriginal Corporation, Koonibba Aboriginal Community Council, and Yalata Community Inc. It should be noted that the Ceduna Forum did not proceed due to Traditional Aboriginal Cultural business occurring in the region in the days immediately preceding the event. While Service Providers and DHS staff agreed not to reschedule the Ceduna forum, those affected by this cancelation were provided the opportunity to attend one of the other forums and/or contribute to the feedback process using Youth Surveys and the Request for Information (RFI) questionnaires as well as provide information during the teleconferences that preceded these forums.

Regional Forums Based on the feedback provided by the Service Providers prior to each Forum, a tailored agenda was developed for each event focused on the age groups of those attending and aimed at encouraging optimum group and individual participation. While the agendas differed slightly between each Forum, both events focused their group discussion and activities around three key topics using example prompts below: Community o What do you like most about the community you live in? o Is there anything you would like to see changed or improved? o How could it be changed or improved? Learning o How do you feel about school and your learning (including cultural learning)? o Does anything get in the way of your learning? o What helps you do your best with your learning? Opportunities after school o What opportunities do you know about that are available to you after school? o What are your hopes for yourself after you leave school? o What would support you most to achieve your goals?

Port Augusta Forum - 17 April 2018 This event was held at the Central Oval Community Hub and a total of 29 young Aboriginal and Torres Strait Islander people attended. (This included attendees from Plaza Youth Centre and the Port Augusta Youth Centre). In addition, STAY Coordinators, support staff and a number of family members also attended. While there were a couple of older teenagers, the vast majority of attendees were aged between 10 and 14 years of age.

Murray Bridge Forum – 24 April 2018 This event was held at the Ninkowar Aboriginal Community complex and a total of 24 young Aboriginal and Torres Strait Islander people attended. (This included attendees from Raukkan Community, Murray Bridge and the Riverland). In addition, STAY Coordinators, support staff and a number of family members also attended The vast majority of attendees attending this event were aged between 13 and 22 years of age.

Overview of Youth Feedback During the two STAY forums responses from the 53 attendees were captured using a range of mediums including group work, notes on butcher’s paper, voting tools and one-on-one video interviews. Further, to capture the voice of those who were unable to attend the forums, a survey form (developed in consultation with the STAY Service Coordinators) was sent out to prior to the Forums. 68 survey forms were returned. Below are the key themes based on the feedback received:  The importance of family and culture.  Impacts of violence and substance abuse, specifically on health, wellbeing, education, employment and housing.  A strong desire to be healthy, finish year 12, and gain employment.  The need and benefits of leadership training, mentoring and ongoing support.  The need and importance of a “safe place” for young people to go to receive culturally appropriate support, meals/snacks and have access to programs and activities. In addition, the need for, and appreciation of, a “quiet place” for homework and other study.  The benefits of a holistic approach - wrap around services, partnerships and referrals.  Lack of/limited public transport options, including driver training.

 The importance of cultural camps and the need for service providers to offer both sport and non sport programs and activities to support young people.  The need for more employment and training opportunities in regional areas.

Overview of Service Provider feedback To gather an understanding of the various STAY programs currently being delivered a Request for Information (RFI) questionnaire was sent out to all STAY providers prior to the Forums (see Attachment A). In addition, video interviews were conducted with each STAY Coordinators at the Forums. The RFI questionnaire asked about the respective service models, the priority needs and emerging issues from each community/region. Below is a summary of those responses.  While the current program caters for people aged 10 – 25 year, the majority of current attendees are within the 12-18 age brackets.  All providers provide a culturally appropriate safe space to deliver programs and support for young Aboriginal and Torres Strait people who are disconnected/disengaged.  While programs and activities have similarities, they do vary according to the needs of each community and all have a strong cultural focus.  Service providers state that their successes are due to the strong relationships that have been established over time, thus stability in staffing and long term funding is key.  All providers employ Aboriginal youth workers/cultural advisors (mostly part time) and actively work with partners to create opportunities for their clients in employment, education, volunteering, training and leadership.  Although there are some variances, service providers reported a breath of similar priority and emerging issues amongst the community and young people that included: alcohol and substance misuse, family breakdown, domestic violence, child protection issues, truancy levels, low numeracy and literacy skills, limited education and employment pathways, involvement with juvenile justice and recidivism, inadequate diet, poor hygiene, mental health concerns, loss and grief, disconnection with culture/family, risk of homelessness, and limited transport options. The RFI also sought information about the organisation’s involvement with a quality framework such as the Australian Service Excellence Standards (ASES). While some of the existing service providers have a quality framework such as ASES already in place, those who don’t are either actively working towards one and/or accept the need to commence this process in the near future.

Consultation with other External stakeholders CSD keeps regular communication with the Department of Prime Minister and Cabinet and from information learned considered:  the collective allocation of funding to Aboriginal and Torres Strait Islander young people

 the wider service system in community  opportunities for collaboration between State and Commonwealth funded services in these communities

Next Steps The recent engagement and consultation process has confirmed there continues to be strong need for services that support Aboriginal and Torres Strait Islander young people living in rural and remote communities to achieve their goals, strengthen their cultural and community connection and build long term resilience.

While DHS remains committed to the continuation of the STAY Program post 30 June 2019, it is important to ensure that the program is consistent with government and community priorities, responsive, targeted and reaches the communities with the greatest need.

Below is a list of “next steps” to assist with this process.

 Consult with DHS CSD Aboriginal Policy and Projects as well as DHS Youth Justice  Develop new STAY guidelines  Consult with senior Aboriginal staff from relevant areas of the Department for Child Protection and the Department for Education, seeking their input to update the STAY program guidelines covering aspects such as the target group, key priorities, program aim, program outcomes and service activities.  Review the target group numbers of current, and potential new communities of need, using available ABS and other relevant data sources  Complete an analysis of RBA data from existing service providers to assist with the development of a set of standard RBA measures for the STAY program  Complete a Risk Assessment of all existing STAY service providers  In conjunction with DHS Procurement and Grants Unit, commence the procurement process to award new contracts from 1 July 2019 including the preparation of an Acquisition Plan to assist with any new tender process  Determine the most appropriate approach to market (i.e. direct negotiation, public tender or selective tender)  Following award of new contracts, work with successful providers to co-design standard RBA measures  Establish a regular STAY provider networking forum with successful providers. Attachment A

Request for information We are also keen to gather additional information about your current service model and also how you currently identify the needs of young people in your program as well as the needs of the general community/region.

To assist we ask that you:  please consider the following questions and provide responses of about one page in length for each question (no longer than two pages)

Questions:

1. Describe your current service model. In your answer please include the following: a. a description of your Service model b. an overview of your current client group (including age range) c. an overview of how you recruit and maintain culture in your service (e.g. employment of Aboriginal workers, engaging volunteers and/or mentors, involving Elders/Respected Aboriginal people from the community/Region) d. a description of your partnerships with other organisations including, but not limited to, your usual client referral pathways (both how do clients enter your service and who do you refer clients to) e. a description of how your service model reflects a focus on using RBA data and/or other information to improve practice and outcomes

2. In relation to your service: a. What are the priority needs and emerging issues for young Aboriginal people in your community/region? b. What are the potential opportunities for young Aboriginal people in the community/region? c. What are the priority needs for the general community/region? d. How does your service currently contribute to meeting these needs? e. Does your organisation have accreditation, or are you actively involved and progressing, in a whole-of-organisation quality framework such as the Australian Service Excellence Standards (ASES)? If no, is your Organisation involved in DCSI’s STARService program? 13 Services to Aboriginal Youth (STAY) Ceduna, Coober Pedy, Koonibba, Murray Bridge, Port Augusta, Port Lincoln, Port Pirie, The Riverland, Raukkan/Meningie, Whyalla, Yalata

• The STAY program has a focus on early intervention, providing at risk young Aboriginal people aged between 10 – 19 years with access to the services and guidance they need to: – achieve their goals – strengthen their cultural and community connection – build long‐term resilience

• Through a platform that actively encourages partnerships and collaborations with the Aboriginal community (including Elders, Aboriginal leaders, services providers and other stakeholders), the service providers will support young people in the context of their family and community. Services to Aboriginal Youth (STAY)

• Planning and Review – aim for 18 months prior – performance review of existing services

• Needs Analysis – population indicators – other data – YJ, Courts – request for Information from providers – survey of clients

• Budget – redistribution, additional communities – refinement of Target Group Services to Aboriginal Youth (STAY)

• Consultation – Client Voice: youth forums – Internal stakeholders: CS Aboriginal Policy and Programs, Office for Youth, DHS Youth Justice, Dept Child Protection, Dept Education, Department of Prime Minister and Cabinet

• Specification, Outcomes, Targets – Informed by all the above

• External Market Analysis – Aboriginal Community Controlled Organisations Services to Aboriginal Youth (STAY)

• Evaluation Plan – mandatory criteria – evaluation criteria – essential elements of scoring matrix – risk assessment – budget considerations e.g. % administration costs

• Part D (tender document) – format of questions and responses – Presentation stage

• Composition of evaluation panel Services to Aboriginal Youth (STAY)

• Negotiating outcomes, targets, assessment and data collection tools

• Active contract management – Communities of Practice at commencement and ongoing – Performance Reviews – R2D2

• Liaison with stakeholders

• Keeping Minister informed 14

South Australian Not for Profit Rules and Guidelines (SANFRAG) Implementation Guide

Last updated January 2019

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SANFRAG Overview

SA PROCUREMENT BOARD TREASURER'S POLICY/GUIDELINE INSTRUCTIONS 11 AND 15 Mandating the use of SANFRAG in Mandating the use of SANFRAG in procurement processes for NFP procurement processes for NFP sector sector

SANFRAG

MANDATED PRINCIPLES FOR FUNDING OF NFPS Robust planning and design – Collaboration and partnership – Proportionality – An outcomes orientation – Achieving value with relevant money – Governance and accountability – Probity and transparency – Community development principles

MANDATED POLICY AND PRACTICE GUIDELINES State Procurement Board policies and guidelines amended to take account the principles for dealing with NFP funding.

PROCUREMENT GRANTS Current master and service Low value/risk contracts agreements replaced with Mandated Grants Agreement simplified agreements as multiple year contracts expire Mandated contracts, rules amd guidelines using the principles the using guidelines amd rules contracts, Mandated

SANFRAG GOVERNANCE Governance and dispute resolution via departments, the State Procurement Board and DTF as set out in DPC044. DTF, DHS, Peak Bodies to monitor, review and update SANFRAG.

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SANFRAG Contracting Process Overview

SANFRAG applies to agreements with non-profit providers or public authorities. It applies to ongoing and one-off agreements, including grants that involve a formal contract.

Guiding documents Stage 1: Exploration Links ✓ Draft new or review existing funding

guidelines Funding Policy for the Guiding Questions for ✓ Determine extent of consultation required NFP Sector (DPC044) Program Managers ✓ Consult on draft guidelines and expected outcomes Page 4 State Procurement Act 2004 p 8 State Procurement Practical Stage 2: Planning Regulations 2005 ✓ Implementation Guide Develop Acquisition Plan with PGU ✓ If required, draft tender documents with Procurement Policy Page 5 PGU ✓ Undertake risk assessment Framework ✓ Determine contract length

✓ Consult as determined in Stage 1. Acquisition Planning SANFRAG Definition of Policy Community Development Stage 3: Selection ✓ With PGU, select suitable provider: Supplier Selection Page 15 - evaluate options Policy - negotiate as required - ensure provider meets negotiated and Contract Management non-negotiable requirements Checklist for Engaging Policy ✓ Detail evaluation approach the NFP Sector

Page 16 Simple Procurement Policy

Stage 4: Ongoing Management ✓ Monitor provider’s performance Treasurer’s Instruction Case Study: ✓ Ensure provider takes community 15 - Grant Funding Community Services development approach p 8 Support Program ✓ Provide min 6 months’ notice of cessation and, where funding certainty SPB User Guide: Page 17 exists, of renewal. Procurement Operation or Grants

Guiding Principles Robust planning and design – Collaboration and partnership – Proportionality – An outcomes orientation – Achieving value with relevant money – Governance and accountability – Probity and transparency – Community development principles

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Guiding questions for program managers

Stages 1 and 2: Exploration / Planning

Funding Guidelines - Does the program have Funding Guidelines?

Community Impact and Need - What is the desired impact or change you are seeking to achieve in the community? - What is the evidence of community need? - Why and how the funded activity will affect the desired outcomes? - Are the desired outcomes for the funding program defined, including quantitative, qualitative and milestone information that is realistic about what the funding is intended to achieve?

NFP Engagement - To what extent and on what issues do you intend to engage with the NFP sector, based on the scale and risk profile of this funding activity? - Have you determined the non-negotiables of the funding program and developed a rationale for these? - How do you intend to engage the NFP sector, and has your approach have the relevant approvals?

Process - Have you considered (and if necessary consulted) about using a fee-for-service arrangement? - Have you documented a timeline for conducting the planning and selection process? A minimum 6 months’ notice is usually required, and short-term contract extensions to accommodate delays to tendering processes should be avoided. A tendering process should typically commence 12-18 months prior to this (depending on scale and complexity) including 6-9 months consultation.

Term - What is the proposed term of the contract, including any optional extension periods? - Is your proposed term less than 3+3+3 years, and if so, why (i.e. uncertainty of funding, high-risk program or changes in the market)? - If extending the term of an agreement, have you undertaken a review of community need, service specifications, contract performance and requirements?

Community Development - How do you intend to embed a community development approach in the planning and selection process? - How do you intend to promote community and personal empowerment in regard to client outcomes?

Stage 3: Selection

Selection Process - Is your selection process as simple as practicable, while still being robust and accountable? - Have you assessed potential risks associated with your selection process and ways to manage these? - Does your selection process consider both cost and non-cost factors in determining value? - Is there a case for limiting the number of suppliers?

Evaluation - Is there an opportunity to have the NFP sector provide evaluators as part of the program? - Do other experts need to be part of the evaluation process?

Collective Impact - Is this selection process associated with and possibly influenced by a collective impact approach?

Reporting - Are volume, detail and frequency of reporting proportional to risk involved and outcomes sought?

Stage 3: Contract Management

Contract Management Plan - Have you established a plan for ongoing management of the contract that ensures ongoing communication, active management and performance monitoring commensurate with the risk involved and outcomes sought? - Does the contract management plan reflect a continuous improvement approach?

Page | Transition4 Process - Have you considered the transition out process at the end of the contract period, taking into consideration a minimum notice period of six months may apply?

Practical Implementation Guide

Introduction

The South Australian Not for Profit (NFP) Funding Policy (Department for Premier and Cabinet Circular 044 -South Australian Funding Policy for the Not-For Profit Sector) applies from 1 July 2017, and aims to support and strengthen collaborative partnerships between government and the NFP sector. It provides a consistent approach to all aspects of funding, sets clear requirements for public authorities, and reduces the administrative burden on NFPs and maintains their independence.

The approach in the Policy is consistent with the Stronger Together commitment that articulates the principles of collaboration and partnership underpinning the relationship between State Government and the not-for-profit health and community services sector. We know that the best outcomes for people and communities are achieved when we work in partnership with the NFP sector to plan and deliver activities and services.

The Policy applies to ongoing and one-off funding arrangements, including funding for services to the public authority directly, or to a third party, and grants that use a formal contractual agreement, regardless of dollar value. It has been co-designed by government and not-for-profit representatives to reflect the needs and interests of not-for-profits, as well as government, and to acknowledge our shared investment in improving outcomes for communities.

The Policy must be read in conjunction with relevant Treasurer’s Instructions, State Procurement Board policies and guidelines and other relevant legislation.

The NFP Funding Policy has paved the way for the development of the South Australian Not-for-Profit Funding Rules and Guidelines (SANFRAG), a suite of reforms arising from the policy. As part of this reform, the government has endorsed a streamlined approach to applying indexation to funding for NFPs and the use of consistent contract templates for use across government (anticipated to be operational by 1 November 2018).

The State Procurement Board has updated the following policies to incorporate the NFP principles: • Procurement Policy Framework • Acquisition Planning Policy • Supplier Selection Policy • Contract Management Policy and • Simple Procurement Policy.

All funding processes must adhere to the relevant Treasurer’s Instructions, State Procurement Board Policies and Guidelines, and the DHS Procurement Framework. Funding activities, whether funding of services or administering a grant, require a consistent approach, including: • appropriate and robust planning, proportional to the scale and risk profile of the funding activity • clearly defined and transparent selection or application processes in accordance with good probity practices • sound management and reporting frameworks that deliver value.

The Policy outlines a number of best practice principles for government and NFP funding relationships. The intent of this document is to provide guidance to program managers in applying the principles when planning, allocating or managing funding programs.

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The Policy outlines an expectation that government will work with the NFP sector in a collaborative partnership approach while maintaining appropriate probity and management in all procurement/grant processes.

The opportunities for engagement of the NFP sector in a collaborative partnership approach include in the: 1. exploration stage of procurement/grant process, especially the development or changes to program Funding Guidelines 2. planning stage of the procurement/grant process 3. selection stage of the procurement/grant process and 4. ongoing contract management stage.

Best Practice Principles for Government and NFP Funding Relationships

Robust planning and design (RPD) 1. Robust planning and design supports efficient, effective, economical and ethical funding administration and is proportional to the scale and risk profile of the funding activity. 2. Public authorities and the NFP sector work together when planning and developing funding strategies to ensure outcomes are based on evidence of community need. 3. Planning is based on a rationale for the funding activity, and defines the expected outcomes and measures of success. 4. Funding activity is designed to achieve value, accountability, probity and transparency.

Collaboration and partnership (CP) 1. Public authorities and the NFP sector work collaboratively and flexibly to achieve shared outcomes. 2. Wherever possible, public authorities need to choose methods that will promote open, transparent and equitable access to funds. 3. Where appropriate, public authorities offer longer term contracts (three years plus three years plus three years) to enable strong, ongoing relationships. 4. Positive working relationships are maintained through effective collaboration that supports the needs and interests of NFP organisations and funding recipient.

Proportionality (P) 1. Processes are as simple as practicable whilst still being robust and accountable. 2. Balance is maintained between managing the complexity of a funding activity and the risk for the NFP sector, recipients and the South Australian Government. 3. The volume, detail and frequency of reporting requirements are proportional to the risks involved and policy outcomes being sought.

An outcomes orientation (OO) 1. Outcomes are clearly defined and include quantitative, qualitative and milestone information that is realistic about what the funding is intended to achieve, both for beneficiaries and with regard to policy objectives. 2. Outcomes should be reviewed regularly and whenever changes are made to the funding activities.

Achieving value with relevant money (AV) 1. Government and the NFP sector work together to achieve value for the South Australian community. 2. Value is achieved by establishing ongoing, joint monitoring arrangements throughout the life of the funding arrangement. 3. Value considers both cost and non-cost factors and promotes proper use and management of public resources. 4. Value demands standardised, efficient and effective funding processes across government that do not impose burdensome requirements on the NFP sector.

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Government and accountability (GA) 1. Clear governance and accountability is demonstrated for all aspects of the funding process (planning, selection/allocation and management) for both government and the NFP sector. 2. Staff involved in developing or managing funding activities have the necessary skills, knowledge and experience. 3. Good record keeping informs better decision making and compliance with accountability obligations. 4. Processes minimise red tape and duplication and ensure consistency across all public authorities. 5. Public authorities support contracts through ongoing communication, active contract management and performance monitoring commensurate with the risks involved.

Probity and transparency (PT) 1. Funding activities meet legislative and policy obligations. 2. Probity and transparency are achieved through funding decisions that are impartial, appropriately documented, publicly defensible and lawful. 3. Appropriate mechanisms are in place to identify and manage potential conflicts of interest for funding activities. 4. A transparent and systematic application and selection process enhances government, NFP sector and public confidence in the funding activity outcomes and contract administration processes.

Community development principles (CDP) 1. Public authorities consider the desired impact or change they are seeking to achieve within the community. 2. Funding activities are advanced only where the desired impact or change will improve outcomes for South Australia. 3. Where possible, and particularly in relation to health and community services, funding should reflect a community development approach which builds resilience in the community and the capacity to respond to change and crisis and empowers individuals in the process of development and service delivery.

The following guidance is provided to support program managers in applying the principles when planning, allocating or managing funding programs.

Stage 1: Exploration

Applicable DPC 044 Principles – RPD1, RPD2, RPD3, RPD4, CP1, CP2, OO1, GA1, GA2, CDP1, CDP2, CDP3.

The exploration stage occurs before any formal planning for the market approach commences, for example the Acquisition Plan. This is to ensure ample opportunity is provided to conduct the necessary research and consultation to feed into the program’s Funding Guidelines and market strategy. This stage of the process will focus on identifying and justifying the community need being addressed, and will set the foundation for later stages of the process.

During this stage of the process, Program Managers will begin drafting or reviewing Funding Guidelines, and determining the extent of consultation required, depending on the complexity and scale of the funding program.

Guidance for applying principles

All funding programs are to be considered for NFP sector input, unless there is a compelling reason to do otherwise, for example, all aspects of the funding program have been pre-determined by Ministerial direction. Page | 7

The State Procurement Board’s (SPB) Acquisition Planning Policy, states that public authorities and the NFP sector need to work together, wherever possible, when planning and developing procurement strategies to identify the community outcome, or the desired impact or change being sought, and to ensure outcomes are based on community need.

Ideally, Program Managers will make details available of upcoming funding programs approximately 12 months in advance (where possible) as part of the DHS Forward Procurement Plan, published on the SA Tenders and Contracts website.

Planning for funding programs should be proportional to the scale and risk profile of the funding activity. Robust planning for funding programs should utilise a range of inputs such as: • government policy; • evidence of community need (including relevant population data, government administrative datasets, reports, community and sector consultation); • relevant research evidence; • feedback from the NFP sector to identify opportunities for improvement and potential for innovation; • liaison with other funding organisations including different levels of governments; • departmental learning from managing the specific or similar funding programs; and • other material and inputs relevant to the specific funding program.

These inputs will inform: • rationale for funding activity; • the design of market approach or selection process; • the nature of funding activity; • service model development; • priority funding investments; • priority populations; • priority locations; • risk identification and management; • performance and evaluation measures; and • the design, implementation and monitoring of contracting arrangements.

Funding Guidelines

It is expected that all funding programs, where appropriate, will have Funding Guidelines that outline: • Purpose and rationale of funding; • Expected Outcomes; • Objectives; • Link to Government policy and legislation; • Key priorities; • Performance measures / measures of success; • Reporting requirements; • Any funding administration requirements.

The Funding Guidelines will reflect a community development approach and be aligned to the principles of DPC 044. Government funding programs are expected to act as a steward of the service system they fund and operate using a community development approach that monitors community need, builds community resilience and the sustainable capacity of the system to respond to change, especially changes in community need.

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Expected outcomes should be articulated through the Funding Guidelines, contracts and performance measures. An outcome reporting framework such as Results Based Accountability (RBA) should be utilised when setting performance measures that reflect the expected outcomes.

Program Managers are encouraged to consult with the NFP sector on a number of areas, including the planning of future funding programs, the Funding Guidelines, and the process for funding allocation. The method and extent of consultation will be determined by the Program Manager and be proportional to the scale and risk profile of the funding activity.

The SPB’s Acquisition Planning Policy outlines that consultation/participation should occur with NFP sector on: • Evidence of community/client need; • Funding Guidelines for programs; • Developing and/or improving the design of procurement/grant processes including reducing administration and compliance costs of providers and government during planning, selection and management phases of funding programs; • Review of requirements set out in Service Agreements and any significant changes when extending terms; • Performance measures and data collection; • Identifying opportunities for improvement and potential for innovation (SA Better Customer Charter for Business); and • Significant changes in contract management.

Draft Funding Guidelines should be made available to the NFP sector for comment as early as possible. Similarly, consultation on the proposed market approach (including value, timelines and selection criteria) with the NFP sector should occur as early as possible, to allow for meaningful consultation to occur.

Prior to consulting, it is important that Program Managers determine which aspects of the funding activity are open for consultation, and which aspects are non-negotiable. For example, the NFP sector may be invited to provide input into the Funding Guidelines, however, the method for funding allocation may have been pre-determined by Ministerial direction, so input would not be sought on this aspect.

Program Managers are encouraged to refer to the IAP2 Public Participation Spectrum (attached) when determining the appropriate level of participation by the NFP sector. The nature of participation by the NFP sector is dependent on a judgement by Program Managers, aligned to the significance and complexity of the issue(s), and a risk and value assessment.

For all funding programs, informal discussions should occur with the sector on an ongoing basis, to ensure Program Managers are well informed on emerging trends and issues within the community.

The SPB Acquisition Planning Policy and Procurement Policy Framework provides further guidance, if required.

Stage 2: Planning

Applicable DPC 044 Principles – RPD1, RPD2, RPD3, RPD4, P1, P2, P3, OO1,AV1, AV2, AV3, AV4, CDP1, CDP2, CDP3

The planning stage of the process is where the Program Manager will work with stakeholders (including the Procurement and Grants Unit (PGU)) to develop the necessary documentation to enable an appropriate market approach.

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During this stage of the process, Program Managers will contribute to the development of the Acquisition Plan (lead by PGU), tender documents (if required) and will finalise the Funding Guidelines for the program. As part of the Acquisition Plan, a risk assessment will be conducted, that will identify procurement specific risks and risks specific to delivering the program.

Guidance for applying principles:

The SPB’s Acquisition Planning Policy states:

When developing procurement strategies, the following community development principles need to be considered: • consideration of the desired impact or change being sought within the community • assessing procurements on their impact on improving social, cultural and/or economic outcomes for South Australia • a community development approach which builds resilience in the community and the capacity to respond to change and crisis and empowers individuals in the process of development and service delivery.

Consultation

Program Managers should seek agreement at an early stage from all Stakeholders (Procurement and Grants Unit, NFP sector etc) on their respective roles and responsibilities before, during and after the selection process. An analysis of stakeholders may be conducted, that will: • identify who needs to be involved and when • identify who will be impacted and when • identify issues associated with the grant/procurement process • provide an opportunity to learn from other people’s experiences and use this information to improve the quality of future outcomes.

As outlined above, the development of Funding Guidelines should include participation by the NFP sector, to the extent deemed appropriate by responsible Director (aided by consideration of the IAP2’s Public Participation Spectrum).

Additional time allowance will be required to undertake meaningful consultation with the NFP sector, therefore planning for Funding Programs should commence ideally approximately 18-24 months prior to the end of the current funding period.

Risk Identification and Management

As part of the Planning stage, a risk assessment should be undertaken by the Program Manager, in accordance with the SPB Risk Management Guideline, to identify the level of risk associated with the funding program. Care should be taken not to over-engineer processes in the pursuit of risk mitigation. Program Managers should continuously identify and manage emerging risks throughout the funding lifecycle.

When designing funding and reporting requirements Program Managers should consider proportionality of the risks involved and policy outcomes being sought. Risk assessment should consider: • Nature of funding (e.g. scope, complexity, quantum of funds, any co-funding arrangements); • Design of funding allocation process (e.g. new approach, timeframes); • Departmental capacity to administer funding (e.g. staff capabilities, resourcing, infrastructure requirements); • Implementation issues including communication with stakeholders, ongoing grant administration; Page | 10

• Nature of industry e.g. industry capabilities, experience and past history of providers; • Relationship between parties to the funding agreement; and • The nature of activities being funded e.g. number and range of activities, locations, nature of clients, relevant service standards.

The State Procurement Board’s Risk Management Guideline states that the level of analysis and detail required in the management of risk will vary depending on the value, complexity and scope of the procurement. The risk management process identifies, and plans for, the potential risks that impact on a project’s procurement objectives. Planning for risk needs to occur at the earliest stages of planning for a procurement project.

Potential risks that may impact on the achievement of the procurement objectives need to be identified, including specific funding program risks. In undertaking analysis of the risks, and in determining necessary treatments, Program Managers need to refer to the DHS Risk Management Policy & Framework. The Framework includes a list of potential sources of risk, and a Risk Assessment Matrix for determining the likelihood and consequence of risks.

When undertaking risk assessments, assistance can be sought from the DHS Risk Management Unit.

Funding programs should continuously identify and manage emerging risks throughout the funding lifecycle.

Contract Length

The SPB’s Acquisition Planning Policy provides the following guidance regarding determining the contract length for NFPs:

In order to provide greater certainty and improve sustainable service delivery, public authorities must establish contractual agreements of three years plus three years plus three years (3 + 3 + 3) for all NFP procurements longer than two years where appropriate (i.e. where risk is low and there are no linked funding arrangements with the Commonwealth Government).

The Policy further states:

The appropriateness of long-term contracts needs to be assessed on a case-by-case basis and needs to represent value for money, and be balanced against the potential for new suppliers, whilst also considering the potential to encourage innovation in service delivery and new service models.

The Policy outlines the following factors to consider in determining the duration of any possible contract extension period: • the likelihood of market change in the meantime; • the need to secure and demonstrate value for money; • the switching costs to change from the incumbent to another supplier; and • the costs of approaching the market.

Staff Training

All staff involved in process of planning, selection/allocation and management of funding programs should undertake relevant training through the State Procurement Board and through their Department.

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Stage 3: Selection

Applicable DPC 044 Principles – P1, AV3, AV4, CDP1, CDP2, CDP3, GA1, GA2, GA3, GA4, PT1, PT2, PT3, PT4.

The selection stage of the process is where the Program Manager will work with PGU to select a suitable service provider to deliver a funding program. External assessors may also be involved in the selection process, and this will ideally be decided during the planning stage.

During this stage of the process, Program Managers may contribute to the evaluation of responses received to an open or selective market approach, or be involved in negotiating with one or more service providers on the delivery of a funding program.

Guidance for applying principles

Limiting the Number of Suppliers

The SPB’s Acquisition Planning Policy outlines that where a collective impact approach is operational in any given area (geographic or issue based) which addresses the purpose for which the funding has been made available, a contract can be negotiated with appropriate not-for-profit organisations if such negotiation is beneficial to the community.

The Policy provides further guidance regarding instances where it may be appropriate to limit the number of suppliers, and requires that Program Managers ensure that the relevant justification is documented and approved by the appropriate delegate.

Evaluation

Consideration should be given to having an evaluation team member from the NFP sector with relevant expertise to the funding program. The evaluation team member may be nominated by a relevant peak body, but should not have substantial ties to any of the potential respondents.

Standardised Approach

Funding programs will ensure they utilise the required across government standardised contracts and indexation processes.

Stage 4: Ongoing Management

Applicable DPC 044 Principles – CP1, CP4, GA1, GA2, GA3, GA4, GA5, P3, OO2, CDP3

The ongoing management stage of the process commences once the funding agreement is in place and concludes only once transition to a new service provider has occurred, or the funding agreement expires, whichever occurs last.

During this stage of the process, Program Managers will work with the NFP service provider to ensure the intended outcomes of the funding program are met. The Program Manager needs to be aware of the reporting requirements under the funding agreement, and the process for exercising any extension options including as part of the agreement.

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Guidance for applying principles

Service providers are expected to deliver services using a community development approach that builds clients skills, resilience and capacity to respond to change. This will include consulting or co-designing with clients about emerging community need, service design, service delivery and evaluation.

Contract Management

The SPB Contract Management Policy defines contract management as the process of pro-actively managing a contractual relationship between a supplier and public authority, including addressing risks and disputes that arise, to achieve the agreed contractual outcomes.

Effective contract management: • supports the achievement of value for money outcomes by ensuring that all parties to the contract meet or exceed their obligations in line with the contract performance measures, timeframes and expected deliverables; • minimises the risks to the public authority, government and clients; • holds the supplier to account; • prevents misunderstandings about the contract scope; • promotes innovation and improvement in supplier performance; • assists in developing the capability of both the supplier and the public authority; and • assists with achieving the contract outcomes in a timely manner.

The Policy further outlines that positive working relationships need to be maintained through effective collaboration that supports the needs and interests of NFP organisations and funding recipients. Public authorities need to openly communicate with contracted NFP organisations and work collaboratively, respectfully and flexibly to achieve agreed outcomes.

The ongoing management of funding programs should feed back into the explorative stage, with a continuous open dialogue occurring between Program Managers and the NFP sector.

Renewing Contractual Arrangements

The SPB’s Acquisition Planning Policy states that when extending terms reviews need to be undertaken prior to each extension term to ensure: • there is a continuing need; • the service specifications, quality standards and contractual requirements are being met; • the contract is operating efficiently and effectively; and • there is active engagement to continuously improve and provide the best possible service to the community.

The Policy also requires that where there is funding certainty, a minimum of six months’ notice must be provided to not-for-profit organisations regarding whether long term contracts are to be renewed. Funding uncertainty exists where the public authority is dependent on state or Commonwealth government funding and the funding outcomes are not advised with sufficient lead time to enable six months’ notice to be provided to the not-for-profit sector.

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Definition of Community Development

DPC044 requires that: • public authorities consider the desired impact or change they are seeking to achieve within the community. • funding activities are advanced only where the desired impact or change will improve outcomes for South Australia. • where possible, and particularly in relation to health and community services, funding should reflect a community development approach which builds resilience in the community and the capacity to respond to change and crisis and empowers individuals in the process of development and service delivery

What is Community Development?

The United Nations define Community Development as a process where community (1) members come together to take collective action and generate solutions to common problems, typically aiming to make their community more cohesive, resilient and/or prosperous.

How does this relate to DPC044?

When developing procurement strategies, the following should be considered: • aligning procurements with the desired impact or change being sought within the community • assessing procurements on their impact on social, cultural and/or economic outcomes for South Australia • prioritising procurements that o build the community’s resilience and capacity to respond to change and crisis o empowers individuals in the process of service development and delivery.

For funding programs this may involve, for example: • actively pursuing partnerships and collaborations with others, including through place-based initiatives such as Collective Impact • enabling service design and delivery to be shaped by the priorities and aspirations of clients, their families and communities. • aligning decision-making with an intent of building social capital (2), community capacity (3), resilience and adaptability. • using operational processes (service design, delivery and evaluation) that include co-design with clients/communities around their needs and priorities • monitoring community need and building the capacity of the system to respond to changes (including crises) within in the community • sharing data and other information to assist community-based and place-based action.

Definitions

(1) Community: Community can denote those who live in a specific region (communities of place), those who share certain characteristics e.g. cultural history, religious belief (communities of identity) and those who come together through shared interests or concerns (communities of interest) (Maguire & Cartwright, 2008) (2) Social Capital: Social Capital refers to the interpersonal relationships (including a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity) that enable communities to function well. There are different types of Social Capital. (3) Community Capacity: Community Capacity refers to the skills, abilities, resources and networks that enable communities to create new and take up existing opportunities. There are different approaches to Community Capacity Building.

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Checklist for engaging the NFP sector

This checklist should be read in conjunction with the Department of the Premier and Cabinet’s (DPC's) guide titled Better Together: Principles of Engagement and the values and practices outlined by the International Association of Public Participation (IAP2), and the Reforming Democracy: Deciding, Designing and Delivery Together Policy.

Planning

✓ Have you conducted a risk assessment for your program to identify any critical factors that may be addressed as part of the consultation process? ✓ Have you determined who you will consult with? The most effective consultations are undertaken with a cross-section of providers & stakeholders, not just a few ‘dominant’ providers. ✓ Have you determined how you will consult? Will you consult with providers individually, conduct a survey or hold workshops? ✓ Have you determined what it is you will be consulting the sector on? Do you know why you are engaging? Have you determined the non-negotiables? It is important to be clear with those being consulted with on what you have the power to change. ✓ Have you determined what you already know? Ideally, you will build upon previous engagement activities, and be aware of current sentiment in the sector regarding the funding initiative. ✓ Who will run the engagement? Will you lead the discussion? How will outcomes be recorded and used?

Engaging

✓ For consultation to be meaningful, you need to engage with the sector early to secure buy-in. ✓ Care needs to be exercised to ensure that no provider has, or is perceived to have, information that provides them with an unfair advantage in a subsequent procurement process. ✓ Keep thorough records of your consultations to leave an audit trail. ✓ During your consultation, ask providers & stakeholders specific questions and provide guidance and context where possible – make your consultation relevant and engaging. ✓ Ensure your method of consulting is accessible for all providers or stakeholders who seek to contribute – i.e. consider allowing phone-ins for group discussions to ensure those in regional locations can participate, allow sufficient time for contributions to be made.

Next Steps

✓ Review the information you obtained as part of your consultation. How does this shape the funding guidelines, market approach or any other aspect of the process or agreement? ✓ Provide a report on the consultation to relevant managers, outlining any recommendations and seeking endorsement for actions required. ✓ Close the feedback loop. Let the sector know the outcome of your consultation process, i.e. what decisions were made? This will build trust with the sector and add legitimacy to future consultations. ✓ Include a summary of the consultation process you have conducted in the acquisition plan, including how it shaped funding guidelines, market approach or other aspects of the resulting agreement.

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Case Study: Community Services Support Program

Exercising of available three-year extension option for the Community Services Support Program (first term 1 July 2015 - 30 June 2018)

• $10.5 million per annum • 40 service providers, 73 services, 12 State Government Regions

Six streams:

• Community Neighbourhood and Development • Facilitating and Supporting Community Hubs • Family Support and Early Intervention • Life Skills Development • Low Income Support Program • Youth Support and Development

Stage 1: Exploration

• External evaluators (Charles Darwin University) appointed to evaluate the program over a period of up to four years • Jan 2017 - planning commenced (18 months prior to contract expiry) • Feb 2017 – notice to service providers to set expectation for them to achieve Quality Framework accreditation within 12 months time • March 2017 - briefing to Minister outlining planned approach • April 2017 - letter to service providers from Executive Director advising of intention to extend the contract and the planned approach.

Stage 2: Planning

• May 2017 consultation with sector commenced including 8 Regional information sessions held across South Australia and an information session or 1:1 meeting with Peak Bodies • Service Provider risk assessment and service-level performance review undertaken for each service provider and service • Request for Information sent to all 73 services. Each service was asked to provide information on: o Their assessment of identified community needs o Their linkages to community assets/strengths o How they plan to align service provision to local collective impact initiative goals and/or how they plan to improve service provision to address identified areas of persistent disadvantage o and, any Intended improvements/refinements to the service model • Following this, 73 individual 1:1 meetings held with each service manager / service provider. As a result of these meetings, a number of future contract improvements were negotiated across the CSSP including: o Merging of Streams with similar service models and outcomes allowing for efficiencies o Clarity of Purpose Statements and Refinement of service models o Separation of services where two distinct services had been operating as one service, allowing for better transparency of funding and reporting Page | 17

o Better alignment to collective impact initiatives o Introduction of a data sharing requirement o Introduction of definition for budgeted administration costs o Introduction of administration limits for metropolitan services (up to 18%) and regional services (up to 22%) o Improved clarity on staff FTE, award and classification o Introduction of risk-based approach to contract management o Red tape reduction by way of reducing frequency of expenditure reporting based on risk o Introduction of a benchmark for # of clients per year o Greater focus on clients from areas of persistent disadvantage as per the ABS population health area data o Introduction of Targets for % of Aboriginal clients and % of Culturally and Linguistically Diverse/New Emerging Communities clients

In addition, there was amicable negotiation to discontinue three services for various reasons as follows: • Discontinuing of 1 service which will be superseded by another service provider through a different funding program from July 1 2018 • Discontinuing of 1 service which did not align well to the region nature of the program and reallocation of these funds to another service delivered by the same provider • Discontinuing of 1 service in line with new strategic direction of the service provider

Stage 3: Selection

• October 2017 - SPGC approval to extend agreements • Early November 2017 - new Service Agreements drafted and issued to Service Provider for feedback • Late November 2017 - new Service Agreements issued to Service Provider for signing • December 2017 - New Service Agreements executed by DHS delegate (6 months prior to contract expiry)

Stage 4: Ongoing Management

• Development of CSD Contract Management Guidelines for multi-year funding to guide in line with Stronger Together and SANFRAG principles • RBA Training and Mentoring provided free to Service Providers and delivered by Community Centres SA • Financial support toward ASES accreditation for Service Providers with total income less than $500k • Creation of an online reporting portal for RBA outcomes reporting Next steps will include: • Continue with evaluation of the program (external evaluators – Charles Darwin University) • Review of Funding Guidelines • Planning for next procurement process will commence • Tender likely to be released Jan-June 2020 (12-18 months out from contract expiry)

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South Australian Not for Profit Rules and Guidelines SANFRAG Fact Sheet

The Department for the Premier and Cabinet Circular 044 -South Australian Funding Policy for the Not-For Profit Sector sets out the requirements under the Policy.

The South Australian Funding Policy (Policy) aims to support and strengthen collaborative partnerships between government and the NFP sector.

It provides a consistent approach to all aspects of funding, sets clear requirements for public authorities, and reduces the administrative burden on NFPs and maintains their independence.

It also ensures that we capture learning and evidence that can be used to continually improve outcomes for South Australian communities.

The Policy applies to:  ongoing and one-off funding arrangements  funding for services to the public authority directly  or to a third party  grants (that use a formal contractual agreement) regardless of dollar value.

It does not apply to funding arrangements with schools, universities and churches

What has changed….

Definition of a procurement: The purchase of services from NFP are generally considered a ‘procurement’ and not a grant. Therefore, the State Procurement Board procurement, acquisition, supplier selection and contract management policies apply.

The DHS Procurement Framework already requires the purchase of services and provision of grant funding to follow the State Procurement Board policies and guidelines. Therefore, there is no change to the procurement process, i.e. acquisition strategy and tender process.

The definitions of a procurement and grant are included in attachment 1. For assistance contact the Procurement and Grants Unit. PGU will make an assessment based on guidance from DTF.

Notice to the sector: A minimum 6-months’ notice should be provided to the supplier if the contract is to cease or be extended.

For instance, if you tender the services the selection of the supplier should be completed (and tenderers advised) at least 6-months prior to the current contract end date. Likewise, if an extension option is being exercised 6-months should be provided.

Indexation: DTF has agreed to set indexation to be paid each financial year for contracts longer than two years.

Exceptions:

 services transitioning to the National Disability Insurance Scheme (NDIS)

 services transitioning to the Commonwealth Government under aged care reform arrangements  indexation arrangements negotiated as part of a competitive tender arrangement.

Further information can be found here.

Agreements: Standard agreements have been drafted by the Crown Solicitors Office, in consultation from DTF.

Current agreements will continue to be valid as will the Master Agreement. However, all new agreements will be drafted using the new agreements.

The new clauses in the agreement can’t be amended (including adding clauses) without approval from DTF. Please contact the Procurement and Grants Unit to discuss

If business units want current agreements transitioned early to the new standard agreements, please contact the Procurement and Grants Unit to discuss.

Contract terms (3+3+3): Long term contracts provide certainty to the sector; however, the appropriateness of long-term contracts needs to be assessed on a case-by-case basis.

Contracts need to:  represent value for money  be balanced against the potential for new suppliers  consider the potential to encourage innovation in service delivery and new service models

3+3+3-year agreements still require robust review and scrutiny. Extension options are not guaranteed and should only be exercised if the contract still meets the need of the community/clients.

During the term of the contract the service model should be responsive to the needs of the clients and should be actively managed to ensure they deliver the right outcomes.

Payments in advance: 25% pre-payment is allowed unless other arrangements are approved by the Chief Executive. Business Units can continue to pay NFPs quarterly.

Industry Participation Policy The Industry Participation Policy must be adhered to for the purchases of goods/services from NFP. Generally, this will be the completion of an Economic Contribution Test.

Sector consultation and co-design: Business Units will need to increase their engagement with the NFP sector. Engagement could be:  emerging community need  future of funding programs  funding guidelines  market approach and funding allocation (procurement process)  contract management  innovation opportunities

The engagement should depend on the scale and risk profile of the funding activity. Not all aspects of the program or delivery model need to be co-designed with the sector. Program managers should decide what are non-negotiables before consultation begins.

Refer to the “SANFRAG Implementation Guideline” for further details on engagement and consultation processes with the sector.

Attachment xx provides an overview of a case study on implementing SNAFRAG principles.

For further assistance on engagement with the sector contact the DHS Community Services Division.

Attachment 1: Definitions of Procurement and Grant

Procurement: State Procurement Act a) the procurement of goods or services required by the authority for its operations, including (without limitation) the procurement of— (i) a supply of electricity, gas or any other form of energy; or (ii) intellectual property; or b) the management of goods of the authority, including (without limitation) the care, custody, storage, inspection, stocktaking or distribution of goods of the authority; or c) the management of the authority's contracts for services; or d) the disposal of goods surplus to the authority's requirements, but does not include operations excluded from this definition by the regulations Grants: Treasurers Instruction 15 (a) it constitutes expenditure by a public authority to assist or support a third party in the conduct of its undertaking; and (b) the benefits on account of that expenditure do not flow, or do not predominantly flow, to the public authority.

Grants as defined in Treasurer’s Instruction 15 are excluded from the definition of procurement operations via the State Procurement Act Contact DHS Procurement and Grants for more information

Attachment 2: Case Study Implementing the SANFRAG Principles

NFP Procurement Processes: Generally, the roles and responsibilities of the business unit and the Procurement and Grants Unit are as follows. The level of work for each part can depend on:

 the nature of the program or service  the business unit’s relationships with the sector  risk level  market analysis

Role of the Business Unit Role of the Procurement and Grants Unit • Planning new funding program • Review previous issues/contract • Review the requirements and previous • Risk analysis issues/contract • Advice on market analysis • Needs analysis • Acquisition Plan • Budget • Evaluation Strategy • Consultation • Advice on Market Approach • Market analysis • Market Documents • Risk analysis • Advice on evaluation criteria • Specification, outcomes, targets • Consideration of Industry Participation

• Essential elements for evaluation criteria Policy • Composition of evaluation panel • Managing the tender via SA Tenders and • Contract negotiations Contracts • Advice on contract details • Chairing the evaluation panel • Keeping Minister informed • Contract negotiations • Contract management • Purchase Recommendation • Contract development

Services to Aboriginal Youth (STAY) Service The STAY program has a focus on early intervention, providing at risk young Aboriginal people aged between 10 – 19 years with access to the services and guidance they need to:

 achieve their goals  strengthen their cultural and community connection  build long-term resilience Through a platform that actively encourages partnerships and collaborations with the Aboriginal community (including Elders, Aboriginal leaders, services providers and other stakeholders), the service providers will support young people in the context of their family and community.

Planning Planning commenced in February 2018 (17 months prior to the expiry of contract contracts) Conducted a Needs Analysis:

 Population indicators:

# of Aboriginal young people # young people leaving school early # young people not engaged in further education, training # young people unemployed at age 25 # single parent families

 Youth Justice and Court data  Requested information from suppliers  Surveyed clients

Service Model Changes: Using information gathered areas were ranked by need, identifying:

 two additional areas to service  redistribution of funding  refined target group

Roles: Business Unit responsible for each of the planning tasks Procurement and Grants Unit to be notified of planning stage. An Adviser will be allocated and provide a point of contact for the program manager.

Consultation Youth Forum held in Murray Bridge and Port Augusta (over 100 young people attended) Stakeholders engaged:

 Department of the Prime Minister and Cabinet – consultation on outcomes and funding distribution  Senior Aboriginal Advisers (DCP and DECD), Office of the Youth and Aboriginal Programs and Policy – Draft guidelines Program Specification: Informed by the consultation the program guidelines, outcomes and targets were developed

Roles: Business Unit responsible for each of the consultation tasks

Market Approach and Documentation

Market analysis – consideration of organizations in identified regions and Aboriginal Communities Develop evaluation criteria and scoring matrix using key elements of the specification:

 Service model (program theory, evidence)  Knowledge and experience  Workforce Capability and capacity  Connection to community  Cultural responsiveness Risk assessment of the procurement process and service Consideration of the tender documents and response:

 Use of plain English  Construction of easy to understand questions  Allowing presentations from organisations (if necessary) Composition of the evaluation team – subject matter experts (including representation by Aboriginal people)

Roles: Business Unit responsible for identifying key elements of the specification for the evaluation, service risk assessment, input into tender documents and approval documents and composition of the evaluation panel. Procurement and Grants Unit responsible for advice and finalization of the evaluation, tender and approval documents and tender process.

Contract Negotiate service delivery, outcomes, targets, assessment and data collection Develop contracts based on agreed service model and negotiated items

Roles: Business Unit responsible for negotiation positions, contract detail and active contract management. Procurement and Grants Unit responsible contract negotiations, contract development and contract management oversight.

Procurement and Grants Unit

Contract Management Handbook

Version: 1.2 January 2019

Table of Contents

CONTEXT ...... 4

PURPOSE AND APPLICATION ...... 4

DEFINITIONS ...... 5

1 BENEFITS OF EFFECTIVE CONTRACT MANAGEMENT ...... 7 2 REQUIREMENT TO APPOINT A CONTRACT MANAGER ...... 7 3 PGU HANDOVER TO BUSINESS UNIT CONTRACT MANAGER ...... 8 4 CONTRACT MANAGEMENT TOOLS AND ASSISTANCE ...... 10 5 KEY CONTRACT MANAGEMENT ROLES AND RESPONSIBILITIES ...... 10 5.1 Role of SPGC ...... 10 5.2 Contract Management Roles and Responsibilities matrix ...... 11 6 CONTRACT MANAGER GOVERNANCE RESPONSIBILITIES ...... 13 7 CONTRACT MANAGER TRANSACTIONAL RESPONSIBILITIES ...... 14 8 CONTRACT MANAGEMENT PLAN ...... 15 9 GOVERNANCE AND OVERSIGHT ...... 16 9.1 Schedule meetings of governance group ...... 16 10 IMPLEMENT THE CONTRACT ...... 16 10.1 Start‐Up tasks ...... 16 10.1.1 Transition to new contract with incumbent Supplier ...... 17 10.1.2 Service Continuity and Transition to new Supplier ...... 17 10.1.3 Transition out – incumbent supplier ...... 18 11 PAYMENTS ...... 18 12 RECORD KEEPING AND DOCUMENTATION ...... 20 13 MEASURE, MONITOR, ASSESS AND MANAGE SUPPLIER PERFORMANCE ...... 20 13.1 Performance Measures and Data Collection ...... 20 13.2 Results‐Based Accountability ...... 21 13.3 Contract Management Meetings ...... 21 13.4 Performance Monitoring ...... 22 13.5 Risk Management ...... 22 13.6 Stakeholder and User Feedback ...... 23 13.7 Performance Assessment and Management ...... 23 13.8 Abatements ...... 24 13.9 Management of performance issues ...... 24 14 CONTRACT MANAGEMENT REPORTS ...... 24 14.1 Timing of CMRs ...... 25 15 MANAGING FUNDING ACQUITTALS/BUDGET EXPENDITURE REPORTS ...... 25 16 MANAGING CONTRACTORS AND CONSULTANTS ...... 26 16.1 Active Management ...... 26 16.2 Setting Expectations ...... 26 16.3 Regular Meetings and Review ...... 26 16.4 Transfer and Training ...... 27 16.5 Handover ...... 27

Contract Management Handbook | Version 1.2 January 2019 2 17 DISPUTE RESOLUTION AND TERMINATIONS ...... 27 18 CONTRACT RENEWALS: NOT‐FOR‐PROFIT SECTOR ...... 28 19 CONTRACT EXTENSIONS ...... 28 19.1 Exercising a contract extension option ...... 28 19.2 Extension beyond extension options ...... 29 20 CONTRACT VARIATIONS ...... 29 20.1 Principles ...... 29 20.2 Nature of Contract Variations ...... 29 20.3 Approvals ...... 31 20.3.1 Procurement Approval ...... 31 20.3.2 Financial Approval ...... 33 20.4 Contract Documentation ‐ Legal Authorisation ...... 33 20.5 Novation ...... 33 20.6 Records Management ...... 34 20.7 Administrative notices ...... 34 20.8 Roles and Responsibilities ...... 34 21 PRICE VARIATIONS ...... 35 21.1 Information to support a price variation ...... 35 22 CONTRACT CLOSURE REPORT ...... 36 23 IS THERE A CONTRACT IN PLACE TO MEET MY NEEDS? ...... 36

APPENDIX 1 OVERVIEW OF KEY CONTRACT MANAGEMENT ACTIVITIES ...... 37

APPENDIX 2 CONTRACT MANAGEMENT CHECKLIST FOR CONTRACT MANAGERS – CONTRACTS BELOW $4,400,000 ...... 38

APPENDIX 3 CONTRACT MANAGEMENT REPORTING REQUIREMENTS ...... 41

APPENDIX 4 CONTRACT MANAGEMENT REPORT DEVELOPMENT AND ESCALATION PROCESS ...... 42

APPENDIX 5 CONTRACT MANAGEMENT POLICY, GUIDELINE, TEMPLATE AND INFORMATION SHEET LIST ..... 44

APPENDIX 6 EXAMPLES OF CONTRACT VARIATION IMPACT ASSESSMENT ...... 46

Contract Management Handbook | Version 1.2 January 2019 3 Context The State Procurement Board (SPB), established pursuant to the State Procurement Act 2004, is responsible for establishing policies and procedures relating to procurement and contract management across the SA public sector. The State Procurement Board has provided the DHS CE with procurement authority of $15 million (GST inclusive). The CE has further delegated this authority to the DHS Strategic Procurement and Grants Committee (SPGC). As part of its responsibilities, SPGC oversights all contract management activities across DHS. This Contract Management Handbook has been developed to assist Contract Managers across DHS meet their contract management responsibilities consistent with the requirements and expectations of the SPGC.

Under DHS Policy YCO/41, the Procurement and Grants Unit (PGU) within DHS is responsible for managing the procurement of goods and services over $110,000 (GST inclusive) and the provision of all grants, regardless of value, must be referred to PGU.

This document “Contract Management Handbook” is focussed on the Contract Management component of the Procurement Process theme, taking into account relevant aspects of other framework themes where appropriate.

This Handbook should be read in conjunction with the SPB Contract Management Policy. Managing contracts with reference to this Handbook will facilitate compliance with these policy requirements.

Purpose and Application This Contract Management Handbook is intended to serve as a tool for Contract Managers. Contract Managers are encouraged to establish contract management procedures and tailored approaches which are consistent with relevant policies, using additional reference material in this Handbook.

Business Units (BUs) should establish their own operational/day-to-day processes and procedures and ensure that roles and responsibilities for managing the contract have been identified and understood by the relevant parties1.

The Handbook applies to grants and contracts for goods and services, including with the Not-for-Profit sector, of all values within DHS business units, LSA and SAHT contracts managed by SA Housing Authority.

1 Reference: SPB Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 4 Arrangements with the not-for-profit (NFP) sector can involve a procurement of goods or services or grants (provision of funds in the nature of giving/gifting or investing). Procurements with NFP entities are covered by State Procurement Act. Grant funding is not covered by the State Procurement Act. DHS follows standard procurement processes for the provision of funding to NFPs. Historically a number of funding arrangements to NFP entities have been referred to as grants whereas in fact the arrangement is more in the nature of a fee for service, or purchasing arrangement, that is intended to be captured by the requirements of the State Procurement Act. The CE has delegated the SPGC the authority to consider all grants above $500,000 (GST exclusive). Business should contact PGU at the earliest opportunity to identify the appropriate process to be followed in relation to arrangements with NFP entities.

While this Handbook covers contract management for all contracts, the effort allocated to contract management is dependent on the value, risk and complexity of the contract. The Contract Manager should use the DHS Risk Assessment template to assess the service and service provider risks. A tool is available to assist business units assess risks. This tool can be adapted to meet specific criteria relevant to a particular contract or business unit. Consider all of the risk items included in the risk assessment templates for inclusion in the tool.

Contracts that have minimal purchases, tasks or activities may not require or benefit from a formal contract management approach.

The owner of this Handbook is the Director Procurement and Grants. Any feedback or queries on the content should be directed to the Manager Procurement and Grants or the Manager Contract Operations using the PGU email [email protected]

Definitions Contract Management is the process of pro-actively managing a contractual relationship between a supplier (including NFP organisations) and the DHS contracting entity, including addressing risks and disputes that arise, to achieve the agreed contractual outcomes.

The SPB Contract Management Framework outlines the key processes and activities to be undertaken by public authorities to achieve effective contract management outcomes. The framework comprises both organisational requirements that apply more generally, and transactional requirements that apply to specific contracts.

The Contract Management Plan (CMP) is an internal document outlining key strategies, activities and tasks required for managing a contract including but not limited to roles and responsibilities, timelines, performance management and financial matters.

The Contract Manager is the person nominated to be responsible for the management of the day-to-day matters of a contract.

CMR contract management report

CCR contract closure report

Contract Management Handbook | Version 1.2 January 2019 5 FGMS Funding and Grants Management System IPP Industry Participation Policy issued by the SA Department of State Development

LSA Lifetime Support Agency

NFP - A Not-for-Profit is an organisation that does not operate for the profit, personal gain or other benefit of particular people. Not-for-Profit organisations consist of two broad categories; charities, and other organisations such as community service organisations, professional and business associations, sporting and recreational clubs and cultural and social societies.

PCMS Procurement and contract management system, the system used by DHS to (amongst other things) act as the contract register.

PGU is the Procurement and Grants Unit within DHS

RBA Results-based Accountability is a flexible planning, evaluation and continuous improvement tool that can be adapted to fit the unique needs and circumstances of different individuals, communities, programs and organisations.

SAHT South Australian Housing Trust

SAHA South Australian Housing Authority, includes previous Housing SA staff and Renewal SA staff undertaking contract management activities for SAHT

Significant Contract A contract above $4.4M, or above $550k which is assessed as medium- high risk in the acquisition plan or purchase recommendation, or as determined by SPGC

SPB State Procurement Board

SPGC is the DHS Strategic Procurement and Grants Committee

Supplier refers to the contracting party and may be a For-Profit or Not-for-Profit entity

Contract Management Handbook | Version 1.2 January 2019 6

1 Benefits of Effective Contract Management Contract management focuses on the activities to be undertaken after the contract has been awarded and executed, but it is strongly influenced by what has occurred in the previous stages of the procurement process: acquisition planning and supplier selection.

Effective contract management:

 supports the achievement of value-for-money outcomes by ensuring that all parties to the contract meet or exceed their obligations in line with the contract performance measures, timeframes and expected deliverables  minimises the risks to the DHS, government and clients  holds the supplier to account  prevents misunderstandings about the contract scope  promotes innovation and improvement in supplier performance  assists in developing the capability of both the supplier and the DHS  assists with achieving the contract outcomes in a timely manner.

Contract Managers are encouraged to use their knowledge of the contract and DHS needs to continually influence change to yield improved outcomes for DHS and its clients. For example, identification of industry wide price reductions, or innovations/new products, or competitors providing items at lower cost, should be raised with suppliers to identify if there are opportunities to improve the contract terms for DHS. Contract Managers should engage with PGU for advice and guidance in the event of these potential improvement opportunities being identified.

PGU and many business units use PCMS to record and manage certain Contract Management activities. Business units not currently using PCMS (for example some business units using FGMS do not utilise PCMS) for contract management purposes are encouraged to utilise its functionality.

An overview of key contract management activities is provided as Appendix 1.

2 Requirement to appoint a Contract Manager For contracts valued at or above $4.4m and for Significant Contracts (refer Definition) an adequately resourced and skilled Contract Manager must be appointed2. Contract Managers appointed for contracts at or above $4.4m and significant contracts must have completed the SPB’s contract management training program (or similar) and undergo refresher training every three years3.

2 Reference: SPB Contract Management Policy 3 Reference: SPB Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 7 For all contracts, regardless of value, business units are to ensure roles and responsibilities for managing the contract have been identified and understood by the relevant party4.

PGU will generally seek to have the business unit identify the Contract Manager early in the procurement process to allow them to influence the final contract and develop the contract management plan prior to the contract being awarded. Complex or high risk contracts may require the appointment of a contract management team.

For across-DHS contracts the Contract Manager may be a PGU Officer, or an officer from an identified Business Unit e.g. Corporate Services. For contracts that are not across-DHS but have more than one business unit receiving services under the contract, the Contract Manager within the business unit accessing the majority of the services by value shall be deemed to be the “lead contract manager”, and this business unit shall be responsible for ensuring the appropriate coordination of contract management activities across the business units.

3 PGU Handover to Business Unit Contract Manager At the conclusion of a procurement process, PGU will confirm the business unit Contract Manager has been provided with access to all of the information and documents required to effectively perform the Contract management function. Refer to the contract handover to business unit checklist.

In many cases the Contract Manager will have been an important member of the procurement project team, or procurement process, and will have access to most if not all of the material required to undertake the CM role. PGU will meet with the CM to provide:  details of any relevant aspect of the procurement process  details of any matters that were negotiated and that may require special attention by the Contract Manager  a copy of the final contract – this will generally be through providing the Contract Manager with access to the relevant objective folders  a contract management report template (together with the schedule for provision of the reports) and advice as to any delegations approved by SPGC (eg for contract variations, extensions, price increases), which will also be recorded in PCMS  a copy of the risk assessment (or risk management plan if completed)  access to the Better Customer Charter for Business which outlines the South Australian Government’s commitment to being the best public service customer to suppliers.  If not already provided, access to the successful supplier response/proposal together with notes of any outcomes from clarifications, presentations and negotiations that occurred with the supplier. While the executed agreement contains the final position agreed between the parties, the response and other information can be useful to the Contract Manager/business unit both during transition/implementation and ongoing management of the relationship and deliverables  a range of other information as detailed in the handover checklist.

4 Reference: SPB Simple Procurement Policy and SPB Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 8 PGU will record the name of the Contract Manager in PCMS, the DHS contract register.

Contract Management Handbook | Version 1.2 January 2019 9

4 Contract Management tools and assistance PGU provides assistance to Business Unit Contract Managers by

 Issuing this Handbook  Maintaining relevant policies, procedures and templates  Providing advice on contract management  Resolving escalated contract issues  Facilitating approvals required for contract extensions, price changes, novations and variations  Managing the documentation process to formalise changes to the contract terms, conditions and schedules.

Appendix 5 provides a listing of relevant policies, guidelines and templates.

5 Key Contract Management Roles and Responsibilities 5.1 Role of SPGC The SPGC5, with assistance from the PGU, oversee procurement and grant funding operations, including contract management activities, across DHS, to: • ensure the use of best practice processes • ensure probity, accountability and transparency • provide for ethical and fair treatment of participants • manage agency interests in contractual arrangements • ensure a strategic approach • oversee the collection, analysis and distribution of information that will help develop strategy • implement effective risk management • develop policies and oversee their implementation.

5 Reference: Strategic Procurement and Grants Committee Terms of Reference

Contract Management Handbook | Version 1.2 January 2019 10

5.2 Contract Management Roles and Responsibilities matrix The key contract management activities, which are described in this Handbook, are:

Activity CM Handbook Responsibility* section number Appoint a Contract Manager 2 BU Contract Manager name placed in PCMS 3 PGU Contract Manager undertakes contract 2 CM management training Lead Contract Manager nominated for multi- 2 BU with guidance business unit contracts from PGU Develop a contract management plan 8 BU with guidance CMP to address responsibility for the review of from PGU contracts, business risk assessments, business continuity planning, correspondence and enquiries relating to the contract, operational requirements of the contract Approve a contract management plan 8 BU following endorsement from PGU Schedule initial and regular Governance 9 CM Committee and Contract Management Team meetings Contract start up and implementation activities 10 CM Establish records in FGMS/PCMS 10 CM/PGU in accordance with the FGMS Guideline Prepare contract management meeting agenda 13.3 CM Attend contract management meetings 13.3 CM Undertake specific tasks for managing 16 CM consultants and contractors Obtain and review performance data and monitor 13 CM performance measures Lead Contract Manager to obtain input from 2 CM other business unit users Certify invoices for payments (non FGMS 11 BU contracts) Process payments through FGMS (where 11 CM/PGU/Finance applicable) in accordance with the FGMS Guideline Review risk management plan 13.5 CM Manage disputes and non-performance 17, 13.8 CM with guidance For NFP contracts, manage acquittals and from PGU retrieve underspends 15 CM with guidance from Finance Document outcomes of meetings 12 CM Communicate with stakeholders 13.6 CM

Contract Management Handbook | Version 1.2 January 2019 11 Activity CM Handbook Responsibility* section number Report on contract performance 13 CM Prepare contract management reports 14 CM (with guidance from PGU for >$550k) Manage process of submission of CMRs to 14 PGU SPGC IPP reporting – 6 Monitor supplier obligations as per the CM contract. Report IPP outcomes to PGU CM Report to Department of State Development PGU on IPP outcomes Social Outcomes Reporting to PGU – CM ABE/ADE outcomes SME engagement Aboriginal employment Northern exemplar Seek approval for novations, variations, price 19,20,21 CM (with guidance adjustments and extensions to contract from PGU for Negotiate with supplier re price adjustments, >$550k) extensions, variations CM (with guidance from PGU for >$550k Prepare contract variation PGU documentation/exchange of letters for execution by supplier and Business Unit Approve price adjustments, contract extensions, 20.3 In accordance with and contract variations financial and procurement delegations and impact assessment Manage contract closure processes 22 CM Prepare contract closure reports 22 CM *BU = Business Unit PGU = Procurement and Grants Unit CM = Contract Manager

A spreadsheet (one for period and one for one-off contracts) is available for CMs to record various actions/tasks taken against contract management activities.

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6 Contract Manager Governance Responsibilities Contract Managers must ensure6:

 privacy and confidentiality - all commercial information provided to the CM is to be treated as confidential. Confidential government, user, client and supplier information is to be handled appropriately throughout the contract management process in accordance with confidentiality and privacy clauses contained in the contract.  probity, ethical behaviour, accountability and transparency – The SA Government’s Better Customer Charter requires that public authorities are honest and fair in commercial dealings, and behave in accordance with the highest ethical standards  stakeholder management - manage the needs and expectations of internal and external stakeholders (end-users, customers or clients, managers, sponsors, suppliers, technical or functional experts or advisers) and determine the type and frequency of interaction and communication with stakeholders which will vary according to the nature of the goods and services, value, risk and complexity of the contract. Communicate with users, stakeholders and clients on the key aspects of the contract and the supplier, as relevant  management of Industry Participation Policy requirements - o monitor IPP Plan commitments o review regular reports from suppliers o report on IPP outcomes to PGU annually. (PGU prepares reports to the Department of State Development.)

Further guidance and detail are available in the South Australian Industry Participation Policy published by the Office of the Industry Advocate (OIA).

Contract Managers should:

 provide reports to PGU on social outcomes or targets (if applicable) - o Engagement with Aboriginal Business Enterprises or Disability Business Enterprises o Engagement of small to medium enterprises under the contract o Aboriginal employment o Northern Exemplar   maintain a written record of all decisions, contract management meeting outcomes, key discussions with suppliers and significant contract management issues including approvals and the rationale for decisions made  undertake supplier audits and access supplier information where necessary undertaking site visits to verify contract undertakings and outcomes

6 Reference: SPB Contract Management Policy and SA Industry Participation Policy

Contract Management Handbook | Version 1.2 January 2019 13  establish processes for identifying, declaring and managing conflicts of interest to avoid the potential for and the perception of unethical behaviour and conflict of interest  use the DHS gift register  adhere to the Government’s Code of Ethics for the South Australian Public Sector  achieve the contract outcomes  maintain a professional and respectful working relationship with the supplier Further information is available in the SPB’s Probity and Ethical Procurement Guideline

7 Contract Manager Transactional Responsibilities The Contract Manager should: o understand the contract requirements and obligation o be involved in the procurement processes (where possible) o identify opportunities for realising additional value o manage and address contract risks7 o maintain effective relationships with the supplier and schedule regular contract management meetings.

Effective contract management includes:

o working collaboratively, respectfully and flexibly with the supplier to achieve agreed outcomes. An effective professional supplier relationship underpins achieving contract outcomes, with the Contract Manager being the key link between DHS and the supplier. An ineffective or difficult relationship may result in the supplier taking a more adversarial approach or being less willing to provide quality services. o maintaining positive working relationships with Not-for-Profit suppliers through effective collaboration that supports the needs and interests of NFP organisations and funding recipients. Communicate openly with NFP organisations and work collaboratively, respectfully and flexibly to achieve agreed outcomes. o developing and maintain a professional relationship through appropriate communications. . set up regular meetings with the supplier to review progress and discuss opportunities for improvement . establish a system to monitor milestones and key deliverables . ensure the flow of relevant information at critical stages of the contract . ensure all formal communication in relation to the contract is channelled through the Contract Manager. o scheduling contract management meetings with the supplier to monitor contract activities and to discuss improvement opportunities. The frequency of contract management meetings varies. For example, the majority of medium to longer

7 SPB Risk Management Guideline

Contract Management Handbook | Version 1.2 January 2019 14 term contracts may require contract management meetings on a quarterly basis, with short term contracts (less than six months) or higher risk contracts requiring meetings on a more regular basis. Prepare a formal agenda to guide the discussion towards improving contract outcomes. Document key contract management meeting outcomes. o providing timely assessment of the supplier’s performance, particularly if they are failing to met their KPIs or performance does not meet expectations. o ensuring that performance indicators are met and provide contract management and contract closure reports as required by the DHS Contract Management Guideline o for NFP contracts managing expenditure acquittals and recovering surplus funds o ensuring the supplier is charging in accordance with the contract schedule of rates o ensuring suppliers do not apply a price increase without approval o certifying payments to the supplier for goods/services delivered (where applicable) o ensuring payments are made in accordance with Treasurer’s Instruction 11 – Payment of Creditors’ Accounts o processing invoices for payment within 30 days of the suppliers invoice being received by DHS unless stipulated otherwise in a contract. o processing payments through FGMS (where applicable) in accordance with the FGMS Guideline o addressing problems and conflicts that may arise o assessing and (where required) seek approval for any variations/extensions/novations to the contract o advising PGU of any change in personnel acting as Contract Manager; PGU will update PCMS.

8 Contract Management Plan The DHS Contract Management Guideline requires that all contracts at or above $550,000 (GST incl) (except for contracts that are of a one-off nature and have minimal management tasks), and for other contracts determined by SPGC to be significant, require a contract management plan (CMP). The CMP:

o is an internal (DHS) document for documenting the key strategies, activities and tasks o summarises meeting procedures, timelines and KPIs  is required to manage the contract  provides a systematic and accountable method to ensure that both parties fulfil their contractual obligations  is used to review the performance of the contract and monitor the achievement of the contract outcomes  is valuable for new staff assuming the Contract Manager role, as it provides critical information required to enable a smooth transition from one Contract Manager to another.

Contract Management Handbook | Version 1.2 January 2019 15 PGU will provide the Contract Manager with a CMP template for the Contract Manager who is able to tailor it for specific business unit requirements. Refer to the information sheet Complete the CMP template.

Where a procurement process has been undertaken using a single acquisition plan and purchase recommendation covering a “program” or “service” that may involve multiple contracts with multiple providers, a single Contract Management Plan may be used, providing that all high risks that relate to a specific/single service and/or provider are addressed.

Once the CMP has been endorsed by PGU and approved by the BU Executive, the Contract Manager should provide the final CMP to PGU, for storage in Objective.

The simple contract management plan template may be used for contracts valued up to $4.4m incl GST. A contract management checklist is provided as Appendix 2 to this Handbook as a useful tool for managing contracts as a companion tool to the Simple CMP.

9 Governance and Oversight An oversight or governance committee can be established to oversee contracts of high value, risk or complexity. Membership may comprise senior staff, users and business unit representatives, as well as the Contract Manager. DHS’s SPGC monitors contract management for contracts valued above $550,000, or high risk contracts of any value, through receiving reports as outlined in the DHS Contract Management Guideline.

9.1 Schedule meetings of governance group The Contract Manager should ensure that meetings for the relevant contract management oversight group are scheduled as required by the Contract Management Plan.

10 Implement the Contract Works or services, or purchases of goods, should not commence until the contract has been fully executed. There may otherwise be a lack of clarity as to the respective rights and obligations of the parties, which could lead to disputes and /or risks being assumed that may not have occurred under the final approved and executed version of the contract.

10.1 Start-Up tasks To implement the contract, the Contract Manager should:

 At all times follow the contract management plan where applicable.  Identify and undertake contract start-up tasks including: o Convening the initial contract management meeting with suppliers, DHS representatives and other relevant stakeholders to detail all parties’ obligations. o Confirm contract risks and strategies to manage risks. o Assist supplier by arranging site inductions. o Finalise record keeping protocols for the contract.

Contract Management Handbook | Version 1.2 January 2019 16 o Obtain confirmation from supplier that screening requirements have been met.  Communicate the existence of the contract to users and stakeholders and the requirements they must fulfil. It is important that all key customer groups are informed of the contract. For whole-of-DHS contracts for consumable items such as stationery or printing services an implementation strategy may need to be developed by the Contract Manager with an implementation plan on how to maximise usage of the contract.  Ensure that the ordering processes are appropriately set up.  Provide new supplier/vendor details to Shared Services SA (non FGMS contracts). This enables payments to be processed via Basware.  Ensure a system for timely payments is in place and users are aware of the process for certifying and approving invoices for payment (non FGMS contracts)  With PGU and Finance, ensure FGMS payment arrangements and processes are established and implemented in accordance with the FGMS Guideline.  Ensure record keeping protocols for contract management are developed, implemented and understood by all participants. This includes electronic record keeping in PCMS and/or FGMS and Objective.

The implementation period commences at the execution of the contract and in some cases, can last up to three to six months before ongoing contract management and monitoring activities take precedence. The Contract Manager should ensure that the new contract is quickly established and operational to deliver the required goods or services to clients and end-users, communicate the existence of the contract to users and stakeholders, and describe what goods and services the contract will provide, who is responsible for the key contract tasks and how to utilise the contract.

10.1.1 Transition to new contract with incumbent Supplier It is important to ensure that all provisions of a new contract with an incumbent supplier/provider are honoured and implemented. A re-engagement of an incumbent provider should not be assumed to mean “business as usual”. Contract Managers should be aware of all changes to terms, conditions, schedules, deliverables, reporting, payment arrangements and ensure these are enforced both with the supplier and with DHS staff through operational procedures associated with the contract. It is appropriate to undertake the “start-up” tasks outlined in section 10.1 even where the contract is with an incumbent supplier.

10.1.2 Service Continuity and Transition to new Supplier The Contract Manager must plan for and implement the transition from one supplier to another or from one contract to another to ensure a smooth handover and the continuity of service provision. The transition period can entail high risks and stress on both parties.

A transition plan and/or the establishment of a transition team may be warranted to manage the transition and is useful where there are:

 complex or essential service contracts in place

Contract Management Handbook | Version 1.2 January 2019 17  significant assets or intellectual property that will become the property of the public authority or new supplier  security or safety issues.

A transition plan identifies and addresses risks allowing the transition to occur with minimal disruption to existing services and for improving systems and procedures.

The new supplier may also have several issues to consider including:

 outstanding warranty matters  obtaining previous contractual records and information  obtaining access to premises and assets  understanding any areas in which the previous supplier did not perform adequately.

Refer to the Contract Transition meeting and minute template with guidance.

10.1.3 Transition out – incumbent supplier The Contract Manager must8 ensure various matters are considered at the end of the contract including whether:  all outstanding contract actions have been completed, including deliveries  required documents, equipment or other goods have been returned, and documents stored in accordance with DHS Records Management protocols  all payments and financial obligations have been completed and reconciled  there are any outstanding reports or disputes  any warranty issues are still outstanding  there are any legal rights and obligations on the parties that may survive after the contract has closed  access arrangements have been terminated or revoked, including security passes.

A contract closure report may also be required – refer section 22.

11 Payments The Contract Manager is responsible for:  Setting up processes to allow orders off the contract.  Providing new supplier/vendor details to Shared Services SA. This enables payments to be processed via Basware if applicable (i.e. for non FGMS agreements).  Scheduling payments in FGMS where relevant.  Establishing a process to confirm that the supplier is charging the correct contracted rates.  Establishing a system for timely payments and making users aware of the process for certifying and approving invoices for payment (non FGMS agreements). Establish o Who will review and code the invoice, who will approve the invoice? o What data will the reviewer and approver require to enable them to check the invoice and how will it be available to them?

8 Reference: Note that this is a mandatory requirement under the SPB Contract Management Policy for contracts >$4.4million and significant contracts and a recommended action for all other contracts.

Contract Management Handbook | Version 1.2 January 2019 18 o Who will monitor that invoices have been received in line with contract requirements, and have been paid on time to meet Treasurer’s Instruction 11 Payment of Creditors’ Accounts requirements? o Do reviewers and approvers require Basware training? o Does the supplier know who to forward invoices to, and who to provide any supporting information to? o What is the process in the event there is a dispute in relation to an invoice or supporting data?  Reviewing and monitoring payments made to the supplier o Are payments being processed in accordance with appropriate timeframes? o Are payments/expenditure in line with the estimated expenditure approved as part of the purchase recommendation and financial authorisation?  If payments are in excess of the expected amount on a monitoring period basis (eg monthly, quarterly, annually), and this may lead to the approved value of the contract being exceeded, taking appropriate remedial action. This can range from restricting purchases under the contract (i.e. demand management) to seeking an approval of a variation by the procurement delegate and the financial delegate to ensure compliance with delegations. o PGU will assist Contract Managers to obtain the required procurement approval (e.g. to vary the terms of the procurement delegate’s approval and/or a contract variation if required). Contract Managers must9 obtain the relevant Financial Delegate’s approval for the expenditure increase.

9 Reference: Treasurer’s Instruction 8 Financial Authorisations

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12 Record Keeping and Documentation The Contract Manager must10 ensure that records are maintained within PCMS (and/or FGMS and/or Riskman) and documents are stored in Objective in relation to:

 risk monitoring and assessments  issues register  the original contract and contract management plan  minutes of contract management meetings  significant communications with the supplier  where applicable, records of payments  performance reports, assessments, feedback or non-compliance issues  variations or extensions to the contract  legal or technical advice received.

13 Measure, Monitor, Assess and Manage Supplier Performance Contract performance management must be undertaken throughout the life of the contract. It includes performance measurement, monitoring, assessment and management. For areas using Results-based accountability (RBA), performance assessment will be undertaken within that context and framework.

13.1 Performance Measures and Data Collection Performance measures, such as Key Performance Indicators (KPIs) specified in the contract, are the key criteria against which contract performance is to be assessed. These should link to the original procurement objectives and are generally documented in the contract.

Performance measures are outcome focussed, able to be measured objectively, agreed and understood by all parties and reflect key aspects of the contract.

Premier and Cabinet Circular 44 Funding Policy for the Not-for-Profit Sector advises that public authorities and the NFP sector work together when planning and developing funding strategies to ensure outcomes are based on evidence of community need, and that planning is based on a rationale for the funding activity, and defines the expected outcomes and measures of success. Therefore, Business Units must work with the NFP entity/ies to develop the performance measures11.

The Contract Manager should be aware of all of the performance measures that are detailed in the contract, and the processes that have been agreed to in the event that requirements are not met (including for example any abatements that have been provided for).

10 Reference: State Records Act 1997 11 Reference: SPB Contract Management Policy and DPC044 South Australian Funding Policy for the Not for Profit Sector

Contract Management Handbook | Version 1.2 January 2019 20 Even where performance measures are not specifically included in a contract, performance against the general contract requirements should be monitored.

Systems for collecting relevant data are best established from the commencement of the contract, with the data discussed with all parties at the regular contract management meetings. Qualitative data may also be collected, for example, through client and user surveys. Examples of performance measures include:

 targets to be met  outcomes to be met  key steps or milestones  achieving invoicing deadlines  client feedback or customer service metrics  technical considerations  quality, safety, environmental or social outcomes.

In some cases, (for example, in contracts relating to complex or highly technical matters), an independent assessment or periodic audit can determine whether the performance measures have been met.

KPIs should be relevant and meaningful and link to the original procurement or grant objectives as documented in the contract. If a supplier is meeting the KPIs yet is not delivering services to the satisfaction of the relevant stakeholders, this may indicate the KPIs are not appropriate. Refer to the DHS Specification Writing Guideline for further information.

13.2 Results-Based Accountability Where the RBA framework has been implemented in relation to a service or program, performance measurement will be an integral part of the program evaluation process. RBA is a flexible planning, evaluation and continuous improvement tool that can be adapted to fit the unique needs and circumstances of different individuals, communities, programs and organisations. As a framework, RBA also has the capacity to enhance organisational outcomes through:

 Creating measurable improvements for clients and communities  Assisting organisations to gather evidence during practice  Enabling organisations to demonstrate the outcomes they have achieved to DHS, other funding bodies (where applicable) and the community. Community Sector Development, a team within Policy and Community Development, has lead responsibility for implementing RBA within the department.

13.3 Contract Management Meetings The Contract Manager should

 schedule the regular contract managements meetings with the supplier, in accordance with the contract management plan requirements.  Prepare the contract management meeting agenda

Contract Management Handbook | Version 1.2 January 2019 21  Attend the contract management meetings  Document the outcomes of the meeting. Refer to the Contract Management meeting minute template  Store the records of the meeting in the relevant Objective folder.

Regularly scheduled contract management and review meetings with the supplier to monitor contract activities are important to monitor contract performance. The frequency of these meetings will be detailed in the contract and should occur no less than quarterly for high value/high complex long term contracts and may occur less frequently for other contracts, or more frequently for shorter term contracts (e.g. for a 6 month contract it may be appropriate to have contract management meetings monthly).

13.4 Performance Monitoring Performance monitoring focuses on the collecting and analysis of information to provide assurance that the supplier will achieve contract milestones and outcomes in line with agreed timelines and includes the following:

 capturing and recording of contract performance monitoring data.  provision of progress reports by the supplier, progress review meetings, contract reviews, supplier visits, independent technical reviews, contract audits and financial examinations.  looking for the warning signs of potential supplier problems or slippage. Any formal or informal meeting or conversation with a supplier should be used to question progress and raise issues early.  recording all contract performance monitoring activities including copies of supplier reports and records of discussions as these may form the basis of any future action involving the supplier.  monitoring compliance with Industry Participation Plan commitments (where applicable) including regular reporting.

Contract performance monitoring should not be excessive and be should be related to the value and complexity of the contract to identify essential information required to measure and assess supplier performance.

13.5 Risk Management Managing risk is central to effective contract management and involves developing and monitoring relevant risk minimisation strategies, including those related to contract risks previously identified in the acquisition planning and supplier selection phases as well as risks relating to the supplier identified in the contract management plan. Further information on managing contract risks and examples are provided in the SPB’s Risk Management Guideline.

The Contract Manager should complete risk assessments for the service and for the supplier and regularly review the risk assessment and risk management plan, and ensure all risks are

Contract Management Handbook | Version 1.2 January 2019 22 assigned to an appropriate risk owner12. Have any additional risks emerged? Are insurance and indemnity provisions within the contract still appropriate? Are there additional risk mitigation strategies required?

A risk assessment tool containing a structured approach to calculating risk is available to assist in this assessment.

13.6 Stakeholder and User Feedback For contracts relating to goods and/or services provided directly to DHS staff, the Contract Manager should obtain feedback from key stakeholders throughout the life of the contract on whether the quality and level of services they are receiving is in line with the contract requirements. Feedback can be collected via surveys, incident log books, questionnaires, telephone or face-to-face enquiries.

Feedback is best considered with other performance data to provide a more comprehensive view. By itself, feedback from one stakeholder may not represent the total or majority stakeholder experience as can skew towards the negative as more unsatisfied stakeholders are likely to log an issue.

Stakeholder and end-user feedback is particularly important on large complex service contracts.

For programs and services using the RBA framework, feedback from end-user/clients will be provided under the RBA reporting mechanisms, likely from the service provider.

For contracts providing services to end-users/clients, in the absence of RBA mechanisms, the CM should ensure feedback is obtained to enable a validation of service delivery.

The Contract Manager should inform stakeholders of any relevant outcomes from the contract monitoring and /or contract management meetings. Appropriate communication strategies to advise end-users/clients should be implemented in the event there are changes agreed that are relevant for the client base.

13.7 Performance Assessment and Management Performance assessment is the evaluation of supplier performance measures on individual contracts using performance monitoring information and other available data. Individual supplier performance is compared against performance benchmarks for the contract.

Areas to be performance assessed should be in-line with performance measures defined in the contract. This assessment can include:

 Delivery  Quality  Management

12 Reference DHS Risk Management Framework

Contract Management Handbook | Version 1.2 January 2019 23  Relationship management  Stakeholder (DHS staff) satisfaction  Client/end-user satisfaction.

Performance standards should be set for each metric and performance recorded.

The results of contract performance assessment form the basis for follow-up with the supplier which can result in an agreed recovery plan, contract amendment, remedial action and/or legal recourse.

Where the supplier’s performance is found to be inadequate, the Contract Manager should discuss the issue with the supplier and agree the remedial actions. These discussions are to be documented and the outcomes monitored at contract management meetings.

13.8 Abatements Generally speaking, an abatement is a reduction, a decrease, or a diminution. Contract Managers need to be aware of a right of abatement that exists in a contract. This right would exist in the form of a contract clause in the contract which gives DHS the right to reduce, decrease, suspend or cease payments due under a contract in specific circumstances. Where such a clause exists in the contract, Contract Managers should apply abatements promptly in accordance with the relevant contract where abatable contract performance failures occur. Contract Managers must not delay the application of abatement or enter into extra contractual arrangements in lieu of abatement.

13.9 Management of performance issues PGU is available to advise and assist with any contract performance issue. Business Units and Contract Managers are encouraged to engage with PGU at [email protected] at the earliest opportunity in the event an emerging issue is identified. PGU will be able to advise on strategies and/or procedural requirements in relation to the management of any issues.

14 Contract Management Reports DHS’s Contract Management Guideline outlines the requirement for contract management reports (CMR). PGU staff will work with the business unit to develop a tailored CMR report or Simple CMR from the standard template. Refer to the information sheet How to complete the CMR for guidance. Where CMRs are required to be forwarded to SPGC, PGU will manage the process.

Three CMR templates are available:

 Simple CMR for contracts valued up to $4.4m including GST  CMR for contracts and panel arrangements valued at and above $4.4m incl GST  Program CMRs for programs/services involving multiple suppliers which were approved as part of a single procurement process (acquisition plan) valued at or above $550k incl GST.

Contract Management Handbook | Version 1.2 January 2019 24 PGU will advise the business unit of the most relevant CMR template at the end of a procurement process.

CMRs are also the mechanism for obtaining delegate approval of price adjustments, term extensions, and other contract variations (refer sections 19-21).

Business Units/Contract Managers are able to tailor the CMR template to meet the particular needs of the contract/issue. Attachments can be used rather than the table format in the sections to provide relevant information in the format that is appropriate for the specific arrangements and circumstances where this will provide information in a more useful format for the delegate.

Where a contract valued above $550k is utilised by more than one business unit, PGU will liaise with the individual business units to advise the CMR content required from each unit. PGU will consolidate information into a single report for SPGC.

A Business Unit representative is encouraged to be available to attend SPGC meetings when their CMRs are being considered, to assist with addressing SPGC queries.

PGU endeavours to advise BUs of SPGC decisions in a timely manner. Decisions are also recorded in PCMS. BUs are encouraged to pro-actively contact PGU for advice of outcomes the day after the SPGC meeting.

14.1 Timing of CMRs CMRs are required based on 6-monthly or annual reporting periods as outlined in Appendix 3, and are generally based on the commencement date of the contract. PGU will confirm with the Contract Manager at handover the reporting cycle and due dates for the CMRs.

Appendix 4 details the CMR development and escalation process. Where CMRs are overdue relevant officers will receive an email advice of the escalation reports being prepared by PGU.

CMs should consider any issues that are likely to arise in the period following the CMR and plan to seek the delegate’s approval of variations, price adjustments and extensions in a timely manner to coincide with scheduled CMRs wherever possible.

In the event there is a need to seek the delegate’s approval of a matter outside of the scheduled CMR reporting timeline, CMs should liaise with PGU to determine whether a CMR report can be brought forward, deferred or whether the most recent CMR report can be used as an attachment to a memo with only the specific item being requested forming the basis of the new submission.

15 Managing Funding Acquittals/Budget Expenditure Reports The Acquittals Process must be managed in accordance with the Unexpended Grant Money Policy (FIN201) and associated procedures.

Contract Management Handbook | Version 1.2 January 2019 25 16 Managing Contractors and Consultants In addition to the contract management requirements outlined in this document, there are some specific considerations required in the management of contractors and consultants.

Contractors may be appointed as part of a contract for the supply of goods and services, supply of services or under a consultancy services agreement. A contractor may be retained to perform defined tasks or to provide more general services and advice to the Department. During the engagement the contractor may develop procedures, systems and processes, or may collect, create or collate information important for the Department to retain and use.

A person managing (the manager) a contractor should take appropriate steps to ensure the contractor effectively documents and communicates processes, procedures, and other information. This is to ensure valuable institutional knowledge gained is transferred to, and retained by, DHS.

If the contract is subject to a Contract Management Plan, protection of information procedures should be incorporated into that planning process.

16.1 Active Management Transfer of institutional knowledge should not just occur at the end of the contract term and handover. If an early contractual relationship termination occurs, it should be possible for the manager, other personnel or another contractor to seamlessly continue with the work that had been undertaken by the contractor prior to termination.

Consequently, the manager should actively manage this. This is particularly important in circumstances where the specific deliverables are not well defined in the contract documentation.

16.2 Setting Expectations At the beginning of the contractual relationship the manager should clearly explain what information, documents and other deliverables are to be produced and how. It is critical the contractor documents any systems, processes and procedures that he/she is developing and has developed.

The manager shall ensure the contractor understands information storage systems, both electronic and paper-based. Further, the manager should regularly check that the processes, procedures, and other information are stored in the appropriate place, in the agreed manner, and are readily accessible.

16.3 Regular Meetings and Review It is important that the manager and the contractor meet regularly to review progress, check that documentation is clear, comprehensive and accessible, and that the expectations of both parties are being met.

Meeting frequency will vary according to the nature of the assignments and if applicable the requirements of the contract management plan. However, meetings need to be sufficiently

Contract Management Handbook | Version 1.2 January 2019 26 frequent to ensure that there is no risk of institutional knowledge not being captured or retained by DHS.

16.4 Transfer and Training In many cases the contractor will work closely with, and in some circumstances, train DHS personnel other than the Contract Manager.

The Contract Manager will ensure relevant personnel receive all necessary training to enable them to access, use and further develop systems, processes, procedures and documents produced by the contractor during the contract.

The Contract Manager will regularly check with the contractor and relevant personnel to ensure that institutional knowledge has been transferred.

16.5 Handover At the end of the contract term the Contract Manager and the contractor should meet to review the contract, expectations and deliverables and ensure all handover activities have been completed. Use the contract closure checklist.

It should be assumed that the contractor cannot be recalled to further explain or locate any systems, processes, procedures and/or documents.

17 Dispute Resolution and Terminations Dispute resolution processes are usually outlined in the contract including mechanisms for resolving formal disputes such as negotiation, arbitration, mediation and litigation.

Disputes often relate to definitions of deliverables or performance measures, disagreements over requirements, delivery schedules, price changes, additional tasks, contract scope, payment schedules and complaints by third parties. The Contract Manager must13 inform the supplier of any problems in writing and provide the supplier with an opportunity to respond. Good contract management can prevent issues from reaching the formal dispute stage.

Formal disputes are to be avoided where possible as they can affect the goods or services provided and undermine the relationship. The Contract Manager should obtain advice from Manager Contract Operations [email protected] should concerns emerge, remedial action is not available or effective, agreed actions are not being implemented, or any other issue arises whereby the Contract Manager needs advice on management strategies and options. Where appropriate, PGU will engage the DHS Legal Services unit or the Crown Solicitor’s Office before formal action is taken in such disputes.

Termination and legal action are only to be considered as a last resort after all reasonable attempts to resolve the issue have been made.

13 Reference: SPB Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 27 18 Contract Renewals: Not-for-Profit sector The SPB Contract Management Policy requires that where there is funding certainty, the Contract Manager must14 provide a minimum of six months’ notice to NFP organisations regarding whether long term contracts are to be renewed. This notice will assist to prevent unnecessary loss of staff and reduce the impact on individuals who rely on these services.

Funding uncertainty exists where the public authority is dependent on state or Commonwealth government funding and the funding outcomes are not advised with sufficient lead time to enable six months’ notice to be provided to the NFP sector.

Other than if exercising an extension option, a renewal will require either a contract variation process or a new procurement process. The timelines for these processes should be provided for in planning, and the Contract Manager should engage with the PGU (using the Procurement Request form extension or variation) at least 12 months (longer for high value high complexity engagements) prior to contract completion to determine the appropriate approach.

DPC Circular 44 provides additional information on the Government’s funding policy for the NFP sector.

19 Contract Extensions 19.1 Exercising a contract extension option Contract extension options are outlined in the contract and the relevant provisions detail how the contract extension options are to be exercised. Prior to exercising a contract extension consideration should be given as to whether the contract extension would provide value-for- money based on the contract outcomes to date and any new or emerging trends and issues relevant to the contract deliverables. Contract extensions as contemplated within the original contract which are exercised do not require formal procurement or financial approval as this would have been obtained when the original procurement and contract was approved and executed, however for all contracts above $550,000 (and in some other cases as determined by SPGC) SPGC will review contract performance prior to approving a contract extension. This is obtained through submission of a CMR. PGU will assist the Contract Manager to complete the CMR. For contracts valued below $4.4m the simple CMR can be used to obtain the SPGC’s or the delegate’s approval. Once approved, extensions are generally exercised by an exchange of letters. The tailored DHS extension letter template should be used and PGU will prepare the necessary contract variation/exchange of letters for execution by the supplier and BU.

Consideration to exercise an extension option generally commences well before the expiry date in case the extension is not taken up and a new procurement process is required.

For extensions beyond all contract extension options, refer to Section 19.2

14 Reference: SPB Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 28 19.2 Extension beyond extension options Where a contract has not yet expired and does not contain any (or any further) extension options, it can be extended before expiration by enacting a mutually agreed variation to the contract (subject to the approvals processes outlined below).

In these cases, there are two pathways for approval.

 Where the proposed extension is for up to 12 months and involves more of the same goods/service while a new procurement process is completed or where the services are not required beyond extension period, the CMR process or a Memo may be used to seek approval. The extension should be progressed as a contract variation as outlined in section 20.3.  Where the proposed extension is beyond 12 months, or involves a moderate or major change in the nature of the goods/services being procured and/or contract terms, then SPGC and PGU require an acquisition plan to be prepared. PGU Advisers need to consider risk and value-for-money and assess any negative impact of the proposed extended arrangements on the contract deliverables, price, timeframes, supplier market and objects of the State Procurement Act 2004 (Act) (including probity, transparency and accountability).

20 Contract Variations 20.1 Principles The key principles for the management of contract variations include:

 Contract variations require financial and procurement approvals  Procurement approval requires an assessment of the impact of the variation (Insignificant, Minor, Moderate or Major). o For all contracts with an initial value of greater than $550,000, SPGC may need to approve each variation, unless specifically delegated by SPGC. This is obtained by the BU completing a CMR, with assistance from PGU. o For a moderate or major variation to contracts valued below $15m, approval may be sought using the simple CMR, submitted by the business unit and endorsed by the Director Procurement and approved by SPGC. o State Procurement Board approval is required where the variation takes the total value of the contract from below to above DHS’s $15 million procurement authority irrespective of the assessed impact.  Financial approval must15 take into account the value of the variation in addition to the original value of the procurement process  The contract variation should be in writing using a letter (for minor variations only) or variation agreement or as otherwise detailed in the contract.  For variations to extend the contract beyond all extension options contemplated in the contract, refer to section 19.

20.2 Nature of Contract Variations A contract variation is defined as an addition or alteration to the original contract.

15 Reference: SPB Contract Management Policy and Treasurer’s Instruction 8 Financial Authorisations

Contract Management Handbook | Version 1.2 January 2019 29 Variations may be proposed by either party and may refer to adding, removing or changing an existing contract provision.

Contract variations do not include exercising extension options provided for within the existing contract terms. These are not variations but are a contract management activity, refer section 19 above.

Identifying the approvals and processes required for a contract variation can be complex. Contract Managers should engage with PGU via [email protected] as soon as the potential need for a contract variation is identified. PGU will provide assistance and guidance to the Contract Manager throughout the process.

Although contract variations can be a normal part of contract management, PGU Advisers and DHS Contract Managers are to avoid unnecessary and unplanned variations by:

o undertaking careful planning and preparation of market and contract documentation to minimise the potential requirement for contract variations; and o identifying and including a process for managing variations at the acquisition planning stage and within draft contract documentation.

It is important that variations not be used to address, or compensate for the absence of, poor procurement management planning processes within the Business Unit or by the Contract Manager.

Any contract variation that relates to an unusually high complexity procurement or one that has a potential across-government impact should be referred to PGU for advice in relation to approval requirements.

There may be international free trade implications dependent on the nature and value of the variation proposed.

Contract Management Handbook | Version 1.2 January 2019 30

20.3 Approvals As outlined above, there are two approvals relevant to contract variations.

20.3.1 Procurement Approval An assessment of the impact of a variation is required to determine its level of significance and consequent need for procurement approval or not. As part of the assessment, Contract Managers, with assistance from PGU Advisers, will need to decide whether the requirements supporting the need for a contract variation are best managed under a contract variation or under a new procurement and contract arrangement. Approving delegates are to be satisfied that a contract variation is best suited and that the measure of impact has been appropriately assessed. Refer to the Appendix 6 for examples of variations and impact assessment.

A variation may impact:

• The scope of the contract – eg expanding the service • The term of the contract - with or without an increase in the value of the contract • The value of the contract • The contract options to be exercised • Prices (where outside of price variation provision outlined/contemplated within the contract) • Quantity • Specifications

For variations which are essentially “more of the same” (for example the addition of a new site, or a change in the site, for a cleaning service, or waste disposal arrangement) or a minor change to the contract terms (for example recognising a qualification or accreditation as acceptable under the contract), following the contract variation process is appropriate.

For variations which envisage a significant change such as the expansion of a service, then a procurement process is generally appropriate. If, after the procurement process has concluded, the result is the approval of using an existing supplier, then a contract variation may be the appropriate mechanism/instrument to use, rather than entering into a new contract. If the value of the varied contract exceeds the delegation level of the approving delegates of the new procurement, then additional approvals will also be required (potentially both procurement and financial).

The level of impact is determined by an assessment of the proposed variation in terms of its impact on the contract deliverables, price, timeframes and objects of the Act (including value for money outcomes, probity, transparency and accountability). The levels of impact for variations and the corresponding criteria for assessing a level of impact are categorised in the following table.

Contract Management Handbook | Version 1.2 January 2019 31 Impact of contract variations

Measure of Criteria for Assessing Procurement Approval Required (All Impact Impact (Examples are procurements, including simple provided in Appendix procurements) 6) Assessment by Aggregate Value Impact increases from below to above $15million Insignificant No potential to negatively Where a variation Irrespective of the impact the contract is assessed as assessed impact, deliverables, price Insignificant or approval is sought timeframes and objects Minor, a file note from the State of the Act (including detailing the Procurement Board value for money variation should be where the variation outcomes, probity, uploaded to the takes the total value transparency and objective folder, of the contract from accountability). unless variations below to above Minor Limited potential to are outside of DHS’s $15 million negatively impact the specific/limited procurement contract deliverables, variations for the authority. (Refer price, timeframes and contract set by note below) objects of the Act SPGC. (including value for For contracts money outcomes, valued above probity, transparency $550,000, SPGC and accountability). approval is required. Moderate Moderate potential to Where a variation negatively impact the is assessed as contract deliverables, Moderate or Major, price timeframes and procurement objects of the Act approval is to be (including value for sought from the money outcomes, approver of the probity, transparency acquisition plan. and accountability). (Refer note below) Major Major potential to negatively impact the contract deliverables, price timeframes and objects of the Act (including value for money outcomes, probity, transparency and accountability).

Note that in the case of a contract/s which resulted from an original procurement approval of the State Procurement Board, or a contract/s where the Board has approved a previous variation due to the aggregate value of the contract/s, PGU will assess the variation’s measure of impact to determine whether or not further procurement approval is required from the Board.

Contract Management Handbook | Version 1.2 January 2019 32 20.3.2 Financial Approval Any variation that will result in an increase in the total contract value must be approved by an officer with the appropriate financial authorisation to enter into a contract16. To determine the appropriate financial delegate, refer to the relevant agency’s (DHS, SAHA, LSA) delegations.

20.4 Contract Documentation - Legal Authorisation For a contract variation to be legally binding, all variations must also be dealt with in line with the variation procedures set out in the contract. Procurement approval by itself will not suffice. A contract will usually provide that a contract variation must be in writing and authorised by all of the contract signatories.

Note that changes to terms and conditions of contracts may only be authorised by all of the contract signatories. Advice from the Crown Solicitor’s Office may be necessary before such authorisation is given.

A list of authorised delegates can be found in in relevant agency delegations.

Contract Managers must17 not agree to informal contract variations by way of oral agreement or other conduct. Contact PGU using the Procurement Request Form – Extension or Variation and an officer will assist with the preparation of the CMR and will prepare the necessary contract variation/exchange of letters documentation.

20.5 Novation Novation refers to the act of replacing one party in a contract with another, or of replacing one debt or obligation with another. It extinguishes (cancels) the original contract and replaces it with another, requiring the consent of all parties involved.

When a novation is required due to an existing supplier simply changing its name eg a change in ABN, with no other associated changes (eg to company structure or ownership) then a deed can be created using the template drafted by the Crown Solicitor’s Office. The Deed will be forwarded to the original Supplier (party to the contract) which will then arrange for execution by the original supplier and the new supplier. The deed will then be executed by the relevant Minister, CE or ED, with an accompanying memo describing the background.

For a novation that involves changes other than a simple change of name, then the Business Unit Manager/Director should first endorse the change. Careful analysis and consideration of any such change is required. Where company restructures are occurring, the financial strength, viability and/or corporate ownership/guarantees can be significantly altered. In these cases, a novation could be a significant variation to the original contract. In such cases the contract variation process should be followed. PGU will manage this process, in accordance with the Contract Variation Section of this Handbook. It may be that a new procurement process is required and a new contract issued with a new supplier. The DHS Legal Services Unit should be engaged to advise in the event it is considered that a new procurement is required and the existing contract should be concluded.

16 Reference: Treasurer’s Instruction 8 Financial Authorisations 17 Reference: Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 33 20.6 Records Management All records must18 be saved into the relevant objective file, and variations should be recorded in PCMS and/or FGMS.

20.7 Administrative notices Standard contract terms provide that Contract Managers are the first point of contact between the Parties and are responsible for overseeing the effective administration of the Agreement including variations and extensions. Minor administrative amendments, such as the change from one DHS Contract Manager to another, may be advised to the supplier through a notice from the Contract Manager, with a copy of the notification filed with contract records.

20.8 Roles and Responsibilities The Contract Manager must19:

 ensure all contract variations are undertaken in accordance with required policies and guidelines  ensure appropriate financial approval is obtained for all contract variations that increase total contract value  ensure appropriate procurement approvals are obtained based on the outcome of the impact assessment  ensure contract variation documentation is executed by the authorised delegates from each party  ensure records are kept ie documents are stored in Objective and notes are recorded in PCMS and/or FGMS.

Contact PGU (using the Procurement Request form extension or variation) and an officer will assist by preparing the necessary approvals documentation and contract variation agreement.

18 Reference: SPB Contract Management Policy and State Records Act 1997 19 Reference: SPB Contract Management Policy

Contract Management Handbook | Version 1.2 January 2019 34

21 Price Variations Where the contract provides a mechanism for price variations, processing of the variation in accordance with the provisions is part of the contract management process. For example, if the contract provides for prices/fees to be increased according to a formula/index, then the new price is generally formalised between the parties by exchange of letter.

A price variation which is not in accordance with the original contract provisions is a contract variation and must be managed in accordance with the standard contract variation process. An assessment of the proposed variation is to be made in terms of its impact on the contract deliverables, price, timeframes, value for money outcomes, probity, transparency and accountability. The level of variation is to be determined in terms of whether it is insignificant, minor, moderate or major.

Business Units are responsible for negotiating with the supplier to minimise price increases to achieve best value-for-money outcomes. PGU are able to provide advice on negotiation strategies. DHS practice is that SPGC approves all price variations for contracts above $550,000 (GST inclusive), where the contract does not provide for such an increase, unless specifically delegated to a Director/Executive Director. SPGC’s approval will be sought via a Contract Management Report, prepared by the Business Unit with assistance from PGU.

Once the delegate has approved the price adjustment, PGU will prepare the necessary documentation/exchange of letters for execution by the Business Unit.

21.1 Information to support a price variation The formal contract/agreement should specify the procedure for price adjustments. This should include information on what information is required when an adjustment is sought, and the frequency/timing of any price adjustment request.

Generally at a minimum the supplier should provide:

 a schedule in the same format/with the same level of detail (ie itemised deliverables and prices) as the price/fee schedule in the contract/agreement  the existing price for each item  the increase requested/proposed for each item (eg % increase)  the new price for each item  data supporting the % increase eg relevant benchmark or index

The Contract Manager should check the information provided, validate any % increase (eg to the independent index/benchmark) and where appropriate negotiate for any reductions in proposed prices.

Contract Management Handbook | Version 1.2 January 2019 35 22 Contract Closure report The requirements for the completion of a contract closure report are detailed in the DHS Contract Management Guideline.

The Contract Closure Checklist should be completed by the Contract Manager on contract closure. A contract closure report (CCR) should also be conducted at the end of a contract (contract period) for all contracts, as outlined in the DHS Contract Management Guideline. PGU will tailor a CCR for the contract. The SPB Contract Management Policy provides further information. File the contract report in Objective.

Refer to the PCMS instructions to record the completion of the contract within PCMS.

Information provided through CCRs is important to document lessons learned, capture corporate knowledge and assist in achieving improved outcomes in future procurements.

23 Is there a contract in place to meet my needs? The PGU intranet site contains a Purchasing Portal which is designed to assist DHS staff get the best value-for-money when acquiring goods and services.

This site contains information for all DHS staff about where and who to buy goods and services from. It contains a listing of the most recent news relating to purchasing including any new contracts that have been finalised. The portal can be used to check whether there are any Across-Government or Across-DHS Mandated contracts which provide the goods or services you require.

The quickest way to navigate the site is by clicking on the relevant A-Z Index to the left of the page. If you can't find what you are looking for on this site, please email the Contract Operations Team [email protected] to discuss your needs.

Contract Management Handbook | Version 1.2 January 2019 36 Appendix 1 Overview of Key Contract Management Activities Reference numbers to the section in the Handbook are included in parenthesis.

Appoint a Contract Manager (over $550,000) Place name in contract register (2) (3) Undertake contract management training (where required) (2) Develop contract management plan (over $4,400,000) (8)

Schedule initial and regular Governance Committee and Contract Management Team meetings (where appropriate) (9)

Schedule initial and regular contract management meetings (monthly, quarterly, biannual) (9)

Contract Start up and Implementation activities (10)

Prepare contract management meeting agenda (13.3)

Attend contract management meetings (13.3) Undertake specific tasks for managing consultants and contractors (16)

Review performance data and monitor performance measures (13)

Review risk management plan (13.5)

Manage disputes and non‐performance (when For NFP contracts, manage required) (17,13.8) acquittals and retrieve surplus funds (15)

Document outcomes of meeting (12) Certify payments (where relevant) ensuring in line with contract pricing (11) Communicate with stakeholders/users (as required) (13.6)

Undertake review of contract performance Prepare contract management (e.g. quarterly/biannual) (13) reports (14)

Seek approval for novations, variations and extensions to contract (where required) (18,19,20,21) Prepare contract closure report (22)

Contract Management Handbook | Version 1.2 January 2019 37 Appendix 2 Contract Management Checklist for Contract Managers – contracts below $4,400,000 This contract management checklist is available as a stand-alone template

Pre-contract execution stage

̀ Involvement in the contract planning and development phase. Identify key factors to be included in the request document that will increase the success of the contract management phase. These include appropriate performance measures and reporting mechanisms and incorporating the lessons learnt from previous contracts.

̀ Read and understand the proposed Contract/Agreement, including the Standard Terms and Conditions and specific details in Attachments; the Request For Quote/Invitation to Supply document; the Supplier’s Response; and the Contract Award Letter; other documents such as any correspondence between the parties from close of tender to award.

̀ Ensure that the required information from the suppliers’ tender response has been incorporated correctly into the contract.

̀ Develop a Contract Management Plan or Simple CMP (and Workbook as appropriate) and update it regularly so it is a useful source of information.

̀ Understand legislative, compliance, governance and audit requirements. This includes DHS, State Procurement Board, and Industry Participation Policy requirements as well as other legislative requirements.

̀ Attend the State Procurement Board’s Contract Management Training session (optional).

Ongoing

Read, understand and comply with the State Procurement Board’s Probity and Ethical Procurement Guideline and the SA Government’s Code of Ethics, particularly in relation to gifts and gratuities. ̀ Regularly visit the PGU intranet site for information on policies, tools, templates and training.

Prepare to Manage a Contract

☐ Appoint a suitably skilled Contract Manager.

☐ The contract has been read by the Contract Manager and its requirements and conditions are understood.

☐ A file has been established for this contract.

☐ Roles and responsibilities for managing the contract have been identified and are understood by the relevant parties.

Contract Management Handbook | Version 1.2 January 2019 38 ☐ There is no conflict, or potential conflict, of interest in managing this contract – if there is inform PGU.

☐ Contract risks and risk management strategies have been identified and assigned to risk owners and will be implemented and monitored during the contract management phase.

Relationship and Communication Strategy

☐ Strategies to develop and maintain the supplier relationship have been developed and include regular contract management meetings.

☐ Effective communication will be undertaken with the supplier, stakeholders, users and persons involved in managing the contract. These will be used to inform the supplier of any agency changes (current or planned/emerging) that may impact on the contract; identify areas for improvement; and obtain input from the supplier about potential improvement opportunities.

☐ Appropriate documentation will be kept including minutes of contract management meetings and key approvals.

Implement the Contract

☐ Transition in and transition out strategies will be developed and implemented as appropriate.

Monitor and Maintain Performance of a Contract

☐ Performance measures have been identified and will be used to monitor the success of the contract implementation.

☐ Appropriate data will be collected and reviewed (including client feedback) to ascertain the performance of the supplier against relevant performance measures and agreed outcomes.

☐ Disputes will be managed and resolved in accordance with the agreed contractual dispute resolution process in a cooperative and professional manner.

☐ Ensure any Contract Variation or Extensions are implemented and requirements for future extensions/variations/new procurement process at end of term are managed in a timely manner. Engage with the Procurement and Grants Unit (PGU) to confirm process and documentation requirements.

☐ Ensure that you understand your/DHS’s obligations under the contract and put processes in place to ensure contract obligations are fulfilled.

☐ Maintain detailed records of contract monitoring/performance and file in Objective.

Contract Management Handbook | Version 1.2 January 2019 39 ☐ Ensure supplier provided with timely assessment of their performance; both satisfactory and unsatisfactory.

☐ For non-FGMS agreements, ensure invoices for payment are fully supported i.e. goods/services have been delivered, and costs are in accordance with the agreed contract price/s. Track invoice processing and monitor expenditure to ensure that the approved value for the contract is not exceeded.

☐ For FGMS agreements, ensure payments are made when due, subject to compliance with agreement terms by the supplier. Track payment processing and monitor expenditure to ensure that the approved value for the contract is not exceeded.

☐ Ensure that the contractor’s insurances remain current by requesting confirmation from the supplier that it meets insurance requirements listed in the contract. Risk Management

☐ Manage risks and resolve any issues as soon as possible to prevent escalation. Identify and report any potential major problems to management. Contract Management Reports

☐ Regular reports will be provided to the appropriate delegate/manager as required by the DHS Contract Management Guideline on the performance of the contract

Contract Closure

☐ A contact closure report is prepared at the end of the contract to review how the contract has performed and whether outcomes have been achieved and a report provided to the appropriate manager.

☐ Various end of contract matters are considered at the end of the contract including outstanding contract actions, payments and financial obligations, final reports or disputes, warranty issues and access and security arrangements.

☐ Appropriate documents are stored securely including risk assessments, contract management plan, review reports and written feedback.

A separate contract closure checklist is available.

Contract Management Handbook | Version 1.2 January 2019 40 Appendix 3 Contract Management Reporting Requirements

Contract Contract Contract Contract Industry Participation Duration / Value Management Closure Management Plan Reporting Report Report Plan < 12 <$550k CCR Months >$550k CCR CMP Annual for regional contracts >$1.1m and metropolitan contracts >$4m > 12 <$550k 12 Monthly CCR Months >$550k 6 Monthly CCR CMP Annual for regional contracts >$1.1m and metropolitan contracts >$4m

Contract Management Handbook | Version 1.2 January 2019 41 Appendix 4 Contract Management Report Development and Escalation Process Contract Management Report Development Schedule

Schedule/Item Responsibility

CMR reminder 2 weeks prior to end of contract reporting PGU to email Business Unit Contract period eg 15 June Manager

*For Business Units that have access to PCMS and to PGU’s Contract Objective file reminders are not provided

End of Contract Reporting Period eg 30 June Business Unit requests reports from contractor/service provider if not automatically provided and begins compiling CMR

CMR Follow Up Reminder – PGU

4 weeks after end of contract reporting period20 eg 31 July PGU sends a reminder to Contract Manager that the CMR is due shortly

CMR Due Date eg 15 August Business Unit Contract Manager

CMR is due to the relevant procurement authority, i.e. SPGC or Executive Director, 6 weeks after the reporting period ends

Prior to this date the CMR must be provided to PGU for review

Approval/Noting of CMR eg 31 August Business Unit Contract Manager

2 weeks is allowed after the CMR due date for signing and PGU approval of the CMR by the ED/SPGC Strategic Procurement and Grants Committee

20 If contract reporting is not available within 4 weeks of the end of the contract reporting period, an extension to the CMR due date may be negotiated with the Director, Procurement.

Contract Management Handbook | Version 1.2 January 2019 42 Contract Management Report Escalation Process for reports to SPGC21

Schedule/Item Responsibility

Report of overdue CMR to SPGC eg next SPGC meeting from 31 PGU August onwards

CMR will be reported to SPGC as overdue if the finalised (signed) report is not received by PGU within 2 weeks of the due date it was due to be signed by the ED/SPGC

Escalation to Executive Director Chair SPGC

Chair SPGC will escalate overdue CMRs to relevant Executive PGU Director 2 weeks after a CMR is reported to SPGC as overdue and there are no extenuating circumstances preventing the report from being completed eg 15 September

Escalation to Chief Executive Chair SPGC

Chair SPGC will escalate overdue CMR to Chief Executive if report PGU not received two weeks after escalation to Executive Director and there are no extenuating circumstances preventing the report from being completed. Eg 30 September

21 The escalation process may also be used for CMRs not required to be noted/endorsed/approved by SPGC at the discretion of PGU

Contract Management Handbook | Version 1.2 January 2019 43 Appendix 5 Contract Management Policy, Guideline, Template and Information Sheet List

Roles and Responsibilities (sections 1-7) Policies/Guidelines 1. SPB Contract Management Policy 2. DHS Contract Management Guideline 3. SPB Probity and Ethical Procurement Guideline 4. Better Customer Charter for Business 5. Code of Ethics 6. Industry Participation Policy Templates/Information Sheets 1. Contract Handover (PGU to Business Unit) checklist

Contract Management Plan (section 8) Templates/Information Sheets 1. Simple Contract Management Plan template with guidance 2. How to complete the CMP template 3. Contract Management Checklist (<$550,000)

Implement the Contract (section 10) Templates/Information Sheets 1. Contract Transition Meeting Agenda & Minutes template

Monitor and Manage Supplier Performance (section 13) Policies/Guidelines 1. SPB Risk Management Guideline 2. DHS Specification Writing Guideline Templates/Information Sheets 1. Contract management meeting agenda and minute template with guidance 2. Risk Assessment template 3. Risk Assessment tool

Contract Management Reports (section 14) Contract Renewals/Extensions/Variations/Price Adjustments (sections 18, 19, 20, 21)

Policies/Guidelines 1. Premier and Cabinet Circular 44 South Australian Funding Policy for the Not for Profit Sector 2. Treasurer’s Instruction 8 Templates/Information Sheets 1. Contract Management Report 2. Simple Contract Management Report 3. How to complete the CMR Information Sheet 4. DHS contract extension letter template

Contract Management Handbook | Version 1.2 January 2019 44

Managing Funding Acquittals/Budget Expenditure (section 15) Policies/Guidelines 1. Unexpended Grant Money Policy (FIN201) Templates/Information Sheets 1. Contract expenditure and variation register

Contract Completion and Closure (section 22) Templates/Information Sheets 1. Contract Closure Checklist

Other resources

State Procurement Board Policies and templates Treasurer’s Instructions Premier and Cabinet Circulars

PGU has adapted contract management worksheets for DHS Contract Managers who have managed period or one-off contracts.

Contract Management Handbook | Version 1.2 January 2019 45

Appendix 6 Examples of contract variation impact assessment Variation Type Details Measure of Impact Required Action

Contract Period Seeking to extend a six-week study by Insignificant/Minor - The same  Seek approval from relevant project two weeks (no increase to contract value) procurement outcome could Manager/Director. For contracts exceeding to ensure project outcomes can be met. reasonably be expected. $550,000 SPGC approval is not required.  Create file note detailing the variation and its impact.  NB: This excludes extension of time for a File note to be placed in objective file and update project with the NfP. Please refer to PCMS and/or FGMS.  Unexpended Funds Policy. Confirm extension with supplier.  Include details in the Contract Closure Report.

Contract Period Extending a 2-year period contract for a Major - May be cause for  Procurement approval should be sought from the further 12-months when no extension complaint from other suppliers approver of the original approved acquisition plan. option exists. regarding unfairness to market  The CMR may be used to seek approval. This is participants. dependent on risk and information required for the project. An Acquisition Plan may be required.  Where the aggregate value of the contract resulting from the variation exceeds the original approver’s procurement authority, approval must22 be sought from a delegate with the appropriate procurement authority.  Financial authorisation to be obtained (refer TI8).

22 Reference: Treasurers Instruction 8 Financial Authorisations

Contract Management Handbook | Version 1.2 January 2019 46 Variation Type Details Measure of Impact Required Action

Scope Seeking an additional site to be cleaned in Minor - The same procurement  Seek approval from relevant project excess of the 50 already contracted outcome could reasonably be Manager/Director. For contracts exceeding expected. $550,000 SPGC1 approval is required.  File note to be placed in objective file and update PCMS and/or FGMS.  Include details in the Contract Management Report.

Scope Change location of sites to be cleaned Insignificant/Minor - The same  Seek approval from relevant project (but no changing number of approved procurement outcome could Manager/Director. For contracts exceeding sites) reasonably be expected. $550,000 SPGC approval is not required.  Create file note detailing the variation and its impact.  File note to be placed in objective file and update PCMS and/or FGMS.  Include details in the Contract Management Report.

Scope Seeking an additional 30 units to be Major – There is a risk that value  Approval should be sought from the approver of supplied in excess of the 50 already for money will not be delivered. the original approved acquisition plan. contracted from a recent procurement and Risk of complaint from other  Where the aggregate value of the contract where no option for additional purchases participants denied opportunity to resulting from the variation exceeds the original exists. compete. approver’s procurement authority, approval must23 be sought from a delegate with the appropriate procurement authority.  The CMR may be used to seek approval. This is dependent on risk and information required for the project.  Financial authorisation to be obtained (refer TI8).

23 Reference: Treasurers Instruction 8 Financial Authorisations

Contract Management Handbook | Version 1.2 January 2019 47 Variation Type Details Measure of Impact Required Action

Scope Expand level of service from an NFP Insignificant/Minor - The same  If the Funding Agreement was approved as part of provider to deliver more services as per procurement outcome could a larger Acquisition Plan variations that do not original funding agreement (but no reasonably be expected. exceed the value of the Acquisition Plan can be change to the overall approved funding approved by the relevant Executive Director. under the Acquisition Plan)  If the variation increases the approved funding under the Acquisition Plan approval should be sought from the approver of the original Acquisition Plan.  The CMR should detail approved variation.  Financial authorisation to be obtained (refer TI8).

Scope Proposal to reduce the scope of services Medium - fairness and equity  Approval should be sought from the approver of to be provided under contract at the same issue if a supplier was excluded the original approved acquisition plan. or reduced price. during evaluation against the  For contracts valued above $550,000, SPGC* original scope or a supplier chose approval is required. Note: this does not apply to contracts not to tender on the basis of  The CMR may be used to seek approval. This is based on usage, for example Stationery, capability/capacity. dependent on risk and information required for the where no minimum usage has been project. guaranteed under the contract.

Demand increase The estimated cost of a period contract is Insignificant - Except where poor  Create file note detailing the variation and its (leading to likely to be exceeded (or has been due to estimation of the potential value impact. increase in recent purchases) due to an increase in has resulted in procurement  File note to be placed in objective file and update Value) end-user demand for the services. approvals at a lower level of PCMS and/or FGMS. procurement authority.  The CMR should seek approval for increased

contract value. For contracts valued above $550,000, SPGC approval is required.

Product Introduction of new size of product Insignificant  Create file note detailing the variation and its already available under the contract impact.  File note to be placed in objective file and update PCMS and/or FGMS.

Contract Management Handbook | Version 1.2 January 2019 48 Variation Type Details Measure of Impact Required Action

Price/Rate Contractor seeking to renegotiate fees in Major - Potential for fairness  Approval should be sought from the approver of increase/ line with demonstrated increases in cost and probity to be questioned if the original approved acquisition plan. Indexation – under a fixed price contract. there are other capable  Where the aggregate value of the contract outside of suppliers and there was price resulting from the variation exceeds the original contract sensitivity in the contractor’s approver’s procurement authority, approval must24 provisions initial selection. be sought from a delegate with the appropriate (leaving to procurement authority. increase in  For contracts valued above $550,000, SPGC Value) approval is required. The CMR may be used to seek approval.  Financial authorisation to be obtained (refer TI8).

Extend term – Extend the contract by any of the N/A  For contracts valued above $550,000, SPGC exercise extension options included within the approval is required. extension option contract  The CMR may be used to seek approval.

Extend term – no All extension options exhausted. Seeking Major - Potential for fairness  For contracts valued above $550,000, an further extension to extend by a further 3 years. and probity to be questioned if Acquisition Plan is required to be approved by options there are other capable SPGC. suppliers and there was term  For contracts below $550,000, and that will remain sensitivity in the contractor’s below $550,000 with the extension, approval initial selection. should be sought from an approver with delegation of the entire contract value. The documentation used extend the contract will be based on risk and information required to inform the approver.  Financial authorisation to be obtained (refer TI8).

Price/Rate Annual price increase in accordance with N/A  For contracts valued above $550,000, SPGC increase/ contract provisions (as detailed in the approval is not required. Indexation – in approved purchase recommendation). accordance with

24 Reference: Treasurers Instruction 8 Financial Authorisations

Contract Management Handbook | Version 1.2 January 2019 49 Variation Type Details Measure of Impact Required Action

contract  The relevant business area Director should provisions confirm price increase has been applied for appropriately and is in line with the contract.  The CMR may be used to seek approval.

* SPGC approval is required unless SPGC has specifically delegated the approval of the variation to a Director/Executive Director. Where the Business Unit foresees that there are likely to be variations over the life of the contract (for example revisions to KPIs, amendments to schedule of rates) the Business Unit should request SPGC to delegate the authority to approve such variations to the relevant Executive Director/Director at the time of the Purchase Recommendation.

Contract Management Handbook | Version 1.2 January 2019 50 17

Can Pat share anything further regarding his comments about adopting a “relational management” approach to support identifying areas for service delivery improvement, and how this is integrated into the procurement process?

Example Extracts from DHS Service Agreements

DHS Service Agreement template – Statement of Intent This Agreement reflects the Parties’ commitment to a relationship in which both have rights and responsibilities that are to be upheld and respected. A co‐operative approach will incorporate agreed values, mutual respect for the roles and responsibilities of government and the community services sector and a commitment to participate and adhere to agreed processes for policy development, planning, resource allocation, service monitoring, review and accountability. The Parties recognise the importance of taking a long‐term view, as well as responding to immediate and urgent need, and recognise the social, environmental and financial outcomes are all equally important. The ultimate vision is for service provision that supports a democratic, fair, accountable body of services, which accommodate and value diversity, which address the particular needs of vulnerable and marginalised people, which recognises regional and rural differences, and which contributes to demonstrable high quality outcomes in accordance with agreed standards.

DHS Service Agreement – Sector Support and Advocacy Program – Statement of Principles It is critical that the Department for Communities and Social Inclusion (DCSI) and non‐government community sector organisations are able to work closely together on policy development, service planning, service development and service delivery. The Sector Support & Advocacy funding is therefore based on a partnership model representing a collaborative relationship between DCSI and the community sector, recognising that peak bodies have a range of functions which contribute to enhancing the infrastructure and quality of service delivery within the community sector. This Service Agreement reflects policies and agreements jointly developed by DCSI and the community sector, and endorsed by the Human Services Partnership Forum, to provide an effective means for DCSI and the community sector to work together in the interests of the South Australian community. The funded activities of the Service Provider will support the objectives of improving well‐being and expanding opportunity for South Australians. Parties to this Service Agreement recognise that community sector agencies are independent bodies that pursue their own goals, but work closely with government, non‐government, local government and local communities. The Parties recognise the importance of taking a long‐term view, as well as responding to immediate and urgent need, and recognise that social, environmental and financial outcomes are all equally important. For Sector Support and Advocacy organisations in particular, this may involve advocating for changes to government policies and priorities, including an emphasis on maintaining diversity and sustainability within the community sector. In this sense, there is a healthy tension inherent in the relationship between government and the community sector. The South Australian Government acknowledges that community sector organisations would exist without government funding, in order to meet the needs of their members and stakeholders. The Government further recognises the autonomy of Sector Support and Advocacy organisations, in line with the principles of independence outlined above. The Sector Support & Advocacy program therefore serves as the Government’s way of recognising the value and relevance of these organisations in and of themselves, irrespective of their advocacy role and interactions with government agencies.

Example 2b see DHS DRAFT SANFRAG Implementation Guide particularly

How often are contract variations done to reflect change in contract specification arising from the continuous improvement approach Pat mentioned? What process/policy is followed in these cases?

Example 4a) Extract from Community Services Support Program January-June 2017 Contract Management Report noting Contract Renewal Process.

In August – September 2017, the Regional Partnerships Team met with all (Community Services Support Program - CSSP) service providers to discuss the service agreement renewal process and the organisation’s response to the request for information. As a result, a number of future contract improvements have been negotiated across the CSSP including: . Merging of the Facilitating and Supporting Community Hubs stream with the Community Neighbourhood and Development Stream . Merging of the Life Skills Development Stream with the Family Support and Early Intervention Stream . Refinement of service models . Separation of services where two distinct services had been operating as one service, allowing for better transparency of funding and reporting . Greater focus on clients from areas of persistent disadvantage as per the ABS population health area data . Better alignment to collective impact initiatives . Introduction of definition for budgeted administration costs . Introduction of administration limits for metropolitan services (up to 18%) and regional services (up to 22%) . Introduction of risk-based approach to contract management . Introduction of a benchmark for # of clients per year . Introduction of Targets for % of Aboriginal Torres Strait Islander (ATSI) clients and % of Culturally and Linguistically Diverse (CALD)/New Emerging Communities (NEC) clients . Introduction of a data sharing requirement

Example 4b) Extract taken from CSSP Jan-June 2018 Contract Management Report re variation in service model

Lutheran Community Care – Family Support and Early Intervention Service In 2017 the Department of the Premier and Cabinet’s Early Intervention Research Directorate (EIRD) reviewed a suite of prevention and early intervention services for families with children. In line with the preliminary findings of that review received by DHS, Lutheran Community Care (LCC) was required to review their service model for their CSSP Mobile Crèche Service within the first six months of the new service agreement. It was agreed that existing CSSP funding would remain with LCC for the three-year term; however, funding would be redirected to an alternative family support program within LCC as a result of EIRD recommendations. LCC is intending to continue their mobile crèche service as a business enterprise creating an income stream for the organisation. LCC has recently submitted the proposal for a new family support and early intervention service providing a universal home visiting service targeting families with children pre-birth to 12 years of age living in the inner north and northern suburbs of Adelaide. The service will be based on a similar program known as Parenting under Pressure (PuP). The PuP framework aims to combine the psychological principles relating to parenting, child behaviour and parental emotions using a case management model. The proposal has since been reviewed and accepted by EIRD. The CSSP service agreement with EIRD is now ready to be varied to reflect the delivery of this new service from 1 January 2019. This Contract Management Report includes a recommendation to approve a variation to the CSSP Service Agreement with LCC to amend the purpose of the family support and early intervention service from the delivery of a mobile crèche to the delivery of a universal home visiting service.

Example 4c) EFAP email – change of data collection through acquittal process

In 2017-18, EFAP funds provided the following assistance to individuals and families experiencing financial crisis: 61% food, 7% transport, 2% utility bills, 30% ‘other’.

A further exploration of the data which captures the breakdown of 30% ‘other’ EFAP expenditure was introduced with EFAP providers. This included EFAP providers providing a list of their top ‘other’ categories. As a result, the following additional categories have been added ‘education expenses’ including school fees, uniforms, IT equipment and stationary; clothing/shoes, ‘household items’ including whitegoods, furniture, bedding, appliances, ‘household starter kits and housing stability’ such as contribution to rent, storage/removalists, skip bin hire, and lawn mowing. The EFAP providers welcomed this change, as it allows for additional trends to be identified, and opportunities for service providers to explore arrangements with third parties to negotiate to receive bulk goods (e.g. household whitegoods) at a reduced price.

Example 4d) PAYC

On 22 November 2016, representatives from Community Services Division met with Board Members to further explore issues brought to their attention relating to the: . PAYC building lease . PAYC staffing / Board . RBA capacity . Australian Service Excellence Standards Subsequently, the Director Engagement and Grants wrote to the Chair of the PAYC Board outlining the governance concerns. The Division developed an action plan (with timeframes) for PAYC to follow to address the issues, with the Far North Regional Coordinator providing ongoing monitoring and support. In addition, to assist PAYC in meeting the expectations of the Action Plan, the Division supported PAYC to receive 1:1 RBA mentoring support from Community Centres SA during 2017-18 to further increase their RBA capacity and allowed for PAYC to use program funds to engage an ASES assessor to provide support/guidance to complete the ASES logbook. In early December 2017, PAYC underwent their ASES assessment and achieved accreditation. All issues identified in the Action Plan have now been resolved.

Example 4e) DCCP - this material is also relevant for the case study questions

Extract from Contract Management Report re STAY Coober Pedy delivered by District Council of Coober Pedy On the 6 March 2017, the DCCP wrote to the Minister advising that its current debt position was affecting its ability to support the youth service and they were seeking additional funding support from the Department in 2017-18 and 2018-19. As a result of this request and before seeking to exercise the available two-year extension option, on the 25 and 26 May 2017 representatives from the Division met with DCCP to discuss the issues relating to the sustainability of the youth program long term, as well as exploring available options for other funding. Following this meeting, DCCP confirmed that it would continue to deliver the youth service within the existing allocation of STAY funding, and would seek to commit a continued co-contribution through their 2017-18 budget deliberations. Following this meeting, it was discovered that the DCCP along with a former Finance and Administration Manager and a former Chief Executive, were reported to the Independent Commission Against Corruption (ICAC). On 15 May 2017, the SA Ombudsman tabled his findings resulting from this investigation, which included a finding of maladministration. Further, an investigation by the SA Auditor-General into the DCCP is currently ongoing. Prior to exercising the available two-year extension option for the STAY service agreement, the Division sought advice from the DCSI Quality Assurance, Risk & Business Improvement (QARBI) directorate in relation to the outstanding Auditor-General’s examination of DCCPs financial accounts, as well as the SA Ombudsman’s findings. Subsequently, the Chief Executive, DCSI supported the option for the existing service agreement to lapse at 30 June 2017, and for DCCP to be offered short-term extensions, consisting of three-monthly Goods and Services contracts (paid in three monthly instalments on invoice) to ensure continuity of service delivery until a tender and selection process is finalised. The current contract expires 31 March 2018. The Division is in the final stages of the STAY Coober Pedy tender selection process and the announcement of the successful tenderer is expected in coming weeks. Current contract management with the DCCP has required intensive liaison and communication to follow up a range of issues, in particular discrepancies in invoices submitted and lack of responsiveness by DCCP to address these. As a result, invoices for August 2017 through to December 2017 are still being queried and remain unpaid until a review of the invoices is complete; and then will be paid within this current Jan-June 2018 period.

UNPACKING RELATIONAL CONTRACTING

Welcome to the Contracting Paradox

More and more companies are facing a contracting paradox. Contracting is about planning for future exchanges of goods and services for money, and about how to deal with the risks and opportunities entailed in such exchanges. Yet today – more than ever before – the search for the perfect plan is painful if not impossible. Today’s market is faster, more global and more complex than ever before. Change is the new constant, making accurate planning and forecasting almost an illusion.

Psychological research has revealed the troublesome fact that evolution has made us ill-equipped to make good plans and at the same time well-equipped to believe we are good planners.1 The result is a planning fallacy leading to the contracting paradox.

So what is the contracting paradox? It is the delusion that we write contracts to make plans, but we cannot really plan accurately. And, as a nice twist, we trick ourselves into believing that we can plan.

The contracting paradox is a recent phenomenon. For centuries much of the business world ran on “handshake deals,” especially when it came to buyer-supplier relationships. When he researched the use of contracts in 1963, Professor Stewart Macaulay discovered that: “Businessmen often prefer to rely on a ‘man’s word’ in a brief letter, a handshake, or common ‘honesty and decency’ – even when the transaction involves exposure to serious risk.”2 At about the same time, legal scholar Ian Macneil coined the term relational contract, referring to the social contract of moral obligations guiding behavior in business that Macaulay and others had discovered.

However, it was also around this time that legal scholars and practitioners began what would start to be a significant trend to create more formalized “complete” contracts to document business agreements. As the decades passed, contracts grew longer and more complex, including more and more detailed plans trying to deal with an endless list of “what-if?” questions. As informal moral norms were replaced with formal contractual obligations, the old relational contract was replaced with the transactional contract that now dominates as the primary approach for contracting. Today, it is not uncommon for a contract to be hundreds, if not thousands, of pages. We have seen one government supply contract that was literally eight and one-half feet tall when printed out!

Unfortunately, many of these extensively negotiated agreements fail to deliver the desired results. Indeed, it is argued by some that their content and the process that supports their formation actually detract from the chances of success. Practitioners cite value leakage from contracts and contractual relationships and the trade press report good deals gone wrong. This has led to increasing questions over the effectiveness of contracts and the contracting process. But then we have to face the contracting paradox. To succeed in business, we cannot really give up planning. But now we know how poor we are at planning. To abandon the detailed transactional contracts and return to the nice and cozy world of handshake deals is not perceived as an attractive alternative in a global world where contracts are most often made between people who don’t know each other. It is simply perceived, and rightly so, as too risky.

UNPACKING RELATIONAL CONTRACTING

But there is hope. A growing number of organizations have begun to find ways out of the contracting paradox, reducing the value leakage while becoming better and better at dealing with the uncertainty and complexity of the modern economy. What we see is the return of the relational contract, but in a new form. Today’s relational contract is not the informal “handshake” deal from a bygone era, but rather a formal relational contract depicted by a highly collaborative relationship where the parties consciously choose to make social norms contractually binding. Modern relational contracts also explicitly describe joint governance processes within which the parties can work together to deal with risk and uncertainty. There is an undeniable and growing amount of research showing how and when relational contracts out-perform conventional transactional contracts in terms of cost advantages, time, quality and innovation. Researchers at the University of Tennessee and organizations such as the International Association for Contract and Commercial Management are squarely behind this movement to help individuals and organizations understand and make the shift to using the modern form of relational contracts when appropriate.

Purpose of this Paper

The purpose of this white paper is to bring practical insights and understanding into the why, what, how, and when of relational contracting. This paper is divided into the following five sections: Part 1: Provides a high level introduction to relational contracting Part 2: Seeks to explain why organizations need to make the shift to relational contracting Part 3: Aims to help you understand the “what and how” to begin to develop a relational contract Part 4: Provides guidance for when to use a relational contract Part 5: Shares a short conclusion and call to action with some succinct advice for getting started

This is not an academic paper; rather it is a practitioner’s guide to help individuals and organizations better understand relational contracting. We would like to challenge individuals who play a role in forming or managing business relationships and writing contracts to take time to read this white paper and reflect on how this approach could improve the results they currently achieve.

We hope this collective work becomes the reference guide for relational contracting. With this goal in mind, we are making this white paper available as an open source document and encourage you to share it with your colleagues, clients, customers, suppliers and business partners.

UNPACKING RELATIONAL CONTRACTING

TABLE OF CONTENTS WELCOME TO THE CONTRACTING PARADOX ...... 1

PART 1: INTRODUCTION TO RELATIONAL CONTRACTS ...... 4

PART 2: WHY USE RELATIONAL CONTRACTS?...... 8

THE RISE OF THE NEW ECONOMY ...... 9

VALUE LEAKAGE IN THE NEW ECONOMY ...... 10

CHARACTERISTICS/WEAKNESSES OF THE TRANSACTIONAL CONTRACT ...... 11

RESEARCH SUPPORTING OF RELATIONAL CONTRACTS ...... 17

PART 3: HOW TO CREATE A RELATIONAL CONTRACT ...... 20

FOCUS ON THE RELATIONSHIP, NOT THE DEAL ...... 21

ESTABLISH A PARTNERSHIP ...... 24

EMBED SOCIAL NORMS IN THE RELATIONSHIP ...... 26

AVOID AND MITIGATE RISKS BY ALIGNMENT OF INTERESTS ...... 29

CREATE A FAIR AND FLEXIBLE FRAMEWORK ...... 33

RELATIONAL CONTRACTING AS A PROCESS ...... 37

PART 4: WHEN TO USE A RELATIONAL CONTRACT ...... 40

PART 5: CONCLUSION AND CALL TO ACTION ...... 42

APPENDIX 1 ...... 44

APPENDIX 2 ...... 45

ABOUT THE AUTHORS ...... 46

ENDNOTES ...... 48

UNPACKING RELATIONAL CONTRACTING

PART 1: INTRODUCTION TO RELATIONAL CONTRACTS

Webster’s dictionary defines a contract as:

1. A) binding agreement between two or more persons or parties; especially one legally enforceable B) a business arrangement for the supply of goods or services at a fixed price

In short, contracts regulate the rules of business between individuals and/or organizations. We write contracts with suppliers, customers, business partners, employees, etc. when we are dependent on others to realize our business plans. But planning is a difficult task, especially in today’s complex and global environment. And since we—as humans—unfortunately have a tendency to act opportunistically, we need to agree with those others on the joint plans for the future. The result is a contract that outlines the rules we shall follow in our relationship and the parts of our agreements that will be legally binding and enforceable in court. Using the terminology of one of the pioneers of relational contracting – Wigmore Professor at Northwestern University Ian Macneil – contracts should be viewed as “instruments for social cooperation.”4 But just what is a relational contract? Let’s start by dispelling a myth. Just because it incorporates the word ‘relational’ does not mean it is soft and woolly. In fact, the opposite is true. A relational agreement brings added discipline because it codifies the framework for the relationship – the forums, behaviors and mechanisms within which interactions will occur. It recognizes that relationships are not just person to person, but also organization to organization. There is an increasing volume of writing and a growing body of case law on the topic of relational contracts. Over the decades legal, economic, and social science research have all provided the foundational underpinnings that point us to defining what a relational contract is—or at least should be. We suggest the best way to understand a relational contract is to compare it to the dominating contract model that we call the transactional contract.* Exhibit 1 (following page) provides the comparison along five dimensions, showing the distinct differences between a relational contract and a transactional contract, while at the same time showing that these two contract forms exist on a continuum.

* Ian Macneil used the term “discrete contracts” for the contract we here refer to as the transactional contract. 4

UNPACKING RELATIONAL CONTRACTING

Exhibit 1: Comparison of Contracting Models

Based on this comparison, which we will return to several times in this white paper, we provide a formal definition of a relational contract, at the far right end of the continuum, as: A legally enforceable written contract establishing a commercial partnership within a flexible contractual framework based on social norms and jointly defined objectives, prioritizing a relationship with continuous alignment of interests before the commercial transactions. As mentioned earlier, transactional contracts dominate as the primary contracting vehicle used in business-to-business relationships. This is not surprising given the fact that in most cases, it is not that complex to do business with others, especially when contracting for the sale or purchase of commoditized goods or services and where there are many suppliers and low switching costs. However, as the nature of what we are exchanging (more intangible goods or services) and the environment in which we operate (more global, faster changing, less predictable and more regulated) grows more complex, transactional contracts are increasingly riskier because of the extent of the ‘incompleteness’ or uncertainty in contracts. Incompleteness has grown from an estimated average of around 5% when Ian Macneil was writing in 1960 to around 35 – 40% today. Successful business relationships find ways to proactively address this incompleteness in a fair and balanced manner. IACCM research has shown that there are nine “relational tenets” that typically recur in successful partnerships based on relational contracts. Those tenets are also areas of unrecognized risk. In other words, the research showed that their absence increases the likelihood of failure – yet they rarely appear in any risk register. What are those tenets? They are:

UNPACKING RELATIONAL CONTRACTING

communication, risk allocation, problem solving, no-blame culture, joint working, gain and pain sharing, mutual objectives, performance measurements and continuous improvements. A definition is provided in Appendix 1. Traditional contracts are formulated on two foundations – price and power. Within these parameters, there is little room for shared values or principled governance. Therefore, one of the main reasons why organizations fail to implement relational tenets into their contracts, moving from the left to the right on the continuum, stems from using conventional procurement and contracting processes that are not fit for establishing the trust and aligned interests needed to succeed with relational contracting. For this reason, we recommend using a formal process and framework for mutually creating a relational contract. Exhibit 2 (following page) outlines a process based on a combination of the five focus areas defining the relational contract set forth above and the nine IACCM relational tenets. We explain the rationale behind this suggested step-by-step approach later in this white paper. While this white paper promotes using a structured process to create a relational contract, we recognize many organizations may find themselves in an existing relationship and it is impossible to go back and lay the foundation from the beginning. If you are like many organizations, you may have entered into discussions with the intent to have a more strategic relationship, but along the way found you created a more traditional transactional contract. As mentioned previously, transactional contracts are built around classical legal theories of risk allocation, which often leads to frustrations and tensions, as the arm’s length nature of the contract structure encourages more opportunistic and adversarial behaviors. If this has happened in a relationship you are involved in, don’t become disenchanted because you got out the gate wrong. We encourage you to not give up. Rather, consider embedding as many of the relational tenets as possible into your existing relationship with the goal to improve the relationship, moving from left to right on the continuum. For example, try adopting a no-blame culture and instead seek to improve processes for managing performance and joint problem solving to get to the root cause and focusing on accountability, rather than blame. Or perhaps develop processes to improve communications and proactively managing changes. Whether you start with the formal process we recommend – or you work to embed the relational tenets into an existing relationship – we believe the investment will pay off. As you make the shift to relational contracting, it is important to understand why it is essential to add relational contracts to today’s contracting toolkit. We start Part 2 of this white paper by taking a look at the world around us and how it has changed during the last thirty years.

UNPACKING RELATIONAL CONTRACTING

Exhibit 2: Relational Contracting Process

Process step Description Relational Tenets implemented 1. Focus on the To build the trust necessary to focus on the Mutual objectives relationship, not relationship, ensure alignment within your the deal own organization and thereafter use a process for choosing a partner that considers relational competencies in addition to service offerings, quality levels, etc. 2. Establish a Before starting to build the relationship, Joint working, Partnership analyze together whether there is enough communication trust, transparency and compatibility between the parties to create a successful partnership. 3. Embed social Jointly discover and agree on following the Risk allocation, norms in the six guiding principles or social norms of the communication, pain and relationship relational contract. gain sharing, no-blame culture 4. Avoid and To lay the foundation for continuously Mutual objectives, risk mitigate risks aligned interests, agree upon a shared vision allocation, gain and pain through alignment and strategic objectives for the partnership, sharing of interests specifying what joint success and value looks like. Also ensure that the economic/pricing mechanisms later agreed upon support achievement of the vision and the objectives. 5. Create Fair and Agree upon the written contract clauses Communication, problem Flexible necessary to establish the more specific solving, no-blame culture, Framework rules of the relationship, all of them aligned joint working, mutual with the six guiding principles. Finally objectives, performance establish a robust governance framework for measurements and continuous relationship management. continuous improvements

UNPACKING RELATIONAL CONTRACTING

PART 2: WHY USE RELATIONAL CONTRACTS?

Back in 1963, Stewart Macaulay reported that most business executives saw little need for contracts and often felt that establishing a contract can ‘get in the way of a good relationship’. A high proportion of trading relationships were long-established and most were geographically or culturally ‘local’. Global networked technologies and the emergence of new business practices in the 1980s disrupted patterns of trade and behaviors. Long-term relationships were discarded in the search for competitive advantage, whether in the name of innovation or of cost reduction. The steady growth of global interdependence has been accompanied by growing tension and unpredictability. Today’s business environment is often depicted by the term ‘VUCA’ – volatility, uncertainty, complexity and ambiguity.5 This shift offered fertile ground for lawyers to seek to perfect the “complete” contract. The saying “Nothing personal, it’s just business” emerged as a common excuse in the quest for opportunistic behavior. A consequence was greater adversarialism in a battle over minimum prices, onerous terms and attempts to pass maximum risk and responsibility for performance to the other side. An alternative to this approach would have been to build more structured relationships, offering a framework through which the participants could better manage the impacts of VUCA. Unfortunately, there was no assessment of the cost associated with transactional contracting and the disruptive, poorly aligned behaviors that resulted from it. Part 2 of this white paper is dedicated to explaining why organizations should consider relational contracts for more strategic relationships. We believe that without a clear understanding of the why, individuals and organizations will continue to resist and even openly reject relational contracting as a viable option. This section:  Highlights the rise of the new economy, which explains why organizations must think more strategically about supplier and other commercial relationships.  Shows the real impact of value leakage in contracts. We share data about value leakage and provide real examples of how getting contracting wrong can cause long-lasting damage for an organization.  Highlights weaknesses in transactional contracts that point to the fact that a transactional contracting model is often not appropriate for many of today’s more complex supplier and other commercial relationships.  Shares scientific research that supports relational contracting. Simply put, relational contracting is not just a good idea; the fundamental construct and theory supporting relational contracts are based on indisputable research, including several Nobel Prize winning concepts.

UNPACKING RELATIONAL CONTRACTING

After reading Part 2 of the white paper we believe you will understand why a shift from transactional to relational contract is often vital for business success. Indeed, you may well conclude that relational components should be used much more widely in many of your trading relationships. You may find yourself asking: “Why would I not want more effective and efficient communications, clarity over objectives, a culture of accountability and continuous improvement?” Relational agreements are not an absolute; there is no sharp dividing line where one side must be ‘adversarial’ and the other ‘collaborative’. Rather, it is an issue of degree and the extent to which a full relational model is justified by the strategic and economic impact of a particular relationship.

The Rise of the New Economy

Most of the 20th century was dominated by the vertically integrated enterprise, incorporating complex supply and distribution chains in one company or group of companies. Harvard Business School’s Michael Porter literally wrote the manuals for creating a competitive strategy in a vertically integrated enterprise in his best-selling books Competitive Strategy6 and Competitive Advantage.7 For Porter, the enterprise was a combat unit on a battle field forged by five market forces creating a threat of rivalry among existing firms, the threat of new entrants, the threat of substitute products or services, the bargaining power of buyers and the bargaining power of suppliers.8 Ironically Porter wrote the rulebook at a time when vertically integrated organizations were already beginning to shift to more decentralized and networked structures. The shift was brought to the forefront in 1989 when management guru Peter Drucker eloquently argued in his Wall Street Journal article that organizations should “Sell the Mailroom.”9 A year later, Prahalad and Hamel argued that corporations should focus on their core competencies in their highly influential Harvard Business Review article.10 CEO mandates around the world began to proclaim, “Do what we do best and outsource the rest.” In the new economy, the combat unit is an organization’s network, not the discrete organization entity itself. The result is that organizations today have a virtual network of suppliers and business partners around the globe that supply not just commodities that feed the industrial engine of the past, but also highly strategic and essential services. Today’s flexible and innovative organizations are supported by strategic suppliers and partnership that manage critical functions such as manufacturing, distribution, IT, facilities management, finance, HR and more. Let’s looks at some of the key attributes of today’s market.  Today’s market is more global. In the past, markets were smaller and more confined by national boundaries. Globalization has torn down these boundaries. While national market segmentations do of course still exist, the markets of today are generally geographically much more diverse than in the past.  Today’s markets are more complex. In the mass-market economy with large vertically integrated corporations as the main players, demand was easier to predict. Orders were

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managed through a backlog and demand was to a large extent driven by the corporations themselves, as illustrated by the famous quote from Henry Ford proclaiming, “My customer can have a car painted any color that he wants so long as it is black.”11 Today, the customer no longer exists; rather the economy includes a multitude of customers with different tastes that change in unpredictable ways. Entire companies have made businesses out of serving the long tail of customer demand.12  Today’s markets are faster. The speed of the market, and market changes, is astonishing. New products and services can become obsolete in a matter of months. While innovation has always been important, innovation is now an imperative, requiring that organizations be flexible and responsive to change. To summarize, markets are more global, more complex, and faster; successful organizations rely on networks of more strategic commercial relationships to navigate in the new economy. This demands new levels of clarity, communication, collaboration and control, which is best answered through relational contracting.

Value Leakage in the New Economy

The networked company can exist because of contracts between the entities in the network. It is therefore troublesome that there seems to be a significant value leakage in contractual relationships in the market today. IACCM research has shown that poor contracting costs the average organization the equivalent of 9.15% of its annual revenue.13 Value leakage takes the form of increased costs, missed savings and lost revenues. The IACCM data does not even attempt to put a price on missed opportunities, the impact of non-renewals or costs of disputes or litigation.

IACCM is not the only one researching this topic. The Corporate Executive Board found that, in a typical outsourcing deal, the outsourcing company can erode up to 90% of anticipated value due to poor contract governance.14 London School of Economics professor Leslie Wilcox studied 1,200 outsourcing agreements and found that ‘power-based agreements’ (those where the more powerful party imposes the terms) generate up to 40% higher costs than trust based agreements.15

The stories of failed and value-eroding relationships as a result of poor contracting practices are legendary. Perhaps the most illustrative is the story of General Motors, which was once regarded as one of the best managed and most successful firms in the world. But between 1980 and 2009 its market share in the United States fell from 62.6 to 19.8 percent, and in 2009 the firm went bankrupt. Research suggests many of GM’s issues can be linked to GM’s arm’s length transactional contracting strategy.16 GM encountered problems in developing contractual relationships essential to modern design and manufacturing. Researchers point to a number of possible causes for these difficulties, including: GM’s historical practice of treating its suppliers as homogeneous, 10

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interchangeable entities, its view that expertise could be partitioned; and that holistic decisions could be made using financial criteria. Essentially, this approach led to one major supplier observing: “When is a contract not a contract? The answer – when it is with GM.” The sense was that GM (and indeed all the major US automotive manufacturers) demanded complete loyalty from suppliers, but offered almost none in return.17 Researchers claim GM’s heavy reliance on power-based supplier strategies and arms-length relationships led to significantly higher transaction costs, much lower degrees of information sharing with the suppliers, and low trust levels – all factors that contributed to GM’s fall from the top. These strategies should be compared to Toyota’s and other Japanese car makers supplier strategies, which are characterized by use of long-term relationships, high degrees of information sharing, and low transaction costs – all which create significantly more supplier loyalty and trust.18 It is interesting to note that, since its near demise, attitudes and behaviors at GM have changed dramatically and many of the power-based, adversarial approaches to the market have been replaced. But among all the stories of failures, there are a steady growing number individual success stories. IACCM research confirms that organizations which make investments in enabling better relationships cut the percentage of value leakage dramatically, to around 3.5%.19 So why is it that the stories of success are not more common? Why it is that organizations struggle to replicate these productive relationships? One answer is that the networked business world has not as yet driven networked behavior. Trading partners are typically viewed with some level of suspicion and an assumption that they are driven by selfish instincts. In short, trading partners cannot be trusted. To make matter worse, many organizations use performance metrics that often encourage short term thinking and promote opportunistic, negative behaviors. Case in point: a Fortune 100 company that provides a bonus to their procurement professionals for getting the best “deal,” measuring a buyer only on purchase price variance of reducing price versus laying the foundation for a successful relationship or reducing total cost of ownership. This is of course mirrored in the compensation schemes for many sales staff, where ‘victory’ is winning the deal, rather than ensuring it delivers long-term value to either organization. While management may talk increasingly about issues of honesty and integrity, they often do little to shift motivation from short- term opportunistic behavior – in part because they lack insight into the costs that are associated with transactional contracting behaviors or understanding of the alternative.

The Characteristics and Weaknesses of the Transactional Contract

Another important and closely related reason for the relatively small number of success stories is the nature of transactional contracts themselves. In Part 1, we used five characteristics to describe the transactional contract. Let’s take a closer look at those characteristics and we will see why a transactional contract is increasingly not fit for purpose in today’s economy. A quick review reveals there can be little doubt that the characteristics and weaknesses of the

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transactional contract explain much of the value leakage and failures from contractual relationships in the market.

FOCUS ON THE “DEAL”, NOT THE “RELATIONSHIP”

The focus of contracting tends to be “this deal,” “this time” and under “this set of business and legal terms.” Negotiators and lawyers think, “Get a signature, and you are done.” It is a done deal, and the deal is the deal. A transactional contract definitely follows this logic. Let’s look at a typical press release for a big “deal.” The parties project success at signing, saying that company x has contracted with supplier y in a seven-year contract worth z million dollars. This assumes the parties know, at the date of the press release, all the transactions that will be carried out. A complex future is viewed as one big deal. As explained previously, today’s dynamic business environment often makes it impossible to publish such a press release with a realistic claim for accuracy. In most complex customer- supplier relationships, the parties know that in reality the “deal” will have to change over time as a result of changing demand, market circumstances, etc. Well crafted, transactional contracts deal with this through change control clauses, most often involving a change procedure from submission of change requests to signing of an amendment agreement. But as most contract managers know, post-signing contract negotiations can be tedious and costly exercises, often involving intense discussions whether the change request should lead to additional compensation or not, and, if yes, how much. Those exercises generate transaction costs for which there can be only one name: waste. The cause of this waste is not how the change control clauses are written. The problem lies instead in the focus. Simply put, the parties persist to focus on the deal at the time of signing, even though they know that “this deal” will become irrelevant. Without a change of focus, this waste cannot be avoided.

ARM’S-LENGTH RELATIONSHIPS

A transactional contract establishes an arm’s length relationship. It is generally designed to limit commitment and to gain as much control over the other party’s actions as possible while losing as little control as possible. A key goal in an arm’s length relationship is to not get too “cozy” – especially if you are the buyer. Conventional logic is that becoming too dependent on the other party is seen as risky, and that buying organizations should avoid “lock-in." To prevent too much dependency, organizations often use commercial terms to prevent “lock-in.” For example, termination for convenience clauses combined with comprehensive exit management obligations create powerful tools that customers can use to control suppliers. Another example is intellectual property right clauses where the customer acquires a right to ideas and innovations created by the supplier. The goal is to ensure the strings between the parties remain unattached.

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As a general rule, buyers have more power than suppliers – at least up through the point of signing the contract. And, typically, the more powerful the organization, the more one sided the clauses. The 1980’s ushered in popular approaches for improving an organization’s power. Business gurus such as Michael Porter stressed organizations should gain power over suppliers and customers as a way to create a competitive advantage. Peter Kraljic espoused that procurement organizations should gain power with “leveraging” tactics. Charles Karrass taught thousands of individuals how to play the “negotiations game” to tilt the deal in their favor. But today, conventional approaches for using one’s power causes a dilemma. Power-based strategies do not work in today’s networked and hyper-competitive economy because enterprises are dependent on their network of customers, suppliers and business partners to succeed. Arm’s length relationships simply are not enough – especially for more strategic and complex deals where there is a great deal of dependency. Successful organizations are abandoning the arm’s length mentality, choosing instead to create highly collaborative strategic relationships with increased interdependence that are purpose-built to create a win-win competitive advantage with their strategic business partners Professor Jeffrey Dyer and Harbir Singh are pioneering research in this area. They coined the term relational rents to refer to the above-normal returns generated by two or more companies using each other’s knowledge and resources in unique ways that cannot be copied by others.20 In an arm’s length relationship, nothing unique can be created. Relational rents can only be generated through investments in relationship-specific assets, substantial knowledge exchange and combining of complementary resources. Making the shift means today’s contracts require far more thought and versatility in how the relationship is contractually structured and managed; it also demands a conscious departure from the one-size-fits-all mentality that remains prevalent in many organizations. Simply put, the strategic contract you structure with Strategic Supplier #1 is highly likely to be unique from the strategic contract you structure with Strategic Supplier #2. And above all, creating strategic relationships requires abandoning the ambition to keep all commercial relations at an arm’s length’s distance. You cannot both generate relational rents through increased dependency and pooling of resources, and remain completely detached and independent at the same time. The transactional contract with its arm’s length character will fail to enable your strategic relationship to blossom and create the desired competitive advantage.

DISCONNECT FROM SOCIAL NORMS

“It’s not personal, it’s just business.” This is the mentality of the transactional contract. This mentality also means that it is acceptable to violate fundamental social norms in the pursuit of a “good deal.” In fact, opportunistic behavior is not only allowed, but expected as part of the “negotiation game.” Millions of books have been sold on how to play the game. We are taught to justify going against the social norms of reciprocity and equity when you have power and can shift risk to the other party. Negotiations courses teach us we are still being honest when we withhold information if the other party does not ask for it – even if it may mean the other party is disadvantaged or could be financially hurt. Of course the easiest way to justify one’s opportunistic behavior is to say “sorry, it’s not personal, it’s just business.” 13

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In reality, violating social norms often generates risk instead of mitigating risks. Why? Because it is safe to assume the other party will try to create strategies to improve their position. In fact, most rational business people look for ways to protect themselves or to “get even.” Unfortunately, protection often means a lack of openness and transparency, withholding data or information, and placing limits on communication. This mindset is not evil, but one of human nature based on opportunism. After all, if there is a conflict of interest and the risk is significant – it is rational to think that both parties will try to act in accordance with their own interest, not taking the other party’s interests into consideration. Psychological research supports this “tit for tat” behavior, showing while humans are opportunistic, they have a strong sense of fairness or, in the terminology of behavioral economics bounded self-interest.21 Most people want to treat others fairly and also want to be treated fairly. However, this also means that people are willing to punish unfair behavior, i.e. behavior in breach of social norms.22 The simple fact is that violating social norms makes the situation worse – not better. It prevents and distorts the conversations that are needed in any healthy relationship. It limits areas of discovery and stifles the very ideas that should lie at the heart of any long-term, productive agreement. A violation of social norms by one party simply leads to a reaction (often a negative and opportunistic reaction) by the other party. And this results in unnecessary transaction costs. Economists such as Oliver Williamson have shown how contractual, legal and social norms interact to guide the behavior of individuals and enterprises in all commercial relationship.23 The findings are clear; in more complex commercial relationships, inefficiencies and transaction costs are generated when contractual norms come into conflict with the social norms which always exist in commercial relatioships to a larger or lesser extent. We are convinced that much of the value leakage in contractual relations is caused because transactional contracts have a “disconnect” from social norms. The more one-sided and power based the contractual obligations, the more an individual is triggered by human nature with a strong sense of fairness to create a counter reaction. Simply put, conventional transactional contracts create a disconnect from social norms, resulting in consequences rather than preventing them.

RISK MITIGATION THROUGH MARKET POWER AND STATE POWER

As the saying goes “buyer beware.” We’ve been taught to do business at our own risk and not expect others to look out for us. It’s our own fault if we have not taken enough precautions to avoid being taken advantage of. Organizations use contracts to mitigate any potential risk that might arise. Conventional wisdom teaches to use one’s power to shift risk to the other party. While the other party might accept the risks – it typically does not do so willingly. The reality is that the more one party seeks to shift risk, the more the other party seeks creative strategies to mitigate their risk or shift the risk back. In a transactional contract, there are two main mechanisms to deal with the risks for opportunistic behavior. The first one is market power, the second state power. In combination, they give the 14

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impression of doing a good job in risk management. In reality, neither power-based mechanism does a good job. Let’s explore why each falls short. We’ll look at market power first. By market power we simply mean the power to leave the relationship and contract with another player in the market or the ability to impose onerous terms on the counter-party, with few obligations of your own. The power to leave is most effectively ensured by a termination for convenience clause, which grants a right to terminate the contract regardless of whether a breach has occurred or not. Onerous terms may take many forms, but generally relate to issues around ownership of assets and consequences of failure. Under classical legal theory, there is a strong belief in driving performance through purely negative incentives. Mitigating risk through market power has serious downsides – not least of which is that it rarely works. In many commercial relationships, the costs of switching a supplier or losing a customer can be very high. Additionally, having such provisions often leads the counter-party to restrict their investment in the relationship. Consider, for example, whether a supplier forced into a corner will willingly provide assets or staff that have invaluable knowledge and experience about the customer and its operations. Market power has its place when there are many suppliers with low or no dependency and switching costs are low (in essence, you are buying a true commodity). But in situations of greater dependency or where there is potential for differentiated value, the use of market power in forming the agreement will invariably undermine potential results. What about state power? By state power we mean the power to legally enforce contractual obligations. Contractual obligations backed up by state power appear to be a great tool for risk mitigation. After all, the entire idea of a contract is based on the assumption of a possibility for enforcement. We argue that the state power mechanism for mitigating the risks of opportunism has serious downsides. Why? The court system is not 100% effective and a contract breach will not automatically lead to enforcement. In addition, it is often very costly to go to court. For this reason, the vast majority of parties choose to settle out of court to avoid astronomical legal bills and the potential damage to their reputation. IACCM research supports this assumption, showing that while 30% of negotiated contracts encounter a substantial disagreement between the parties at some point during their execution, only 0.007% end with litigation or arbitration.24 Even though most contracts rely on an implicit assumption of the effectiveness of the court system, in reality state power is not used as a viable option. In summary, the risk mitigating mechanisms of the transactional contract – market power and state power – create an illusion of safety when in reality they can be weak in managing known risk and largely ineffective in dealing with unknown or unanticipated risks.

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COMPLETE PLANNING

A contract is first and foremost an economic instrument with the purpose to support the realization of business plans. To build a house or a railroad, to execute a marketing campaign, to ensure access to information technology, all this requires many activities from the parties in a contract. The goal of the contract is to ensure that the plans are realized. Conventionally this is done by allocating control over the activities through contractual obligations. For example, the buyer would create a prescriptive statement of work or service description of the activities to be performed. The problem is, again, that there is a tendency for opportunism. What if we have missed something when making a plan? What if we realize, after the contract has been signed, that the building of the railroad requires some additional work that we forgot to include in the specification? Will not the other party take advantage of the situation? Most likely yes, especially if the prior negotiation was focused on minimizing price and maximizing supplier risk. But rather than recognizing these recurrent symptoms and learning from experience, many buyers react by becoming even more demanding in their negotiations. The result? The never-ending quest to make the contract more ‘complete’ so that the supplier cannot ‘take advantage’ in the post-award phase. These attitudes and behaviors are driven by the incorrect belief (historically peddled by consultants and advisory firms) that power rests with the buyer until contract signature and moves to the supplier once the deal is signed. This philosophy views trading relationships in the context of battlegrounds and relationships as a war of attrition. To maintain control, the plan must be complete and written down in the signed contract. Complete planning is the attitude of the transactional, adversarial contract. But just as with risk mitigation and disconnection from social norms, achieving a complete plan in a complex environment is based upon a costly illusion. Indeed, 2016 Nobel prize winner Oliver Hart has showed that most contracts are incomplete. As we have written, today’s business environment is complex, fast moving and unpredictable. Supply and demand change quickly. Market threats come from all angles, ranging from new competitors, customer hypes, disrupting technology, regulation and unpredictable events such as dramatic fluctuation in oil prices. Essentially, we are dealing with a growing volume of the unknown or the unknowable. Relationships must be designed, not to eliminate these realities, but to cope with them. The transactional contract has no mechanisms for achieving the much needed flexibly and collaboration that is demanded by today’s environment. The fact is complete planning becomes harder and harder in the new economy. An irony about complete planning is that psychological research has revealed that we never were good planners to start with.25 To borrow terminology from behavioral economics, we suffer from bounded rationality, in that we don’t have enough time to gather all relevant information and that our brains are not able to deal with all of the information. The conclusion? It has always been impossible for a transactional contract to live up to the ambition of complete planning.

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Research Supporting Relational Contracts

While the previous sections showed scientific support for the disadvantages of transactional contracts, this part of the white paper shares the advantages and benefits of the relational contract. We show relational contracting has strong support of Nobel Prize winning research in psychological, economic and social theory. As an example, in October 2016, the work of Professors Hart and Holmstrom was recognized when the Nobel Prize for Economics was awarded. Their research highlights the importance of contracts being 'properly designed to ensure that the parties take mutually beneficial decisions' - a philosophy that lies at the heart of relational contracts. A key reason relational contracts make sense is that contracts are negotiated, written and entered into by human beings. This means that the logic of human psychology, as it has been formed by evolution, has strong influence on the practice of contracting. But not only psychology plays a role; human beings entering into a contract are acting within economic and social systems that together forms the rules of the game of contracting, leading to either beneficial or non-beneficial economic results. Therefore, economic and social science also teaches us important lessons about contracting. While there are literally hundreds of research studies supporting the concepts and logic behind relational contracting, in this white paper we have limited ourselves primarily to the psychological research. As stated, contracting is about planning for future exchanges of goods and services for money, and about how to deal with the risks and opportunities entailed to such exchanges. It is because the future is unknown and because we as humans have a tendency to act opportunistically that contracts are needed in the first place. As we have repeatedly said, contracts are written to deal with the future. The problem is that we are psychologically ill-equipped to deal with the future. As far back as 1957, Nobel Prize winner Herbert Simon concluded that humans are rational, but only to a limited extent.26 There is probably no one that has investigated deeper the limits of our rationality than professor Daniel Kahneman, 2002 Nobel Prize winner and author of the best seller Thinking, Fast and Slow.27 We draw a number of important conclusions from Kahneman’s work, as well as from the work of the psychological branch of economics – behavioral economics. We focus on three key concepts: 1. The systematic errors we make as a result of our bounded rationality 2. Our limited ability to correctly assess risks 3. Our sense of fairness

1. THE SYSTEMATIC ERRORS WE MAKE AS A RESULT OF OUR BOUNDED RATIONALITY

Instead of being omnipotent, all-knowing and fully rational creatures (which is the assumption of traditional economic theory), we tend to use rules of thumbs and simplified models of the world to

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get around. These rules of thumb are called heuristics. Since they are simplifications they are not necessarily correct, meaning that they can lead to systematic biases or fallacies. From the perspective of contracting, the most important one is the planning fallacy, already mentioned in the introduction. Our bounded rationality severely limits our ability to plan for the future, which is a key component in all contracting. However, our mind also tricks us into thinking that we are in fact good at planning for the future. Simply put, we suffer from overconfidence.

The planning fallacy and related biases means that, in the complex, fast and global economy, we will with absolute certainty fail if we try to deal with the uncertainty of the future through a transactional contract. Instead, relational contracts should be used, containing among other things mechanisms for transparently sharing information and feedback loops allowing the parties to adjust the contract as the future unfolds while at the same time keeping interests aligned.

2. OUR LIMITED ABILITY TO CORRECTLY ASSESS RISKS

Our limited rationality also means that we are poor in assessing risks, another key activity in contracting. The planning fallacy means that we most likely will fail to identify many of the most relevant commercial and contractual risks in the first place. And even if we identify a risk, we tend to rely on feelings when assessing it, instead of a rational analysis of likelihood and negative impact. The less we like a possible future event, the more risky it appears to us. Professor Cass Sunstein has coined the term probability neglect for the tendency—all too common among lawyers—to overemphasize the potential negative outcomes of an event, paying little or no attention to whether this outcome is likely to occur.28

Since the future has never been more uncertain, it has also never been riskier. We are not psychologically equipped to deal with such risks through the transactional contract, in which all risks must be addressed at the moment of signing. Instead, the relational contract must be used, including, among other things, governance mechanisms for continuous and collaborative risk management, allowing the parties to, over time, keep the risks of their partnership at acceptable levels.

3. OUR SENSE OF FAIRNESS

Daniel Kahneman and Richard Thaler, one of the founding fathers of behavioral economics, have also demonstrated our strong sense of fairness.29 This sense of fairness has a positive and a negative side, both relating to our feeling for reciprocity. On the positive side, we have a natural tendency to act with fairness. On the negative side, it means we are willing to punish those who treat us unfairly, even if it is to our own economic disadvantage or against our long term interest.

The positive and negative side of our sense of fairness has been proven beyond doubt in experiments such as the Ultimatum Game. In this game, individual A – the proposer – is given a sum of money and is requested to suggest to individual B – the responder – how the money shall 18

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be shared between them. If the responder accepts, the money is split in accordance with the proposal. If the responder rejects the offer, neither party gets anything.

Against strict economic reason, the proposers typically offer 50/50 splits instead of offering as little as possible, showing the positive side of our sense of fairness. On the other hand, the responders typically reject offers of 70/30 splits or less, even if they in fact would be better off with, say, 10% of the money than nothing. The responders are thus willing to punish unfair behavior, against their own strict self-interest.

Contracting is not only about planning for the future. It is also about dealing with opportunistic behavior. Here, the transactional contract suffers from a severe blind spot – a power-based contract that is disconnected from social norms. But as the Ultimatum Game shows, we don’t respond well to use or abuse of power. Power-based processes and practices of the transactional contract often trigger opportunistic behavior. And we try to deal with opportunism through the threat of market or state power.

Simply put, we respond to power with power, to unfairness with unfairness.

THE NEED: CONTINUAL ALIGNMENT OF INTERESTS

Psychology and behavioral economics proves that (i) we are psychologically ill-equipped to succeed with the completeness ambition of the transactional contract, (ii) our limited ability to correctly assess risks grants an illusion of safety to the transactional contract, and (iii) the contracting and negotiation processes we typically use often generate opportunistic behavior instead of protecting against it. While we have offered three clear reasons to shift away from transactional contracts, these same three reasons also offer a compelling reason to shift towards relational contracts –especially when operating in a complex, fast-paced or uncertain business environment.

For more strategic contracts with higher risks and uncertainty, what is needed is a relational contract that seeks to continually a interests in the face of uncertainty. The relational contract— and equally important the process to enter into it—will bring out the positive side of our sense of fairness and help us best deal with these uncertainties in a much more constructive manner.

But just how do you create a relational contract? Read on to Part 3.

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PART 3: HOW TO CREATE A RELATIONAL CONTRACT

In Part 2, we illustrated the severe weaknesses and sometimes even the dangers of using a transactional contract when you are operating in a complex and uncertain environment. We also shared the logic for shifting to a relational contract. The purpose of Part 3 is to help you begin to understand how to develop a relational contract. As we will discuss below, a journey towards a relational contract can start by the parties implementing one or more of the nine relational tenets. While this will definetly benefit both parties, the full value from relational contracting won’t be realized until the full relational contract with all its components is implemented. Therefore, this part 3 mainly focuses on the full relational contract on the far right side of the contract continuum shown on page 5. A key goal of a relational contract is to create a continuous alignment of interests throughout the contract term. As we pointed out in the introduction, to achieve the best results it is important to place equal importance on both the process of entering into the contract as well as on the content of the relational contract. There are two main reasons why the process matters as much as the content of the contract. The first reason relates to what we explained at the end of Part 2. Evolution has given us a dualistic nature; a tendency for both opportunism and a strong sense of fairness. The relational contract attempts to build on and leverage our sense of fairness while avoiding opportunism and the high transaction costs and value leakage that come with it. While it is possible to adopt relational contracting tenets at any point in a relationship, using a process to lay a strong foundation at the outset of a relationship is the easiest way to success because it helps us avoid opportunism from the start. The importance of this is well illustrated by the research of Kathleen Vohs, professor at Carlson School of Management, University of Minnesota. Vohs’ research shows how money makes us egoistic.30 For example, in one experiment some individuals were exposed to words and thoughts about money and some were not. The individuals were then tested for their willingness to help others. Those individuals exposed to money prior to being asked to help others showed a significantly lower willingness to help than individuals who had not been exposed to money. Vohs’ work suggests it is critical not to start a relational contracting process by negotiating the deal, where money is always a key component. Instead, the seeds of a non-opportunistic relationship must first be cultivated, by which our opportunistic tendencies can later be avoided or at least minimized. The second reason we recommend using a formal process at the start of the contracting process is to ensure organizations and individuals feel there has been a fair process for establishing the contract. The situation is analogous to legislation in a democracy. In legislation, both the content and the process for generating the content matter. A law adopted through democratic voting that denies a group of people fundamental rights will be fair from a process perspective, but will be unjust from a substance perspective. Likewise, a law adopted by a dictator giving equal voting rights to men and women will be just from a substance perspective, but will be unfair from a

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process perspective. If the process is perceived as unfair, the adopted laws will lack legitimacy and the people’s willingness to follow them will be diminished. For these two reasons, we believe the process for developing the relational contract is equally as important as the contract’s content. The process of negotiating and jointly creating the relational contract is not just a means to get to the written document, but an important part of creating what is actually in focus: the relationship. As outlined in Part 1, there are five essential focus areas for developing a relational contract and nine main relational tenets. We use these five focus area to outline each of the high-level steps in the relational contracting process. Through the process, the nine relational tenets are also implemented. 1. Focus on the relationship, not the deal. This step is designed to help you build the trust necessary to focus on the relationship. It includes ensure alignment within your own organization and using a process for choosing a partner that considers relational competencies in addition to service offerings, quality levels, etc.

2. Establish a Partnership instead of Arms-Length Relationship. This step is designed to explore and lay the foundation of trust, transparency and compatibility between the parties to lay the foundation for a successful partnership.

3. Embed Social Norms in the Relationship. This step is designed to help the parties jointly discover and formally agree to the six guiding principles (social norms) of the relational contract.

4. Avoid and Mitigate Risks by Alignment of Interests. This step is designed to lay the foundation for continuously aligned interests. It starts with the parties agreeing upon a shared vision and strategic objectives for the partnership, specifying what joint success and value looks like. Also ensure that the pricing arrangement and contractual clauses later agreed upon supports achievement of the vision and the objectives.

5. Create a Fair and Flexible Framework. This step is designed to establish a robust governance framework for continuous relationship management. The parties agree upon the written contract clauses necessary to establish the more specific rules of the relationship, all of them aligned with the six guiding principles.

We go into each of the five steps in detail in this section of the white paper. At the end of this section, we share some further thoughts and insights regarding the suggested process and whether there are other ways to enter into relational contracts.

Focus on the Relationship, Not the Deal

It is common practice for a lawyer or an advisor to say, “I am working on closing the X transaction” or, “I am negotiating the Y deal.” As we have seen, a transactional contract puts the focus on the

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deal, viewing all the future transactions as one big deal. In a relational contract, the focus is put on the relationship, with the “deal” simply being components of the overarching relationship. WHAT DOES IT MEAN? Let’s take a look at what it means to focus on the relationship and not the deal by picking out a classic from the library. Thought leader Jim Collins provides an excellent analogy of what it means to have a long term view versus a short term view in his book Built to Last31 (co-written with Jerry Porras). The book provides a telling comparison between successful and less successful companies by using the terms ‘clock builders’ and ‘time tellers.’32 Some companies are successful because they have amazing products and services, but their success fades when those products and services fade in popularity. Those companies are time tellers. Other companies have successful products and services because they are created by amazing companies, clock- builders who will generate profits year after year by always producing new products and services that the market wants. In the race of the market, it is always the clock builders that win in the long run. The comparison between time tellers and clock builders can be used to compare transactional and relational contracts. In transactional contracting, the focus is on telling the time, on the deal. When the exchanges planned for in the deal have been carried out, the relationship terminates and no more value is created. In relational contracting, instead, the focus is on building a clock, i.e. a relationship that can continue to generate value when all the transactions of the initial deal have been carried out. This means the parties must begin discussions with a potential partner that send signals about the importance of the partnership, and not the importance of the deal. HOW DO YOU DO IT? To focus on the relationship instead of the deal has important consequences for both the contracting process and the actual contract content. First, an organization must seek to create trust. Much has been written on the importance of building and sustaining trust in a relationship.33 Trust is generated when there is alignment between words and actions, i.e. when you can feel confidence that what someone is saying also will be followed by their actions. You can trust a person that shows integrity in this sense. But trust is not only something shown by and to individuals. There is such a thing as organizational trust and organizational integrity. To build trust, the organization must speak with one voice, or at least not with inconsistent voices. But since every organization is made of individuals, it is critical to identify all relevant stakeholders within your own organization as early as possible that may impact the trust level in the relationship you are about to enter into. And in addition, it is important to achieve alignment of goals and objectives among those stakeholders, laying the foundation for later on implementing the relational tenet of mutual objectives.

Action: Identify all relevant stakeholders involved in the process, including top management, external advisors, procurement and sales managers. Ensure alignment before approaching potential business partners.

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Second, organizations must seek to find partners – not just vendors to provide a good or service. The University of Tennessee has been researching successful supplier relationships for more than a decade. An interesting finding is that most organizations shift to relational contracts with pre-existing relationships by converting their transactional contract into a relational contract. But what if your organization does not have an existing business partner to fulfill a particular need? In that case, it is necessary to first find the right partner. In most situations, contract negotiations are preceded by a competitive bidding process used to pick the best supplier. The type of bidding method varies, but is almost always focused on getting the best “deal.” Most organizations use one of three competitive bidding methods:  Request for quote/price (RFQ) – which emphasizes selecting suppliers based on the price they quote.  Request for Proposal (RFP) – used to seek a more formal proposal from potential suppliers beyond simply price. RFP’s use a requirements specification to outline the requirements of the goods or services that the organization wants to acquire and the potential suppliers submit proposals on how they will meet the specifications.  Request for Solution (RFS) – used when an organization does not know the best way to achieve specific business needs. Rather than developing specifications, the organization instead states its needs and objectives, leaving to the supplier to propose a solution to meet them. In all cases, the focus is typically on the deal, not the relationship. It’s about picking a supplier to meet a need – not about picking a potential partner. For example, there is little if any exploration of behavioral norms and cultural fit of the potential partners. In addition, the emphasis managing the supplier with performance metrics and compliance rather than on seeking to co-create a governance structure to maintain continual alignment of interests when “business happens.” More strategic relationships should use what is referred to as a Request for Partner process.34 A Request for Partner process helps an organization find a business partner with not only the right capabilities, but also the right “fit” for the commercial relationship—within which the parties jointly will explore the needs, objectives, relational competencies and optimal solutions that will change over time as business happens. This will of course have important consequences for supplier evaluation. In traditional procurement situations, evaluation of bids focuses on the service or goods offered, their functionality, quality and, of course, price. When focusing on the relationship, all this will still be relevant, but the customer must add a critical dimension of evaluating the relational capabilities of the different suppliers.35

Action: When looking for a strategic supplier relationship, use a Request for Partner process to evaluate potential suppliers on both technical and relational capabilities.

UNPACKING RELATIONAL CONTRACTING

Establish a Partnership

The transactional contract establishes a relationship with clear boundaries between the parties, an arm’s length relationship. A relational contract establishes a different kind of relationship, a partnership per se. We have hesitated to use the term ‘partnership’ in this white paper for two reasons. First, it is an often abused concept by business professionals. One supplier said “When my customer tells me they want me to be more of a partner, it is typically followed with the expectation for me to open up my checkbook.” Second, lawyers in some jurisdictions eschew the term due to the legal definition of a partnership (e.g. a partnership creates a legal entity such as a joint venture). Nevertheless, we have purposefully chosen to use the word partnership to describe a relational contract because there simply is no other term that better describes what characterizes the relationship established through a relational contract. While a relational contract does not create a “legal” partnership, it does create the spirit of relationship that embodies the spirit of a partnership.

WHAT DOES THIS MEAN?

The difference between an arm’s length and partnership type relationship is perhaps best described by legal scholar Ronald Dworkin. Dworkin establishes a clear distinction between what he calls a “rulebook community” and a “society of principles.”36 While the distinction is aimed societal relationships rather than contractual relationships, it is nevertheless highly useful. According to Dworkin, a “rulebook community” is a community that “…accepts a general commitment to obey rules established in a certain way in that community. Imagine self-interested but wholly honest people who are competitors in a game with fixed rules or who are parties to a limited and transient commercial arrangement. They obey the rules they have accepted or negotiated as a matter of obligation and not merely strategy, but they assume that the content of these rules exhaust their obligations.”37 This description of a rulebook community—apart from the part about wholly honest people— clearly fits the kind of relationship established by a traditional, transactional contract. The attitude is that the parties have clear and written obligations, but hold no commitment to each other apart from what is in the contract. When the contract is silent, no one else will speak. This should be contrasted with Dworkin’s description of a society of principles, which fits the kind of relationship established through a relational contract. The parties to a society of principles accept “…that they are governed by common principles, not just by rules hammered out in /…/ compromise. /…/ Members of a society of principles accept that their /…/ rights and duties are not exhausted by the particular decisions their /…/ institutions have reached, but depend, more generally, on the scheme of principles those decisions presuppose and endorse.”38

UNPACKING RELATIONAL CONTRACTING

In a society of principles, a partnership exists in which “each partner is concerned not just to keep explicit agreements hammered out at arm’s length but to approach each issue that arises in their joint commercial life in a manner reflecting special concern for his partner as partner.”39 In a transactional contract, the corporate boundaries are kept strictly separate with rights and obligations and does not extend beyond the written clauses, whereas the relational contract creates more of a “virtual entity” based on certain underlying principles. A key difference is that a relational contract establishes the mechanisms through which principle-based behaviors will be enabled and rewarded.

HOW DO YOU DO IT?

The normal state for most organizations is to have arm’s length relationships. It makes sense when you think about it because an organization typically has hundreds, if not thousands of suppliers. The contracting process is pretty straight forward, typically started by one of the parties writing a draft contract,and sending it over to their counterpart. Thereafter the parties meet in the ring for negotiations. Establishing a partnership requires a different process. You must first start by understanding if you and your potential partner have a foundation that is strong enough to build a partnership. As mentioned previously, trust is a critical success factor in all successful relationships. However, trust does not exist at the start of a new relationship. Trust must be consciously built – and the relational contract is a fundamental building block. Trust must be combined with a high degree of transparency and compatibility.40 Why? Given our limited abilities for planning, a high degree of transparency from both parties will be critical. You will need as much facts on the table as possible to be able to cope with the future in a changing market. But even if trust and transparency levels are high, differences in organizational cultures could lead to friction and problems to make the relationship work. Compatibility is not absolutely necessary, but is still highly important. Using the process we have outlined enables the potential partners to sit down, first by themselves and then together, and ask some serious and sometimes also uncomfortable questions: 1. Are we trustworthy? Do we align our actions with what we say? 2. Are we prepared to work collaboratively and in good faith with in our partner, or do we feel that we must use power to induce them to do as we want? 3. Is there evidence that our potential partner(s) share our values and readiness to operate under shared principles? 4. Are we both prepared to be transparent, i.e. to share information about our plans for the future, our internal challenges, our risk register, our costs and even margins? 5. Are we compatible? Do we share a base of organizational value, interests and views of the world? Is this alignment likely to continue? 6. Do we have evidence to support our answers, or are we just hoping? 25

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By using this process, the parties lay the foundation for implementing the relational tenets of a joint working relationship and communication, which are critical for successful of governance of any commercial partnership.

Action: Find out if you are ready to become partners with each other by understanding your initial levels of trust, transparency and compatibility.

Once you have ensured you have laid a strong foundation, you will then be able to create a strong ‘society of principles’ by embedding social norms in the relationship, as explained next.

Embed Social Norms in the Relationship

The transactional contract establishes what Dworkin calls a rulebook community. When the ink has dried on the contract, all the rights and obligations of the parties can be read in the written document. When the written document is silent and none of the parties can prove there is some oral agreement, no rights or obligations exist. Opportunism can flourish. Society outside a commercial environment is different. In society, people have moral obligations toward each other. These moral obligations impact behaviors, feelings and actions. Take the norm of honesty. If we lie to you and you find out, we will feel ashamed – a symptom of the breach of a social norm. You may avoid us in the future, creating a pattern of passive-aggressive behaviors and actions. Or take for instance the norm of reciprocity, which creates an obligation to return in kind. If we invite you to dinner, you will feel obliged to reciprocate and invite us for dinner or do us some other kind of favor (bring flowers and wine or offer to take us sailing on your boat). If you don’t reciprocate, you most likely will feel ashamed. We may blow off your actions as forgetfulness. But over time if you do not reciprocate, we will quit investing in the relationship and stop inviting you to dinner because we will not feel our actions our valued. Social norms are not just a nice thing to say or to write about. Social science has proven a clear tie between social norms and the effectiveness of a society or group of individuals. 41 But can (or should) basic social norms be embedded in contracts? The answer is yes. In fact, to convert social norms into contractual norms is one of the most critical step of the relational contracting process, dispelling any idea that relational contracting is something soft and should be used outside the court room. After all, if social science has unequivocally linked success of societies to adherence of the social norms among individuals and groups of individuals, why wouldn’t you want to embed the social norms contractually in a business relationship? Embedding social norms into the foundation of the contract is where the informal relational contract discovered and explored by such researchers as Macaulay and Macneil, mentioned in the introduction, is transformed into the formal, modern form of relational contract needed in the new economy.

UNPACKING RELATIONAL CONTRACTING

WHAT DOES IT MEAN? A relational contract establishes a “society of principles” when the parties contractually agree to adopt a set of social norms or guiding principles for the partnership. The following six guiding principles should be adopted:42 1. The principle of reciprocity – the principle obliges the parties to return in kind. 2. The principle of autonomy – the principles obliges the parties to abstain from usinpower, allowing each party to make autonomous decisions, independent of undue influence from one another. 3. The principle of honesty – the principles obliges the parties to tell the truth about facts and their intentions. 4. The principle of loyalty – the principle obliges the parties to look out for each other’s interests and treat each other’s interest with equal value. This means, amongst other things, that risks and costs must be allocated so as to keep them as low as possible in the partnership. 5. The principle of equity – the principle obliges the parties to keep proportionality in the contract, for example between risk and potential rewards. 6. The principle of integrity – the principle obliges the parties to be consistent over time, i.e. to treat like cases alike and to avoid opportunistic behavior but to always, when in doubt, act in accordance with the other guiding principles. Why do we list those guiding principles and not others? There are several answers to this question. First, think of what would happen if you try to establish a partnership and take any of those principles away. Would a partnership without honesty and loyalty survive for long? A relationship without equitable allocation of risks and costs would soon deteriorate, as would a relationship which, in breach of the integrity principle, is not consistent over time in applying the other principles. Second, each of the six guiding principles are based on scientific research in psychological, social and economic theory. As we have said above, research has clearly proven a link that these principles are not only important, but also that societies and groups that adhere to these norms out-perform those where the principles are missing. Third, it should be noted, the six guiding principles listed are not necessarily an exhaustive list of all known social norms. Contracting parties of course are free to add any other social norms or guiding principles that they think are relevant. For example, one organization added a guiding principle of transparency, creating an obligation to share information on the basis that it is was critical to the success of the partnership to transparently share information. It is the authors’ opinion that most other principles that organizations come up with can be related back to these six principles or a combination of them. For example, the principle of transparency follows from the principles of autonomy, honesty and loyalty. To allow both parties to make autonomous decisions, they need as much good and relevant information as possible. Honesty does not only oblige the parties to ensure that whay they say is true; it also obliges not to withhold 27

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important information. Holding back on information is also dishonesty. Finally, transparent sharing of information facilitates efficient and effective communication and problem solving, ensuring that the total costs of the partnership is kept as low as possible, as required by the loyalty principle. The guiding principles fulfill at least four important functions in the relational contract: 1. They will guide the parties during the rest of the negotiations. The only valid arguments in the discussions are those than can be justified under one or more of the guiding principles. 2. All the contract clauses shall be aligned to the principles. This will to a maximum extent ensure that the contract is fair, balanced and facilitate creation of a frictionless relationship. 3. The guiding principles shall, together with the shared vision, constitute the basis for interpreting the agreement, both when the written clauses are ambiguous and when the contract is silent on a particular matter. We will deal with this further in the next section. 4. The guiding principles will also assist the parties when making changes to the contract. Not only will the guiding principles ensure a fair and balanced agreement, they will also ensure that the contract remains mutually beneficial throughout its term. To use power will be a contract breach because of the agreed upon principle of autonomy, so when dealing with change the parties will have to find solutions sanctioned by the principles of loyalty and equity. Any solution that harms one of the parties more than it is beneficial to the other party will be in breach of the principle of loyalty and the principle of equity will ensure avoidance of opportunistic risk transfer to the other party. As we will see in the next section, the guiding principles are therefore also a key instrument for risk avoidance and mitigation. By embedding the guiding principles in the relationship, the parties also lay the foundation for implementing the relational tenets of risk allocation, communication, pain and gain sharing and no-blame culture, to be formalized in the fourth and fifth steps of the relational contracting process. Will the guiding principles create a failsafe system? Of course not, but they will create a system that is in a much better position to create and keep interests aligned than the transactional contracts, which only deals with conflicts of interests as a fact that cannot be avoided at all.

HOW DO YOU DO IT? To a greater or lesser extent, the guiding principles exist in almost all relationships. However, because they are not often stated and openly discussed, we are often unaware of the presence of the principles as social norms in our relationships. In many cases, we deliberately (or subconsciously) ignore them in search for short term advantages. The first step when adopting the guiding principles is therefore to have an open and candid discussion and define each of the guiding principles. We think of this as “discovering” each of the principles. As social norms, they exist between the parties before the discussions start, so they are not invented. For most, it will be the first time the parties (or even individuals) have ever openly discussed how to apply social norms in a business context – let alone a contract.

UNPACKING RELATIONAL CONTRACTING

The six guiding principles are best codified in a code or charter to the relational contract – preferably right up front. Some organization put this in the main body of the contract while others create a Schedule (often the first Schedule) to codify their intentions of how they parties will behave over the life of their relationship. In appendix 2, we have included an example of how the guiding principles can be documented in a contract.

Action: The parties should “discover” and together define the guiding principles and formalize them as part of their contract.

Avoid and Mitigate Risks by Alignment of Interests

As we have seen in Part 2, a transactional contract mitigates risk through use of a combination of market and state power. The conflicting interests are accepted and their symptoms attacked. Even if the parties to some extent do share goals and objectives, they usually do not have any obligations to look out for each other’s interests when goal conflicts arise. In the relational contract, you take a different approach: you attack the causes of conflicting interests and not their symptoms. The intention is to always keep interests aligned. WHAT DOES IT MEAN? Misaligned interests are the most common cause of value leakage and unnecessary transaction costs. It is only when the parties interests are misaligned that opportunism becomes a problem in a commercial relationships. The source of misaligned interests is conflicting goals and objectives. If a customer’s goals and objectives can only be achieved at the cost of a supplier achieving its goals and objectives, interests will be misaligned and opportunism and friction will follow as a necessary consequence. For example, an important source of value leakage is the fact that customers’ goals of lowering their costs comes into conflict with the suppliers goals of increasing their revenue and margin. This is not a goal conflict given by nature, but instead a result of conventional economic models most often used in commercial relationships today. A relational contract – by design – seeks to align interests by avoiding goal conflicts between the parties. Joint – not separate - goals and objectives should be adopted. To do this follows logically from adoption of the guiding principle of loyalty described in the previous section. Loyalty requires that each party’s interests are treated with equal value. To build in conflicting interests into the relationship would be a breach of loyalty, since it will mean that one of the parties interests will be considered less valuable. There are three main components in a relational contract that aim for risk mitigation and avoidance through aligned interests: 1. The six guiding principles 2. A shared vision and a set of common strategic objectives for the partnership 3. A governance process for continuous risk and change management 29

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We have already discussed the six guiding principles and we will discuss governance later. Below we focus on the shared vision and strategic objectives. We will also briefly discuss the importance of finding the right economic model for the partnership.

HOW DO YOU DO IT?

To adopt a shared vision and strategic objectives is to adopt a common view of what is valuable. An individual’s and an organization’s interests are tied to what they perceive as valuable. In the market, what is valuable is most often tied to goals and objectives that, when achieved, generates revenues or improves productivity. For public and non-profit organizations, what is valuable is often tied to the task or function to be fulfilled, for example providing health care, infrastructure or education. A shared vision for the partnership can be created based on what the parties perceive is valuable. This is a powerful exercise and should always be done jointly. An effective method is to let everyone in the room think about a few words that they want to be included, words like “together”, “customer satisfaction”, “empower” and “world-class quality”. Everyone in the group then can assign three votes to the words that the group has come up with, thereby indicating a direction for the continued work. After this, the parties can start to create draft statements, which step-by-step are merged into a view of a bright future – the shared vision. A good shared vision should not be too long, paint a successful common future, and be aligned to both parties business strategies. You know when you have a good shared vision when everyone in the room smiles and feels engaged and want to roll up their sleeves immediately to achieve the vision. For example, Vancouver Coastal Health and their strategic partner for environmental services created the below shared vision43. Patient and Resident focused Environmental Services that are of the highest quality and reliability. Our commitment to collaboration, innovation, and shared governance will drive value and create an exceptional healthcare environment for all.

The process for getting to a first draft can often be quite quick, but we advise that the parties then take a break for a day or two, allowing for the organizations to socialize the draft and time for individuals reflect. This will allow for new insights and thoughts about changes or adjustments. It will also prevent the urge to spend hours wordsmithing.

Action: Create a shared vision for your partnership and document it.

When you have created a shared vision, it is often a good idea to break it down into a number of shared objectives, which specifies in more detail what the shared vision means. The objectives range based on the intent of the relationship. Objectives typically fall into one of three categories.44

UNPACKING RELATIONAL CONTRACTING

 Outcome-based – which are boundary spanning transformation business outcomes that typically can only be achieved with a high degree of collaborative (e.g. the mountain climber cannot get to the top of Mt. Everest without the Sherpa).  Output-based – which typically tie to a specific scope of a one or both parties (e.g. Service Level Agreements tied to a supplier’s workscope)  Transactional – which typically linked to the effectiveness of a specific task or activity. In a relational contract, the objectives should typically be outcome-based or output-based. Common objectives can be to increase customer satisfaction, lower total cost of ownership, gain market shares, avoid business interruptions etc. We advise to use at a maximum of 4-6 objectives, otherwise the parties will lose focus governing the relationship.

Action: Break down the shared vision into strategic objectives.

Having adopted a shared vision and strategic objectives, the relational tenet of mutual objectives will have been implemented. We must however emphasize that these alone may not be enough to align interests. It is typically also necessary for the parties to take a hard look at how risks will be allocated and at the economics of the deal, as both can create perverse incentives due to conflicting interests. Each of these is discussed in more detail. We’ll first look at risk allocation. Risk should be allocated following the guiding principles, which would have already been agreed to and adopted. It is important to understand the role of the guiding principles in avoiding and mitigating risks in the partnership. As stated previously, the guiding principles will not only guide the relational contract process and negotiation; they will also have hard consequences for the contract content. It is important to recognize – again – that no matter how perfect your objectives and planning are at the onset of the contract, all contracts are incomplete. Conflicts of interests will unavoidably arise anyway - as business happens, changes in the market occur, and priorities shift. Your contract will be full of cracks and holes with risks and events not dealt with in the contract clauses. When this happens it is important to go back to your shared vision and guiding principles. Why? The shared vision and guiding principles fulfill an important role in dealing with the tricky combination of arising conflicts of interests in an incomplete contract. This is done by agreeing on how the contract shall be interpreted when something is ambiguous or even silent in the contract. How to interpret contracts is an important part of contract law in most jurisdictions. But the legal rules and principles for interpreting contracts vary significantly. In Common Law countries, the four corner of the document principle is a key component, even though the principle today has so many exceptions that it can be discussed to which extent the principle still apply. In other legal traditions, for example in civil law countries, more attention is paid to the intentions of the parties at the time of signing the contract.

UNPACKING RELATIONAL CONTRACTING

In a relational contract, the parties should contractually agree that the contract clauses shall be interpreted in the light of the shared vision and guiding principles. They should clearly agree that the shared vision and principles shall, so to say, fill in the blanks when the contract is silent on which rights and obligations the parties have in a particular situation. For some, this may seem to be a controversial move to make. To say that the shared vision and guiding principles shall apply when the contract is silent, means to add obligations where the contractual language in the contract is silent or uncertain. For a contract lawyer used to “Entire Agreement” clauses where the goal is to ensure contract obligations are exhausted by the written word, this will seem risky. This perception is, however, based on the incorrect transactional contract assumptions that contracts can and should be complete. As we have seen, this is an illusion. All complex contracts are incomplete and unless the cracks and holes are dealt with through the shared vision and guiding principles, opportunism will enter and value will erode. To ensure that the contract is interpreted in light of the shared vision and guiding principles therefore decreases the risk of the relationship significantly. Remember also Dworkin’s description of a society of principles shared above; by definition, a partnership contains rights and obligations broader than the written word.

Action: Agree on clauses regarding contract interpretation, saying that when ambiguous or silent, the contract shall be construed in light of the shared vision and guiding principles.

The second key consideration comes in structuring the economics of the relationship. It would be naïve to think that money doesn’t matter. As such, it is important to understand the context of an economic model as it relates to a relational contract. To be clear, the economic model of the relationship - how which the parties generate and allocate value between themselves – is not an integral part of the relational contract. Different economic models can be used in a relational contract. Rather the economic model is a component of the relational contract. Think of the relational contract as setting the rules of the game for the relationship and the economic model as establishing the stakes of this game. The economic model can in many deals create either aligned or conflicting interests. When there are conflicting, it will undermine the relational contract’s purpose to create continous alignment of interests. The very process of creating the relational contract enables the parties to solve the often toughest part of any commercial negotiation – the price/value negotiation. As a result of adopting the guiding principles, the parties will be both obliged and incentivized to find a model that, without usage of power, respects loyalty and equity, i.e. that treats both parties’ interests with equal value and apply proportion between risk and rewards. The important relational tenet of sharing of gains and pains should be implemented here. The various economic models that can and should be used under different circumstances in primarily customer-supplier relationship is thoroughly examined in the book Strategic Sourcing in the New Economy.45

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Action: As part creating a relationship with aligned interests and maximized value creation, jointly work out the economic model that best incentivizes the parties to achieve the shared vision and strategic objectives, while respecting the guiding principles and relational tenets,

Create a Fair and Flexible Framework

As we have discussed, a transactional contract tries to be complete in the sense that there should be no future events that the contract cannot deal with. The theory and practice is that transactional contracts should never be silent, no matter what happens. This ambition can actually succeed in some cases. Often, a transaction is a simple exchange of a product for money and all the likely risks can be dealt with through a contract. But, as we have seen, more and more organizations are entering into contracts that are not simple. Many contracts are rooted in an environment that is complex, uncertain, and demands flexibility and speed. Attempting to write a complete contract dealing with everything in the future is naïve. Remember the contracting paradox discussed in the introduction of this white paper. This does however not mean that those authoring contracts should resign, succumbing to their limited ability to predict and plan for the future. Rather it means today’s contracting professionals need to adapt to new ways of authoring contracts that are both fair and flexible.

WHAT DOES IT MEAN? A relational contract gives up the ambition of completeness and accepts that complete planning is impossible. The contracting parties try to establish a fair and flexible framework for their deal and their relationship. The relational contract operates as a framework, setting forth clear rights and obligations as the parties pursue their mutually defined shared vision and objectives. But on a more general level, a relational contract is designed for flexibility, enabling the parties to deal with change – not just change control. This means creating a sound governance structure and mechanisms to help the parties manage the business in a dynamic environment, not just enabling the customer to manage the supplier. The guiding principle and relational tenets ensure that the explicitly laid out rights and obligations and the processes for managing the relationship are kept fair during the term of the contract. We have stated previously that the foundation of a relational contract is trust. Sometimes we are asked if the relational contract should contain common clauses like service scope, service levels, confidentiality, termination clauses, limitation of liability, dispute resolution etc. The underlying question is whether it is compatible with trust to want to implement legally enforceable rights and obligations in the relationship. Isn’t it a signal of distrust to ask for such rights and obligations? This is an important question that requires some reflection. Trust is a complex phenomenon. But it should not be mistaken for naivety. We have noted how as humans we have a tendency for

UNPACKING RELATIONAL CONTRACTING

opportunism, looking out for our own interests to the detriment of others. Evolution has made us that way and it would be naïve to ignore this fact. And somewhat paradoxically, trust exists because of opportunism. To trust someone is to have confidence that she will do what she says, despite her opportunistic DNA. Without opportunism, trust would serve no purpose. But trust also exists because evolution at the same time has made us into moral creatures, having a strong sense of fairness, shown for example in the Ultimatum Game referred to previously. If we were only opportunistic, trust would – again – serve no purpose. To trust someone is to have faith that a person’s sense of fairness will be stronger than her tendency for opportunism. So, trust rests on our combined and opposing tendencies for opportunism and sense of fairness given to us by millions of years of evolution. The aim of the relational contract is to create circumstances as favorable as possible for our sense of fairness to dominate over our opportunistic nature. But that does not mean that this opportunistic nature is ignored. It is therefore not necessarily a signal of distrust to ask for clear and legally enforceable rights and obligations in the relational contract. Instead, it would be naïve, and often commercially very risky for the relationship, not to include clear rights and obligations. The key is the following: It is not personal when we ask for clear legal rights and obligations, it’s just accepting how evolution has made us. But since we also must accept our strong sense of fairness, those rights and obligations must not be listed in excess, which would indeed be a strong signal of distrust. And also – and this is critical – those rights and obligations must all be aligned with and be justifiable under the guiding principles described earlier.

HOW DO YOU DO IT? At this stage of the process, three cornerstones of the framework have been placed. These cornerstones are the shared vision, the strategic objectives and the guiding principles. Here is how they work together.  The shared vision and the objectives are set at the beginning of the relationship. They can of course be changed over time, but they should typically lay the foundation for the foreseeable duration of the contract.  The guiding principles should be considered fixed and should be strictly adhered to not only during the contracting process, but also post contract signing.  The parties should be flexible in the means they use to achieve shared vision and objectives, as long as they always act in accordance with the guiding principles. To create a fair and flexible framework based on the three cornerstones requires the parties to agree on clear rights and obligations regarding ‘the deal’ and the risks related to it and the relationship. In addition, the parties must agree on a robust governance process for managing the relationship. As set out above, the parties must agree on clear rights and obligations regarding the goods or services of the deal, their quality and timely delivery. The parties will also have to agree on the contract duration, payment terms, confidentiality, rules for terminating the contract, how to

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compensate each other in case of breaches, what limits should be set to the parties’ liabilities, ownership of intellectual property etc. The trick is to find an appropriate level of detail to ensure that it is a framework and not a complete manual that is written. The clauses you adopt in the contract will play a role in interpreting the contract. But the contact language you don’t write will play an important role providing the necessary flexibility you need to manage change in a dynamic business environment. The key is finding the right balance. The guiding principles play a vital role in developing and interpreting the contractual clauses and language. First, the parties must ensure that all the written clauses are aligned to guiding principles from the start. Second, the guiding principles provide a way of interpreting the clauses (and lack of contract language). A quick look at a typical transactional contract shows that many of the typical clauses are in breach of the guiding principles. Some examples are:  Non-reciprocal and non-equitable audit rights, indemnification rights or limitations of liability.  Sweeper clauses obliging the supplier to provide services without a right to compensation in accordance with the equity principle.  Termination for convenience clauses giving one of the parties discretionary power in the relationship, in breach of the autonomy principle.  Limitation of liability clauses that fail to keep the risks for the relationship as a whole as low as possible, breaching the loyalty principle. To be clear, clauses about audit rights, indemnification, limitation of liability, termination for convenience etc. are not as such in breach of the guiding principles. But in transactional contracts, they are typically written in breach of those principles. In a relational contract, they can and often should be used. But the intent and wording must be fair and balanced, aligning to the guiding principles. Think about this: what would it mean to make all the clauses of the contract aligned to the guiding principles? Take, as an example, the limitation of liability clause. To make this clause aligned to the guiding principles would mean to find the allocation of risks that keeps the risks as low as possible for the partnership. Part of the solution is to, according to the loyalty principle, allocate risks to the party having the cheapest insurance policy covering the potential liability. But it is not possible to buy insurance for all risks and for those risks the parties must, according to the equity principle, make sure that the party carrying those risks are also compensated with proportionate potential rewards. And what about allocation of risks for unforeseen factors regarding a set of outsourced services that could potentially have been but was not discovered during the due diligence phase of the contract negotiations? A powerful customer would typically shift those risks to the supplier, using a scope sweeper clause. Of course this is something the supplier would resist, wanting to be compensated for unforeseen additional costs. The guiding principles will here help the parties to 35

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find the right balance between the customer’s obligation to transparently inform the supplier about the services and the supplier’s obligations to use its knowledge and expertise to investigate and ask questions before offering prices. Or what about termination for convenience? Could such a clause be compatible with the guiding principles? That seems a challenge, especially since this kind of clause is a classic power instrument used by the customer side. But what if the reciprocity principle is used, making the termination right mutual? That would create more of a power balance between the parties. And what if the parties also negotiated equitable compensation clauses, making sure that neither party loses money apart from future revenues as a result of the termination for convenience clause. It is important to understand that there is seldom one “right” answer or solution when it comes to clauses such as the ones discussed above. What would be an unfair indemnification clause in one contract could be compatible with the guiding principles in another. This is partly because it is necessary to always look at the total risk allocation in the contract when assessing its overall fairness. It is also because the process of agreeing on a particular clause – with honesty, reciprocity and autonomy – is as important for a clause’s fairness as its actual content or the result of the process.

The last remaining cornerstones of a relational contract is creating a structure and mechanisms for managing the relationship post contract signing. This is often referred to as governance and it is crucial to sustain the relationship, ensuring continual alignment of interests and helping the parties to remain focused on the vision and objectives. Sound governance includes incorporating the following seven mechanisms into how you will jointly manage the relationship post-contract signing46: 1. Create a tiered management structure. The number of tiers can vary based on the scale and complexity of your relationship. The most common is a three-tier structure that enables the parties to focus at the operational, management, and strategic or executive levels. 2. Establish clear roles. Good governance ensures the parties to focus on managing for today (service/product delivery), managing for tomorrow (transformation and change management), managing the economics (commercial management) and managing the overall relationship. We recommend larger contracts not only clearly spell out the roles, but also establish separate roles for areas to enable proper focus. A separate transformation role is essential for large scale outsourcing deals where transformation and innovation is essential. 3. Establish peer-to-peer communications protocols. To enable efficient and effective communication, the parties should shorten the communication lines and let the right people on each side connect and communicate directly and not via an account manager or contract manager. 4. Develop a communications cadence. To keep momentum in the relationship, the parties should agree a frequency for their meetings at operational, tactical and strategic level.

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5. Develop a process to maintain continuity. A relationship is created by people and if people in the governance structure change, it is critical to have processes ensuring that new individuals are educated and taken on board the relationship in a way that ensures continuity. We recommend larger contracts establish “key man” provisions for both parties. 6. Establish a performance management program. The parties should agree on joint reports to continuously follow up their performance, i.e. their journey towards the shared vision and strategic objectives. 7. Establish processes for risk management and contract changes. The parties should agree on a process for reviewing whether the contract needs changes to ensure that the shared vision is met and the guiding principles are followed. As part of this, they should agree on a process to continuously identify, assess and deal with upcoming risks. If a need for change arises (i.e., identification of new risk or other factors), the parties should have a simple process for formalizing such changes and make them legally binding. It goes without saying that all changes must be aligned to the adopted guiding principles. By incorporating the seven mechanisms above into their governance structure, the parties will have implemented the relational tenets of communication, problem solving, no-blame culture, joint working, mutual objectives, and performance measurements. If the commercial deal is about delivery of service, the parties should also incorporate the relational tenet of continuous improvement and create mechanisms for driving developing, measuring and monitoring improvement opportunities.

Action: Jointly agree on the best governance structure and mechanisms to enable the parties to, respecting the guiding principles, achieve their shared vision and strategic objectives while also dealing with change and unforeseen events.

Relational Contracting as a Process

People sometimes ask us whether it is necessary to use the formal process we have outlined in this white paper when architecting a relational contract. They argue creating a solid relationship should come naturally and should not feel “forced” with the process.

We want to be clear; we have definitely seen many organizations that have created very successful relational contracts and did not use this, or any, formal process. Instead they discovered the journey for themselves, often by intuitively implementing the various components we suggest, for example the relational tenets. While we know getting to a good relational contract can be done without using a formal process, we do want to emphasize that we believe using the simple five-step process we have outlined will definitely help you facilitate the foundation for a sound relational contract.

UNPACKING RELATIONAL CONTRACTING

Clearly, the process we recommend in this white paper is not the only one that can be used. However, we do recommend the process in this white paper for three reasons.

First, we have seen firsthand that the process outlined in this white paper works. It has been used by many organizations with success.

Second, we suggest following the formal process because it helps ensure the parties do not start from the wrong position. For example, it is very easy to start by discussing the deal and the money related to it. But as seen previously, this will bring out our opportunistic nature from the start. Getting out of the gate wrong can make it very hard if not impossible to build a strong foundation of trust that is needed if the parties have not intuitively followed the guiding principles we outline.

Lastly, following the formal process we have outlined ensures that your relational contract will have the essential elements of success – i.e. the shared vision, guiding principles, nine relational tenets and so on.

Is it necessary for a relational contract to inlude all the nine relational tenets or components, for example mutual objectives? The answer is likely not. Do you need to formally document the guiding principles as we suggest, or can you rather just “do” them? The answer is it depends. In some organizations, the culture is such that they consistently live into the guiding principles. In others, individuals may be tempted to violate these essential social norms, which will most likely erode trust. In these organizations it is essential to document and institutionalize the guiding principles. The critical point is to ensure that the guiding principles are adopted in practice. It is for example only then that the relational tenets will deliver their full value.

In Part 4 we show the importance of a relational contract grows as interdependency, risk, costs and complexity grows. At the higher end of the spectrum of those factors (the most valuable and strategically important relationships), it will be very hard to succeed without including all the components we recommend. At the same time, this means that not all components must necessarily be used for relationships that may less interdependency, risk, costs and complexity. For example, the typical organization has hundreds if not thousands of suppliers. Simply put, relational contracts should not be used for all of your supplier relationships. Do you really need a relational contract for working with a pen supplier? However, as your relationships shift along the sourcing continuum, you will likely find value in using a more formal process for creating a relational contract.

We want to emphasize that using a relational contract approach from a certain perspective is an all-or-nothing choice. You cannot, if you want to succeed, play an opportunistic and a collaborative game at the same time. The opportunistic player will then take advantage of the collaborative player and the relationship will fail. Therefore, you have to jointly choose which game to play and stick to that choice. With that in mind, you can then determine how formal of a process you want to use for embedding the concepts we outline into your relationship. We highly recommend that no matter what process you use or how formal or informal the process, it is 38

UNPACKING RELATIONAL CONTRACTING

essential to make the six guiding principles a key focal point of any relational contract. A relationship where reciprocity, autonomy, honesty, loyalty, equity and integrity do not exist will never succeed in establishing the level of trust and transparency needed to get out of the contracting paradox discussed in the introduction.

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PART 4: WHEN TO USE A RELATIONAL CONTRACT While transactional contracts may be acceptable in many situations, this paper argues that they are not fit for more strategic and complex commercial agreements. Simply put, the business world has evolved and it is essential that organizations evolve their contract vehicles as well. The new economy demands that organizations take a broader view of contracting by adopting relational contracts as a critical enabler for doing business. The reasons for choosing the relational contract will vary depending on who is making the choice and the situation at hand. A good way to think about it is to ask, “Is beef a commodity?” It might be to the local grocery retailer but for McDonald’s, beef is a strategic weapon and commands a highly strategic relationship with suppliers.47 A customer thinking about outsourcing will have a different perspective than a supplier trying to gain a competitive advantage. A government planning to build a hospital will have a different perspective than a technology company that wants to join create a strategic alliance to join forces with companies in other markets. And so on. However, given what everyone is trying to achieve with any contract – to make plans for the future while coping with our limited capabilities for planning and the tendency for opportunism – there are some common factors that will always point towards a relational contract as the optimal choice. IACCM suggests that organizations use more relational contracting vehicles as interdependence, risk, complexity and cost rise. Research from the University of Tennessee offers additional insights, building on the work of Nobel Prize winner Oliver Williamson. University of Tennessee researchers suggest that business relationships fall along a continuum that fall into three classifications: 1) transactional, arm’s length relationships, 2) relational contracts and 3) investment-based relationships where business transactions are managed and controlled through ownership in joint ventures, shared service centers etc.48 Which relationship model is best to use varies depending on the characteristics of the environment and the deal, as well as what the parties want to achieve. The researchers outline 12 attributes which point practitioners to the most appropriate classification for their situation. These attributes fall into three categories:  What is the overall level of dependency associated with the product or service?

 What is the strategic impact of the product or service category? Does this product or service provide your organization with a core competency or competitive advantage?

 What is the degree of risk associated with this product or service category?

To find the best fit relationship model, practitioners can use a relationship model mapping tool (an. example is shown on the next page).† Let’s look at an example of how the mapping tool works on the following page when a pharmaceutical company mapped supplier dependency for Clinical Research Outsourcing with a strategic supplier.

† The complete tool also enables the parties to find the best fit economic model for the relationship. The tool can be downloaded on http://www.vestedway.com/self-assessment/ 40

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Exhibit 3 – Example Mapping Exercise to Determine Appropriate Relationship Model

Attributes to Determine Transactional Contract Relational Contract Investment

Best A B C D E F Relationship Model

Dependency

Overall cost to switch Medium to Medium to Low Low Medium suppliers High High High

Physical asset specificity Medium to Medium to (location, machinery, Low Low Medium High High High processes)

Skill level needed for Unskilled Semiskilled Skilled Professional Professional Expert predominant personnel

Level of supplier Integration/interface None Low Medium High Very High Critical required (systems, support processes)

Using the tool is not a mathematical exercise, but instead is a way to obtain a common understanding of the business, enabling the parties to make a wise decision on which type of contract to use. Even though the mapping tool involves many attributes, the underlying logic is simple. The basic question to ask is to what extent is alignment of interest between the parties important. In a situation characterized by high dependency, risk, and complexity, the costs of misaligned interests will often destroy any potential value in the deal. Under such circumstances, it will not be possible to use power without facing the costs of retaliation. Therefore, it is critical to use a relational contract that enables the parties to continuously align their interests. When dependency, risk, and complexity are low, an arm’s length transactional contract can be used since the risks of misaligned interests can be mitigated through market power. When using the mapping tool, it is easy to understand why a relational contract is the recommended approach for more strategic deals being done in the new economy. Contracts regarding outsourcing of integrated facilities management, finance processes, integrated IT services, complex construction projects, or supply chain management services are a few good candidates for a relational contract. Relational contracts are good for these types of relationships because typically a competitive advantage cannot be gained in an arm’s length relationship and misalignment of interests creates friction and high transaction costs.

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PART 5: CONCLUSION AND CALL TO ACTION

Think of this analogy. Newtonian physics - largely discovered and developed by Sir Isaac Newton and many of his 17th century contemporaries, was the mainstay of classical mechanics through much of the 20th century. When Albert Einstein came along with his theory of relativity, Newtonian physics was not abandoned, but incorporated into a broader system of thinking. The same intellectual action is needed in contracting. The relational contract will and should not replace the transactional contract. Instead, it is necessary to incorporate transactional and relational contracts into a more comprehensive system that explains the characteristics of both, including explaining when each contract model is needed. In this white paper, we set out with a goal to become the go-to practitioner’s guide to help individuals and organizations better understand relational contracting. We end with the challenge for those individuals who play a role in forming or managing business relationships and writing contracts to take time to reflect on how relational contracting can improve the results for your organization. The bottom line is that relational contracting is about enabling organizations to adapt to and to support the new rules of business in the new economy. It is time to put past dogmas, policies and contract templates aside and embrace contracting in the new economy. This does not mean transactional contracts should be abandoned, but rather they should be used only when it is a good fit, leaving room for the relational contract when that contract model is the best fit. Here are four things you can start doing today in your journey towards relational contracting: 1. Arm yourself with facts about transactional and relational contracts. Investigate whether you suffer from problems in your transactional contracts and analyze whether the problems can be understood as result of the weaknesses we have discussed in this white paper. Investigate your most successful commercial relationships and analyze whether success may be a result of use of relational contracting elements. Facts must be your weapon when confronting superstitious beliefs and skepticism about relational contracts. 2. Involve the right stakeholders. Upper management should become aware of the potential advantages and economic upside associated with relational contracting. Make them your allies and sponsors. 3. Start with lower-risk contracts and call it a pilot. De-risk and build a success story from which you can continue using relational contracting for bigger and more business critical contracts. 4. Be very forgiving and patient with nay-sayers and skeptics. Relational contracting will meet resistance, regardless of the undeniable evidence of its advantages in many situations. We are all humans and typically don’t like change. Hesitation should not be confused with bad intentions. Instead, try education as your change agent. Please remember that this white paper is available as a free, open source document and we encourage you to share it with your colleagues, clients, customers, suppliers and business partners. ‘

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If you are hesitant and still want to try, start by implementing one or a few of the relational tenets and see what happens. Start the journey from left to right on the continuum showed on page 5! It should then be clear to you that this will not mean that you are creating a relational contract - that will only happen when you make the guiding principles the true North of the relationship. But you will then maybe have started a relationship journey that hopefully will lead you to adopt the relational contracting approach in full in those commercial relationships where this contract model is the best fit and will produce most value to your organization.

Good luck with your relational contracting!

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APPENDIX 1

Definitions of Nine Tenets of Relational Contracting

Relational tenet Description

Communication A defined framework for communication planning – what, when and how – and a forum established for monitoring the effectiveness of communications and

driving future improvement.

Risk allocation Ensuring that the allocation of risk under the contract does not act as a disincentive to collaboration and that there are methods established to deal with

the unknown or unexpected.

Problem solving Agreeing on principles for the way that problems or future misalignments and change requirements will be identified and resolved, including clarity over review

and escalation procedures and paths.

No-blame culture Establishing operational principles that focus first on resolution and the principle ‘we are in this together’, but with clarity over individual roles, responsibilities and accountability for performance.

Joint working Defining the benefits and rationale for joint working and establishing criteria to determine when and for how long it is required.

Gain and pain sharing Ensuring the allocation of risk and reward provides each party with the right incentives for success and for introducing added-value through continuous

improvement and innovation.

Mutual objectives Aligning goals and objectives across the parties to ensure consistency or understand different interests; establish where there are areas of uncertainty and the likelihood of changes in objectives over time.

Performance Determine the measures and performance indicators that are critical to success measurement for each party and ensure there are methods for shared data gathering and review.

Continuous Develop a framework for delivery of continuous improvement and verify that the improvement necessary mechanisms exist; for example through the approaches established for communication, gain share, performance measurement.

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APPENDIX 2

Example Contract Language for Including the Six Guiding Principles The Guiding Principles below set the tone for a collaborative business relationship that replaces a traditional competitive relationship characterized by conflicting, negative or non-productive social norms, often leading to deterioration in trust between the parties and the creation of a dysfunctional working relationship. 1. Guiding Principles The parties commit to adhere to the Guiding Principles during the establishment of their relationship and to maintain that commitment throughout the term of the contract for the scope of Services in this contract. This commitment is intended to assist the parties to establish a positive environment designed to purposefully build trust in the relationship. 1.1. Reciprocity We will strive to make fair and balanced exchanges that are mutually beneficial to the parties. We will not place any expectation upon the other that we ourselves are not willing to return in kind. We recognize that reciprocity lies at the heart of our partnership’s ability to reach its goals and will ensure that short-term and long-term requests are for the benefit of the relationship. 1.2. Autonomy Neither party will seek to use its power against either party’s best interests or those of the relationship. We will strive to transparently make as much information available as possible to allow our partner to make good decisions for itself and for the relationship. We recognize that working together and being free from coercion ensures our ability to reach our own goals and those of the partnership. 1.3. Honesty We will have accurate and genuine conversations at all levels within the relationship. We will speak the truth about facts and about our intention, not withholding information being relevant for the success of our partnership. We will also separate the facts from people’s observations, perceptions, and experiences, and we will speak to our own perception. We will then look for the greater good that can come from accepting all points of view as relevant for seeking greater value for all stakeholders. 1.4. Loyalty We will champion and protect the value of the other party’s interests to the same extent that we value our own individual interests. The partnership creates more value for both parties than acting separately. We will therefore be loyal to our partnership, striving to allocate costs and risks to the party being in the best position to carry and mitigate them. 1.5. Equity We acknowledge that some situations will require an unequal distribution of risk or investment. In those situations, we will strive to compensate each party in proportion to the value, risk, costs incurred, or investment made to the partnership. 1.6. Integrity We will avoid opportunistic behavior and continually strive to make decisions that are consistent with the Guiding Principles in the best interests of the partnership. To achieve results, we will align our actions with our words. We will do what we say.

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ABOUT THE AUTHORS

David Frydlinger is an attorney at Lindahl law firm in Sweden, a faculty member at the University of Tennessee and active in IACCM in Sweden. He is a Vested Certified Deal Architect and has more than fifteen years experience in drafting and negotiating outsourcing and other complex commercial contracts. David, who teaches relational contracting at the University of Tennessee, is also author and co-author of several books, including Getting to We – Negotiating Agreements for Highly Collaborative Relationships. He also holds a masters degree in sociology.

Tim Cummins is the CEO of IACCM. Tim works with leading corporations, public and academic bodies, supporting executive awareness and understanding of the role that procurement, contracting and relationship management increasingly play in 21st century business performance and public policy. Prior to IACCM, Tim's business career included executive roles at IBM and a period on the Chairman's staff, leading studies on the impacts of globalization and the re-engineering of IBM's global contracting processes. His earlier career involved the banking, automotive and aerospace industries, initially in Corporate Finance and later in commercial and business development.

Kate Vitasek is an international authority for her award-winning research and Vested® business model for highly collaborative relationships. Vitasek, a Faculty member at the University of Tennessee. has been lauded by World Trade Magazine as one of the “Fabulous 50+1” most influential people impacting global commerce. Her work has led to 6 books, including: Vested Outsourcing: Five Rules That Will Transform Outsourcing, Vested: How P&G, McDonald’s and Microsoft Are Redefining Winning in Business Relationships and Getting to We: Negotiating Agreements for Highly Collaborative Relationships Vitasek has also been featured on CNN International, Bloomberg, NPR, and on Fox Business News.

Jim Bergman is the VP – Asia, Africa and Middle East for IACCM. He has over twenty years of experience in commercial contracting, initially as a contracts attorney. During his career, Mr. Bergman has trained and led contract development and negotiation teams, as well as managed commercial relationship portfolios worth over US$1 billion. He has also developed contracting processes for a number of Fortune 500 companies. His efforts have led to value generation of well over US$500 million, as well as numerous process improvements to his audiences and clients.

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FOR MORE INFORMATION ABOUT….

The University of Tennessee is highly regarded for its Graduate and Executive Education programs. Ranked #1 in the world in supply chain management research, researchers have authored six books on the Vested business model and it’s application in strategic sourcing and complex outsourcing deals.

For additional information, visit the University of Tennessee’s website dedicated to the Vested business model at http://www.vestedway.com/ where you can download white papers, watch videos, read articles and subscribe to the Vested blog. You can also learn more about our Executive Education courses in the Certified Deal Architect program as well as download the many resources and tools to help you understand and begin the Vested journey.

For more information, contact [email protected]

The International Association for Contract & Commercial Management’s (IACCM) provides a global forum for innovation in trading relationships and practices. IACCM enables both public and private sector organizations and professionals to achieve world-class standards in their contracting and relationship management process and skills. With more than 35,000 members representing more than 14,000 corporations across 159 countries, IACCM is leading the way in responding to the demands of global networked markets. IACCM membership is drawn from many industries and is made up of contract and commercial managers, negotiators, attorneys and supply chain professionals.

For more information, visit https://www.iaccm.com

LIndahl Law Firm is the third largest law firm in Sweden and a market leader in the IT, telecoms, energy and life science industries. Lindahl’s practice group for Strategic Contract offers advise to Swedish and international clients on the relational contracting process in outsourcing deals, other complex customer-supplier relationships and strategic partnerships.

For more information, visit: www.lindahl.se

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ENDNOTES

1 Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011). 2 Quoted in Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and the Lyrical (International Studies in the Theory of Private Law), edited by Jean Braucher, John Kidwell, William C Whitford (2013). 3 Available at http://www.merriam-webster.com/dictionary/contract. Definitions that do not apply to business contracts are omitted from the definition 4 Macneil, Ian R., Contracts: Instruments for Social Cooperation (Hackensack, NJ: F. B. Rothman, 1968). 5 See the Wikipedia definition at https://en.wikipedia.org/wiki/Volatility,_uncertainty,_complexity_and_ambiguity 6 Porter, M., Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: The Free Press, 1980). 7 Porter, M., Competitive Advantage: Creating and Sustaining Superior Performance (New York: The Free Press, 1985). 8 Porter, Competitive Strategy, pp. 3. 9 Peter Drucker, “Sell The Mailroom,” Harvard Business Review, July 25, 1989. Available at http://www.wsj.com/articles/SB113202230063197204 10 C.K. Prahalad and Gary Hamel, “The Core Competencies of the Corporation,” Harvard Business Review 68.3 (1990): 79-91. 11 My Life and Work, by Henry Ford, in collaboration with Samuel Crowther, 1922, page 72. 12 Chris Anderson, The Long Tail: Why the Future of Business is Selling Less of More (New York: Hyperion, 2006). 13 “The Value of Contract Management: Return on Investment - Survey Results,” International Association for Contract and Commercial Management, (Sept. 2013). 14 Ibid. 15 L. Willcocks, S. Cullen, “The Outsourcing Enterprise 2: The Power of Relationships,” (London: LogicaCMG, 2005). 16 Helper & Henderson, “Management Practices, Relational Contracts and the Decline of General Motors,” The Journal of Economic Perspectives, Volume 28, Number 1, Winter 2014, pp. 49-72(24) 17 Ibid. 18 Jeffrey H. Dyer and Wujin Chu, “The Determinants of Trust in Supplier-Automaker Relationships in the U.S., Japan, and Korea,” Journal of International Business Studies Vol. 31, No. 2 (2nd Qtr., 2000), pp. 259-285 19 “Maximizing ROI from Effective Contract Management,” International Association for Contract & Commercial Management. (published March 2015). Available at https://www2.iaccm.com/resources/?id=8484 20 Jeffrey H. Dyer and Harbir Singh, “The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage,” Academy of Management Review, October 1, 1998 vol. 23 no. 4 660-679. 21 Jolls, Christine; Sunstein, Cass R.; and Thaler, Richard, "A Behavioral Approach to Law and Economics" (1998). Faculty Scholarship Series. Paper 1765. P.16 http://digitalcommons.law.yale.edu/fss_papers/1765 22 Ibid. p. 22. 23 See for example Williamson, O., “The New Institutional Economics: Taking Stock, Looking Ahead,” Journal of Economic Literature, Vol. 38, No. 3. (Sept., 2000) 595-613. 24 IACCM contract management survey, op. cit. 25 Kahneman, op. cit. 26 Simon, Herbert A. Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting (New York: John Wiley and Sons, 1957). 27Kahneman, op. cit. 48

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28 Sunstein, Cass R.,” Probability Neglect: Emotions, Worst Cases, and Law” (November 2001). U Chicago Law & Economics, Olin Working Paper No. 138. Available at SSRN: http://ssrn.com/abstract=292149 orhttp://dx.doi.org/10.2139/ssrn.292149 29 Kahneman, op. cit. 30 Kathleen D. Vohs, et al., “The Psychological Consequences of Money,” Science 17 Nov 2006: Vol. 314, Issue 5802, pp. 1154-1156. 31 Jim Collins and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies (New York: HarperCollins, 1994) 32 Ibid. p.22. 33 See Covey, Stephen M., et al., The Speed of Trust: The One Thing That Changes Everything, (New York, Free Press, 2006). Also see John Whitney, The Trust Factor: Liberating Profits & Restoring Corporate Vitality (New York: McGraw-Hill, 1994) and Dan Ariely, The Honest Truth About Dishonesty: How We Lie to Everyone--Especially Ourselves (New York: HarperCollins, 2012). 34 Vitasek et al., “Unpacking Collaborative Bidding: Harnessing the Potential of Supplier Collaboration” (2016). Available at http://www.vestedway.com/vested-library/ 35 Bonnie Keith et al, Strategic Sourcing in the New Economy (New York: Palgrave Macmillan, 2015). 36 Dworkin, R., Law’s Empire (Cambridge, MA: Harvard University Press 1986) p. 209. 37 Dworkin, p. 210. 38 Dworkin, p. 211. 39 Dworkin, p. 200. 40 Nyden J., Vitasek K., Frydlinger D, Getting to We: Negotiating Agreements for Highly Collaborative Relationships (New York: Palgrave Macmillan 2013). p. 42-46. 41 See for example Applied Economics, (December 2000). 32--‐3; S. Knack, P. Keefer, “Does Social Capital Have an Economic Payoff? A Cross--‐Country Investigation,” Quarterly Journal of Economics. 112:4; B. Uzzi,“The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect,” American Sociological Review (1996) v 61(4): 674- ‐698; J. Dyer, Collaborative Advantage, Oxford University Press 2000; J. Dyer, “Effective Interfirm Collaboration: How Firms Minimize Transaction Costs and Maximize Transaction Value,” Strategic Management Journal, Vol. 18:7 (1997) and J. Dyer and H. Singh, “The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage,” The Academy of Management Review 23, No. 4, (1998); L. Willcocks, S. Cullen, The Outsourcing Enterprise 2: The Power of Relationships. LogicaCMG, London (2005). 42 Getting to We, op. cit. (chapter 5). 43 Vitasek et al., “Transforming Healthcare Outsourcing: How Vancouver Coastal Health Used Vested to Drive Innovation in Outsourcing” (2016). Available at http://www.vestedway.com/vested-library/ 44 Keith et. al., Strategic Sourcing, op. cit. 45 Keith et al, Strategic Sourcing, op. cit. See also the University of Tennessee’s white paper, “Unpacking Pricing Models – Make ‘you get what you pay for’ Real for Business Relationships.” Available at http://www.vestedway.com/vested-library/ 46 See white paper written in collaboration between University of Tennessee, IACCM and Corporate Executive Board, Unpacking Outsourcing Governance - How to Build a Sound Governance Structure to Drive Insight Versus Oversight (2011). Available for download at http://www.vestedway.com/vested- library/ 47 Vitasek and Manrodt, Vested, chapter 6. 48 Keith, Strategic Sourcing, p 67. Also chapter 4.

Procurement and Grants Unit

Procurement Instructions

Version: 2.0 January 2019

Table of Contents

Contents

Purpose and Application ...... 4

Context ...... 5

Introduction ...... 6

Definitions/Acronyms ...... 6

Background ...... 8

Chapter 1 Acquisition Planning ...... 9 1.1 Acquisition Initiation ...... 9 1.1.1 Initiate a Procurement ...... 9 1.1.2 Determine Acquisition Planning Documentation Required ...... 10 1.1.3 Manage Risk ...... 11 1.1.4 Project Management of Procurement Projects ...... 12 1.1.5 Obtain Approval of Funds ...... 13 1.1.6 Probity Considerations ...... 14 1.1.7 Procurement milestone dates ...... 14 1.1.8 Document management ...... 16 1.2 Acquisition Plan Development ...... 17 1.2.1 Acquisition Details ...... 17 1.2.2 Market Research and Analysis ...... 18 1.2.3 Determine Length of Contract ...... 20 1.2.4 Determine Due Date for Market Responses ...... 21 1.2.5 Update Preliminary Fields in PCMS ...... 21 1.2.6 Contract Management Plan ...... 21 1.2.7 Purchase Recommendation Delegation ...... 22 1.2.8 Variations to Acquisition Plan ...... 22 1.3 Market Approach Document Development ...... 23 1.3.1 Determine the Market Approach ...... 23 1.3.2 Invitation to Supply Process Guide (Part A) ...... 24 1.3.3 Specification (Part B) ...... 25 1.3.4 Contract Development (Part C) ...... 27 1.3.5 Invitation to Supply Response (Part D) ...... 28 1.3.6 Sole Supplier ...... 28 1.3.7 Unsolicited Approaches ...... 29 1.4 Evaluation Planning...... 29 1.4.1 Prepare Evaluation Methodology ...... 29 1.4.2 Evaluation Team composition ...... 31 1.5 Acquisition Plan finalisation, review and approval ...... 32 1.5.1 Final Review and endorsement ...... 32 1.5.2 Simple Acquisition Plans ...... 32 1.5.3 Acquisition Plans – more than one supplier approached ...... 32

Version 2.0 January 2019 For Use of PGU Staff Only - 2 - 1.5.4 Acquisition Plans - single source ...... 33 1.5.5 Acquisition Plans requiring SPB approval ...... 33 1.5.6 Communication and Records Management ...... 33 1.5.7 Evaluation Team meetings booked ...... 33

Chapter 2 Supplier Selection ...... 35 2.1 Market Approach ...... 35 2.1.1 Finalise Market Documents ...... 35 2.1.2 Issue and Manage Market Documents ...... 35 2.1.3 Industry Briefing/Site Visits ...... 37 2.1.4 Manage Enquiries by Respondents ...... 38 2.2 Receive and Access Reponses ...... 38 2.2.1 Receive and Access Responses ...... 38 2.3 Evaluation and Contract Award ...... 40 2.3.1 Evaluation Team First meeting ...... 40 2.3.2 Scoring ...... 41 2.3.3 Shortlist Respondents ...... 44 2.3.4 Negotiations ...... 45 2.3.5 Purchase Recommendation Approval ...... 47 2.3.6 Communication and Records Management ...... 48 2.3.7 Contract Development & Finalisation ...... 48 2.3.8 Contract Execution ...... 49 2.3.9 Post Sourcing Review ...... 51 2.3.10 Debrief Unsuccessful Respondents/Bidders ...... 51 2.3.11 Supplier Complaints ...... 53 2.3.12 Disclose the contract and advise OIA of outcome ...... 53 2.4 Finalise procurement stage and handover to Contract Support team ...... 54 2.5 Finalise Contract Management Plan ...... 55 2.5.1 Contract Management Framework ...... 55 2.5.2 Contract Management Activities ...... 56 2.6 Handover to Business Unit contract manager ...... 56

Attachment 1 – Acquisition Planning and Supplier Selection Process Checklist ...... 58

Attachment 2 – Policy, Guideline, Template and Information Sheet List ...... 61

Version 2.0 January 2019 For Use of PGU Staff Only - 3 -

Purpose and Application

Purpose: To enable the Procurement and Grants Unit (PGU) to provide: - a standard and consistent service for its clients (DHS Business units, Lifetime Support Agency, South Australian Housing Trust), - confidentiality, probity and management of risk, - a high quality business outcome for DHS.

Application: All grants, and purchases of goods and services including single source arrangements, and including those procurements managed by DHS/PGU on behalf of the Lifetime Support Agency and the South Australian Housing Trust

Confidential: For use of PGU staff only. Not for distribution.

Ownership: The owner of these instructions is the Director Screening and Procurement. Any feedback or queries on the content should be directed to the Manager Procurement and Grants (P&G) or Manager Purchasing and Contract Support (P&CS), through your line manager.

Review: These instructions will be reviewed by the Manager P&G and Manager P&CS every 6 months.

Related Documents: All PGU staff must be familiar with State Procurement Board and relevant DHS policies and guidelines.

Version 2.0 January 2019 For Use of PGU Staff Only - 4 - Context The Procurement and Grants Unit (PGU) is a business unit within the Financial and Business Services division of DHS. It comprises three teams, Procurement and Grants (P&G), Purchasing and Contract Support (P&CS) and Projects and Support.

Under DHS Policy YCO/41 “Procurement and Grants Approvals and Processes Policy”, PGU is responsible for “managing the procurement of goods and services across the department (including contractors and consultancy services)”. Specifically, for higher value acquisitions (greater than $110,000 (GST inclusive)) PGU supports DHS divisions by “conducting and managing the acquisition throughout the procurement process.” In addition, YCO/41 requires that all grants, regardless of value, must be referred to the PGU.

These instructions apply to all procurements covered by the State Procurement Act, all procurements/contracts with not-for-profit entities, all construction procurements managed by DHS, and grants.

In performing its function DHS/PGU is governed by the policies and guidelines of the State Procurement Board (SPB), which is established pursuant to the State Procurement Act 2004. The State Procurement Board has provided the DHS Principal Officer (CE) with procurement authority of $15 million (GST incl). The CE has further delegated this authority to the Strategic Procurement and Grants Committee as documented in DHS’s financial authorisations, and certain officers have been provided with authorisations of lesser amounts.

The SPB’s procurement policies and guidelines are based around a number of themes – Procurement Governance; Procurement Reporting; Government Requirements; Procurement Process; Supplier Complaints and Not-for-Profit Sector Procurement. For each theme there are a number of SPB, DHS and other agency policies, Guidelines, Processes, Better Practice Handbooks, information sheets and templates. For a listing of the policy and guideline documents refer to Attachment 2. Because the various governing agencies update their policies on a continual basis, these instructions will be reviewed every 6 months. PGU holds regular training sessions with staff to provide updates on any new or revised policies and procedures. SPB also holds regular staff training sessions which PGU staff, in consultation with their Manager, are encouraged to attend.

This document “Procurement Instructions” is focussed on the Procurement Process theme, taking into account relevant aspects of other framework themes where appropriate.

DHS uses the “Procurement and Contract Management System” (PCMS) to record and manage processes associated with all procurements. PCMS support is provided by the PGU Procurement Financial Analyst. All PGU staff require access to and training in PCMS which is provided as part of the induction process.

Version 2.0 January 2019 For Use of PGU Staff Only - 5 -

Introduction

Under the SPB framework, the Procurement Process consists of four phases – Acquisition Planning; Supplier Selection; Contract Management and Disposal.

This document “Procurement Instructions” is structured to align with the first two of these phases. Within each phase, the processes to be undertaken are presented on a step by step basis. A list of each process to be undertaken is included at the end of each section, and a consolidated list is presented as a checklist at Attachment 1.

A separate document “Contract Management Handbook” addresses the third phase.

Definitions/Acronyms

Business owner The senior officer within the Business Unit that has direct day to day responsibility for the services/function that requires a procurement Business unit The operational area within DHS which has responsibility for the activity that requires a procurement CCR Contract Closure Report Client The DHS Business Unit contact officer for which PGU is managing or advising on a procurement CMP Contract Management Plan CMR Contract Management Report Consultant a person or entity that is engaged for a specified period to carry out a task that requires specialist skills and knowledge not available in the entity. The objectives of the task will be achieved by the consultant free from direction by the entity as to the way it is performed and in circumstances in which the engagement of a person under normal conditions is not a feasible alternative. Contractor Any person or entity engaged to perform a service or provide goods under a contract with the government agency that is not an employment contract. Includes consultants. DHS Department of Human Services DPTI Department of Planning Transport and Infrastructure ECT Economic Contribution Test FGMS Funding and Grants Management System FOI Freedom of Information Grant Treasurer’s Instruction 15 defines grants as money given by an administrative unit, including subsidies, to an entity in order to fund or to assist with the funding of any program or project. IPP Industry Participation Policy IPP Industry Participation Plan ITS Invitation to Supply LSA Lifetime Support Agency MOAA Memorandum of Administrative Agreement

Version 2.0 January 2019 For Use of PGU Staff Only - 6 - NGOs Non-Government Organisations NfP Not for Profit organisation Not for Profit an organisation that does not operate for the profit, personal gain or other benefit of particular people. Not-for-profit organisations consist of two broad categories1:Charities, which will usually be registered with the Australian Charities and Not-for-profits Commission (charities can be further broken down into the following types: public benevolent institutions, health promotion charities and other charities) 2: other types of not-for-profit organisations such as community service organisations, professional and business associations, sporting and recreational clubs and cultural and social societies. OIA Office of the Industry Advocate PAG Procurement and Grants (also known as PGU) PCMS Procurement and Contract Management System P&CS Purchasing and Contract Support team within PGU PGU Procurement and Grants Unit PGU Adviser refers to any member of staff in PGU including Advisers and Officers Preliminary Within PCMS, all activities leading up to an executed contract are defined as Preliminaries Preliminary owner The PGU Adviser allocated the responsibility for the Procurement Procurement The act of acquiring, buying goods, services or works from an external source. Includes the procurement of services from not-for-profit entities, sometimes referred to as grants. RFQ Request for Quote SAHT South Australian Housing Trust Simple Procurement Procurements with a whole of life value of up to the SPB threshold ($550k including GST as at September 2017) SPB State Procurement Board SPGC Strategic Procurement and Grants Committee TI Treasurer’s Instruction VfM Value for Money

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The South Australian Housing Trust (SAHT) is excluded from the scope of the State Procurement Act by virtue of being a prescribed public authority. DHS’s PGU provides services to the SAHT through a Service Level Agreement. In providing this service, PGU follows its standard procurement policies and procedures.

The Lifetime Support Agency (LSA) elected to manage its procurements under DHS’s procurement authority. PGU provides its services under a fee for service arrangement with the LSA. PGU’s standard policies and procedures apply to the services it provides to the LSA. PGU manages LSA’s procurement above $220,000 (GST inclusive).

PGU’s responsibilities extend to contracts with, procurements from and grants to the not-for-profit sector. Arrangements with the not-for-profit sector can involve a procurement of goods or services or grants (provision of funds in the nature of giving/gifting or investing). Procurements with not-for-profit (NfP) entities are covered by State Procurement Act. Grant funding is not covered by the State Procurement Act. DSCI follows standard procurement processes for the provision of funding to NfPs. Historically a number of funding arrangements to not-for-profit entities have been referred to as grants whereas in fact the arrangement is more in the nature of a fee for service, or purchasing arrangement, that is intended to be captured by the requirements of the State Procurement Act. The CE has delegated the SPGC the authority to consider all grants above $500,000 (GST excl).

The DHS Strategic Procurement and Grants Committee (SPGC) is a committee established by the CE DHS. The SPGC, with assistance from the PGU, oversees procurement and grant funding operations to:  ensure the use of best practice processes  ensure probity, accountability and transparency  provide for ethical and fair treatment of participants  manage agency interests in contractual arrangements  ensure a strategic approach  oversee the collection, analysis and distribution of information that will help develop strategy  implement effective risk management  develop policies and oversee their implementation.

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Chapter 1 Acquisition Planning

Because it is critical that all market documents (external) and procurement planning and management documents (internal) are consistent, before an acquisition plan can be finalised and submitted for approval, all related documents should have been prepared, and either finalised or in final draft stage. This both ensures internal consistency of the documents (thus avoiding delays in revising any documents to amend for anomalies) and ensures that once the acquisition plan is approved there is minimal delay in commencing the approach to market/supplier selection phase. This chapter details the steps required to complete the Acquisition Plan and all associated documents.

1.1 Acquisition Initiation

1.1.1 Initiate a Procurement

The three triggers for initiating a procurement are:

1 Strategic Procurement Project The PGU initiates strategic reviews of commodity groups based on data analysis.

2 Contract Nearing Completion The PGU renews existing contracts and works with clients who initiate these as part of the contract management role. Options would include contract extension, or variation to extend with revisions, or a new procurement process.

3 Enquiry from DHS business unit Enquiries concerning proposed procurements are received from clients by phone, e-mail or in person. Clients should be directed to the PGU intranet site to access the DHS Procurement Request Form and asked to complete this form and forward it to the generic PGU email address. PGU Advisers should offer to assist the business unit should they have any queries when completing the form. Following consideration by the relevant PGU manager, the manager will allocate the procurement to the appropriate PGU Adviser. Information to be provided by the business unit in completing the request includes:  anticipated value (whole of life)  business unit priority/alignment to DHS strategic priorities  desired timeframe  understanding of the requirement/specifications  whether ICT has been engaged for projects with an ICT component.

Once a procurement has been determined the following occurs: 1. The Manager is to, within 3 business days:

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 enter the Preliminary onto the PCMS and assign to a PGU Adviser; and  open an Objective file. Refer to PGU Objective Filing Structure and document naming requirements for instructions and information on the specific filing structure for documents relating to a procurement process within Objective.

2. The PGU Adviser is to:  within 2 business days contact the business owner/relevant business unit officer to arrange an Acquisition Panning meeting. Forward a copy of the Acquisition Planning meeting agenda to the business unit meeting attendees prior to the meeting to assist in achieving a productive meeting;  review previous relevant procurements undertaken, including reading related Purchase Recommendations, Contract Management Reports and Post Sourcing reviews; and use the Acquisition Planning meeting to plan and scope the project – the Acquisition Planning Meeting Agenda Template can be used to inform clients of all steps in the procurement process and to agree on realistic time-frames and allocation of responsibilities for completing the Acquisition Plan (or Simple Acquisition Plan for procurements valued up to $550,000 incl GST) and associated documents. The PGU role is to add value for the business by considering and advising on the most efficient and appropriate procurement methodology and approach, advise clients about the process and time required, and complete the procurement related processes and documentation.

If the Manager considers the project is insufficiently scoped or researched, it may be appropriate for the Business Unit to conduct pre-procurement demonstrations or proof of concept processes, with assistance and guidance from PGU. This may include engaging with the market for product/service presentations, or participating in a proof of concept process. For each process refer to the document example bank for pro forma agreements that can be used for participants to sign which outline the process, as well as providing information about the purpose of the research, and that there is no obligation on DHS to move forward with a procurement process. In such a case the Acquisition Planning Document is not required until the project is to proceed to procurement.

1.1.2 Determine Acquisition Planning Documentation Required

The value, risk and complexity of a procurement determine the extent of the process and documentation requirements. The State Procurement Board has enabled simplified requirements for lower value procurements. Refer to the SPB Policies Acquisition Panning and Simple Procurement.

The minimum requirements for low value procurements (refer to the SPB policies for current thresholds and requirements) is that one quote is obtained. An Acquisition Plan is not required. File notes should be retained in the business unit of the process undertaken. The relevant delegate within the business unit must approve the resultant contract/engagement/purchase order.

The State Procurement Board refers to procurements up to a certain value (refer to the SPB policies for current thresholds and requirements) as simple procurements. For simple procurements a Simple

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Acquisition Plan1 is required for each procurement, other than for low value procurements (refer to the SPB policies for current thresholds and requirements).

For higher value procurements (refer to the SPB policies for current thresholds and requirements) an Acquisition Plan is required.

For the remainder of this document the term Acquisition Plan is used to cover both Simple Acquisition Plan and Acquisition Plan.

Where SPB Policy requires an Acquisition, or Simple Acquisition, Plan, this requirement extends to those procurements where it is proposed to approach a single supplier only, or a limited number of suppliers.

It is recommended that the Client complete the first draft Acquisition Plan with PGU assistance and input as agreed at the project initiation stage.

From time to time it may be that a delegate has approved a procurement in the absence of the completed acquisition plan, or based on information in a format that differs from the acquisition plan template. SPB Policy requires that the SPB’s Acquisition Plan templates must be used, although additional items can be added if required. Refer to the Complete the SPB Acquisition Plan template information sheet. In cases where a delegate has approved a procurement in the absence of the required template being completed, the PGU Adviser must discuss the matter with the Manager to determine the appropriate response. This may range from progressing on the basis that the approval stands, to requiring a new approval using the required templates. This will be determined on a case by case basis depending on risk, value, complexity, impact on the market and equity principles.

Any non-compliance must be reported by the PGU Adviser to the Manager PGU, using the non- compliance register. The Manager will report relevant non-compliance matters to the Director for SPGC, using the non-compliance SPGC report. Refer to the Non-compliance reporting procedure information sheet.

If the procurement will involve not for profit suppliers, refer to the DPC Circular 044 South Australian Funding Policy for the Not for Profit sector. 1.1.3 Manage Risk

Risks must be assessed and managed in accordance with the SPB Risk Management Guideline, the DHS Risk management policy and the DHS Risk Management Framework.

For all acquisitions above $33,000 (GST incl) (refer to the SPB policies for current thresholds and requirements) SPB Policy requires that a risk assessment is undertaken. This should occur as early in the process as possible. For procurements below $33,000 (GST incl) DHS People and Culture have

1 For acquisitions up to $220,000 (GST incl) SPB policy allows a Simple Procurement Report rather than a separate Acquisition Plan and Purchase Recommendation to be used. However, DHS requires a Simple Acquisition Plan and Purchase Recommendation for all acquisitions above $33,000 (GST incl).

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developed a checklist for managing work health and safety risks. PGU Advisers should forward the checklist to the business unit for them to complete and retain.

The SPB Guideline identifies categories of risk as Planning and preparation, Product/service, Procurement process, Industry and suppliers, management and stakeholders.

Two key elements must be considered when assessing risk:

Likelihood – how likely is it that the potential risk will occur? Consequences – what would be the impact if the potential risk eventuates?

For simple acquisition plans other than those that are high risk, the PGU Adviser should complete a risk assessment using the DHS Risk Assessment template. The business unit should complete a risk assessment for business risks. These assessments can be attached to the Simple Acquisition Plan and in the SAP section on key project risks simply refer to the attachments. Include the overall risk rating (which would be the highest risk rating for any risk identified) in the SAP.

For Acquisition Pans for procurements up to $4.4m (GST incl) (refer to the SPB policies for current thresholds and requirements) other than high risk procurements, the PGU Adviser should complete a risk assessment using the DHS Risk Assessment template. The business unit should complete a risk assessment for business risks. These can be attached to the Acquisition Plan and in the AP section on risk analysis simply refer to the attachments. Include the overall risk rating (which would be the highest risk rating for any risk identified) in the executive summary section of the AP.

SPB Policy requires that for high risk procurements, and for all procurements valued greater than $4.4m (incl GST) (refer to the SPB policies for current thresholds and requirements) a Risk Management Plan must be developed. The PGU Adviser should complete a risk assessment using the DHS Risk Assessment template. The business unit should complete a risk assessment for business risks. These can be attached to the Risk Management Plan and in the AP section on risk analysis refer to the attached plan. Include the overall risk rating (which would be the highest risk rating for any risk identified) in the executive summary section of the AP. The Risk Register in the RMP should summarise the risks assessed in the Risk Assessment sheets. Refer to the attachments if some aspects of the Risk Register (eg controls, impacts, treatments) cannot be readily summarised.

If necessary, seek independent, professional assistance from the Risk Assessment Facilitator (Quality Assurance, Risk and Business Improvement Division).

Once a risk rating has been determined, the requirements for liability caps (which will be included in the Part C agreement) can be determined. The SPB Acquisition Planning Policy sets out the requirements for low and medium risk procurements. The Crown Solicitor’s Office must be engaged for high risk procurements to determine any tailored contractual terms and conditions that may be required.

1.1.4 Project Management of Procurement Projects The Director Screening and Procurement, the Manager Procurement and Grants and the Manager Purchasing and Contract Support monitor the overall progress of procurements being managed in the

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PGU through reports generated from the PCMS. PGU Advisers therefore need to ensure that progress is recorded in PCMS as each task is completed, and also that regular reporting of status and actions undertaken are reported in the notes field in PCMS. Detailed instructions are contained within PCMS.

1.1.5 Obtain Approval of Funds

Commencement of a procurement process, including “simple” procurements (ie those valued up to the SPB threshold (currently $550k incl GST - refer to the SPB policies for current thresholds and requirements)), prior to funds being approved should only occur in exceptional circumstances. Details of funding approvals must be included in the Acquisition Plan, and the business unit ED or financial delegate is required to certify that funds are available through endorsing the acquisition plan. At the Acquisition Initiation stage, PGU Advisers must obtain advice from the business unit that funds are available - generally this will require evidence that an ED or officer/entity (eg Cabinet) with financial authorisation equivalent to the value of the procurement has identified the funding source for the procurement.

The funding sign off in the acquisition plan is separate to the formal approval that is required in accordance with Treasurer’s Instruction 8 Financial Authorisations, which occurs after Purchase Recommendation and prior to the contract being executed. The procurement delegate will need to be satisfied that the funds are available prior to approving the Acquisition Plan. The PGU Adviser must ensure the officer endorsing that funds are available has appropriate seniority within the business unit – generally this will be the officer with a financial authorisation equivalent to the value of the procurement, or other senior officer as nominated by the Business Unit.

Treasurer’s Instruction (TI) 17 has specific requirements in relation to approvals of “Public Sector Initiatives” which are defined in the TI as “Public sector initiatives include any proposals involving a cost in order to derive a benefit consistent with some specified Government objective. The term public sector initiative would, for example, include a capital project, an information technology systems project, a change in pricing policy, change in service delivery models or an initiative requiring an environmental impact assessment.” For any project that falls within this definition, the PGU must ensure the appropriate process has been followed in accordance with TI17, including the approval of funds, prior to any approach to the market.

1. Capital Works Program The PGU is responsible for procurement of goods and services that are part of a capital works program, unless provided by Department of Planning Transport and Infrastructure or the Across Government Facilities Management Arrangements (AGFMA). While the Department of Planning Transport and Infrastructure undertakes the majority of the higher value capital works, DHS is responsible for managing its capital works up to a value of $150,000 ($1.1 million for Housing SA). Projects valued between $150,000 and $1.1 million (GST inclusive) must be delivered by Facilities Service Providers under AGFMA or by DPTI Infrastructure Delivery. Contact the DHS Assets and Facilities division for information on the DPTI/AGFMA processes.

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Refer to DPC Circular 028 Construction Procurement Policy.

2. Operating expenditure The value for the purpose of the procurement and funding approvals is the whole of life anticipated value of the contract. For example, a five-year contract with an annual expenditure of $100,000 will require a delegate with authorisation of $500,000 (or more if costs are likely to rise with inflation/indexation. Refer to the State Budget Papers chapter 7 for current official State forecasts of CPI.). This is because, as discussed above, prior to the resultant contract being executed, the contract will need to be approved by a delegate with authorisation relating to the anticipated full value of the contract.

3. Consultants All proposed consultancies over $10,000 (GST inclusive) must be approved by the Chief Executive (CE) prior to undertaking a market approach. Consultancies of $10,000 (GST inclusive) or less must be approved by an Executive Director (ED) or Executive Leadership Team (ELT) prior to undertaking a market approach.

PGU Advisers must ensure the client has obtained the relevant approval to engage a consultant (ie from the CE, ED or ELT) prior to commencing a procurement process.

Refer to the guideline for determining the nature of a contractual relationship to assist in identifying if the procurement is for a consultant.

1.1.6 Probity Considerations PGU Advisers should consider how probity issues will be managed throughout the process. For low value, low risk, simple procurements, it is likely the involvement of the PGU will ensure the process is managed such that probity issues do not arise, or if they do they are addressed as they arise.

For more complex, highly sensitive, very high value and/or high risk procurements, the need for a probity adviser to be appointed must be considered. The approach to managing probity is to be outlined in the Acquisition Plan. If an external (private sector) adviser is to be appointed this may require its own selection process, which should be commenced at this stage. As any costs associated with the external adviser will be borne by the business unit, the business unit financial delegate must approve the engagement. Refer to the Probity Adviser information sheet.

1.1.7 Procurement milestone dates

The Acquisition Plan templates provide a table which includes key procurement activities to be undertaken as part of a procurement project. Target dates are to be provided.

To identify the target dates for inclusion in the Acquisition Plan, PGU Advisers must complete the project timetable template, which includes all of the steps and tasks involved in a procurement process. This should be completed at the Acquisition Planning meeting, or as soon as possible thereafter if further information is required to enable it to be fully completed. The completed milestone table must be saved in PCMS and in Objective under the folder 01 Preliminary sub-folder 02 Acquisition Plan. The timetable should be continually monitored and reviewed over the course of the project. It may need to be updated at acquisition plan approval stage to ensure dates align with those approved by the procurement delegate. The revised project table must be provided to the business

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unit, and saved in PCMS and Objective. Variations from the dates as approved by the procurement delegate in the acquisition plan must be treated in accordance with the requirements outlined in section 1.2.8 of this document “Variations to Acquisition Plan”.

The following timelines for key stages are provided as indicative, but will need to be considered and adjusted to take into account any specific complexities or other issues relevant to the particular project. Should the business unit require any deviation from these indicative timeframes, this needs to be raised with the Manager PGU to identify how to manage client expectations.

SAHT procurements will require longer for some steps due to the additional approval requirements and formal correspondence procedures with Renewal SA. At the time of writing, timelines from completing the contract for execution to having the document signed and sealed can be up to 12 weeks.

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Target elapsed time Target elapsed for each task for time for each task Activity simple procurement for >$550k (GST ($33k to <$550kGST incl)2procurements incl ) Acquisition Plan and supporting 1-3 weeks 3-8 weeks documents submitted to PGU for endorsement/approval Acquisition Plan approved 1-2 weeks 2-4 weeks Market Approach Documents <1 week <1 week issued Market/Industry Briefing (where 1 week after 1 week after required) advertising advertising Invitation Closes 2-3 weeks 4-6 weeks3 Evaluation 1 week 2-4 weeks Short listing and Presentations 1 week 1-2 weeks (if required) Negotiations <1 week 2-3 weeks Purchase recommendation 1 week 1-2 weeks submitted to PGU for endorsement/approval Purchase Recommendation <1 week 1-2 weeks Approval Contract drafting finalised < 1 week 1-2 weeks Contract Award and Execution < 1 week 2-4 weeks De-briefing unsuccessful 1-2 weeks 2-3 weeks suppliers Contract Management Plan < 1 week 1 week Completed Transition Plan Completed and > 1 week >1-4 weeks Implemented and contract commencement Contract Details Published – Within 30 days of Within 30 days of where required (including execution execution contract disclosure)

1.1.8 Document management

PGU uses the Objective workflow tool to manage the flow of documents and obtain internal review and approval. Refer to the relevant workflow instructions.

2 Procurement valued above $1.5 million (GST incl) which require Ministerial approval of funding may require longer to complete. Procurements valued above $15m (GST incl), (which require State Procurement Board approval), or those which are highly complex and/or sensitive may require longer than the timeframes indicated. Very high value, or sensitive procurements, requiring Cabinet approval will require longer periods to meet Cabinet and Ministerial lead time and lodgement requirements. 3 For procurements involving the Not-for-Profit sector a longer term is encouraged eg 8-12 weeks. This has been requested by the NfP sector.

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Outcomes section 1.1  Procurement Preliminary Established in PCMS and Objective  Completed Acquisition Planning meeting agenda Template  Acquisition Planning Documentation Requirements Determined  Risk Assessment commenced  Business Unit confirms funding (where relevant)  CE has approved the engagement of a consultant (where relevant)  Probity issues considered and Probity Adviser engagement commenced (where appropriate)  Procurement Milestones discussed and agreed with client  Procurement project milestone timetable template completed  PCMS updated and documentation stored in Objective

1.2 Acquisition Plan Development

1.2.1 Acquisition Details

Before commencing drafting acquisition planning documents, PGU Advisers should consider the overriding objective of adding value for DHS through smarter and innovative procurement approaches. The objective is not to just repeat models and approaches that have been done before without clear research as to whether that is the right approach. PGU must always strive to achieve better outcomes (measured through any of quality, service, sustainability, socially responsible, local industry participation, financial) in new ways.

A first step is to review lessons learned from previous similar procurements. This would include the most recent procurement of the particular service or good being procured, and procurement of similar goods or services, or procurements that might have involved a similar supplier market. Refer to the lessons learned section in PCMS for the previous procurement. The Acquisition Plan must include a reference to the review (ie how it was performed, what was identified) and the outcomes (ie how the review has informed the strategy/approach recommended in the acquisition plan).

PGU Advisers must ensure that the scope of the procurement is appropriate and inclusive of any relevant associated items. Unless consistent with a valid strategy approach justified in the acquisition plan, the procurement should not be “de-scoped”, or separated into smaller parcels, for the purpose of falling within a lower financial threshold. Similarly, where it is known there may be future acquisitions of the same or similar items, over a period of time, an approach which covers future purchases should be considered, which would lead to a bulked up/consolidated acquisition

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plan, referred to as a “holistic acquisition plan” within DHS. Refer to the Information Sheet Holistic acquisition plan.

The detail to be provided in the Acquisition Plan is dependent on the risk assessment and value of the project. Refer to the information sheet complete the SPB Acquisition Plan template.

The role of the PGU is to advise the business unit owner on methods of achieving the best outcomes for the Department including achieving:  Value for money  Appropriate quality  Efficiency of process  Management of risk  Social procurement/local employment outcomes (if relevant) and manage the procurement process.

PGU Advisers are to:  discuss the acquisition with the client to gain an appropriate understanding of the client needs, the objectives of the procurement, the items which the client considers highest priority in terms of deliverables under the procurement, and the project governance arrangements. PGU Advisers should identify relevant areas that will need specific input or development from the client (eg KPIs to be required, any mandatory items that may be required, any desirable items that may be pursued, any innovation that might be able to be secured through the process). This information should have been obtained during the Acquisition Initiation stage through the Acquisition Planning Meeting. However, it is possible not all information will be available/obtained at an initial meeting and follow up meetings may be required to obtain all of the information required.  advise the client on the importance of having appropriately detailed specifications and work with the client to convert any business requirement into specifications suitable for release as part of the market approach. Refer to the Specification writing guideline.

1.2.2 Market Research and Analysis

Generally, it is expected that the Business Unit will conduct market research as part of their business case development. PGU Advisers must ensure an adequate level of market research is conducted so that the supplier market is clearly understood as this will impact the procurement method selected. For large, strategic or high risk contracts this may involve meeting with major suppliers with a list of standard questions in order to refine the procurement strategy.

This may include engaging with the market for product/service presentations, or participating in a proof of concept process. For each process refer to the document example bank for pro forma agreements that can be used for participants to sign which outline the process, as well as providing information about the purpose of the research, and that there is no obligation on DHS to move forward with a procurement process.

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The PGU Adviser and the Business Unit must determine the most efficient process to conduct the market research.

The steps to be undertaken include identifying -

1. Is there an existing across government contract that can be accessed to meet the need? (check the A-Z listing) 2. Is there an existing DHS contract that can be accessed to meet the need? 3. Does another government agency have a contract that DHS can leverage to meet its needs? 4. Is there an Aboriginal Business Enterprise or Australian Disability Enterprise that can provide the required goods and services? 5. Is it an ICT procurement? - Refer to the DHS eProject Panel Guideline in relation to the ICT procurement. 6. Identify and read previous Acquisition Plans, Purchase Recommendations, CMRs, CCRs and Post Sourcing Reviews for similar procurements/requirements

If the answer to any of these is “yes” then it is appropriate to research the existing contract arrangements and identify whether the business unit needs can be met by engaging with a supplier under the existing arrangements. In the case of using an existing DHS contract, the appropriate mechanism to engage may be through a contract variation, rather than requiring a new acquisition plan.

If the answer is no, then market research of potential suppliers should be undertaken.

Refer to the Conduct Market Research information sheet.

Consider the best market approach and methodology – taking into account the market research. Options include accessing an existing contractual arrangement (whole-of-government; DHS; other government agency), open market call, select market call (eg approaching 3-5 suppliers for example), single sourcing (ie approach a single supplier).

Should the number of suppliers to be approached be less than the SPB guidelines ie o Purchase of goods or services between $33,000 & $220,000 (GST incl)– at least three written quotes with one from an SA Supplier4; o Purchase of goods or services between $220,000 & $550,000 (GST incl)– at least five written quotes with one from an SA Supplier5 – but ideally consider an open market approach as this can be a more efficient process than trying to identify 5 suppliers ; o greater than $550,000 (GST incl)– as approved in the Acquisition Plan, then this needs to be justified in the acquisition plan, referring to SPB guidance (refer “Reasons for limiting number of suppliers” section in SPB Acquisition Planning Policy).

4 Procurements for regional South Australia must seek one quote from a business in the relevant region. Check SPB policies for current thresholds and requirements. 5 As per footnote 4.

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Note that the Department of State Development’s Aboriginal Business Procurement Policy enables direct procurement from eligible Aboriginal businesses up to $220,000 (GST incl) where the business meets certain criteria set out in the policy and provides value for money.

Ensure that market research is documented, and key findings are documented in the Acquisition Plan. PGU Advisers should verify any assertions made by the Business Unit in relation to the supplier market through their own research and analysis.

For all procurements greater than $4.4 million (GST incl) (check SPB policy for current threshold), the SPB’s Acquisition Planning Policy requires that public authorities must use the Supply Positioning and Supplier Preferencing market analysis models outlined in the Market Analysis Guideline to assist with the development of an appropriate acquisition strategy. This can also be used for lower value procurements. Refer to the Undertake market analysis information sheet. 1.2.3 Determine Length of Contract

For period contracts for goods or services, the following guidelines apply:

Type of Contract Recommended Length of Contract Standard tactical contracts (Routine 3 years purchases; Low cost/low risk goods/services; Many potential suppliers; CSO/SPB standard agreement templates applicable) Strategic major contracts (High annual 5 years cost; specialist goods/services; Limited number of suppliers with capability and capacity; tailored agreement likely required) Strategic major contracts with major 7 years changeover and/or implementation issues (tailored agreement required) Contracts with Not-for-profit entities 9 years (3+3+3) or 5+3+3

Where a business unit seeks to include extension options within a contract (eg a term of 2+2+1 rather than 5 years), the reasons for this must be fully articulated within the acquisition plan. PGU Advisers must advise business units that extensions are not to be used for contract management purposes, but must be appropriate in their own right. One example of an appropriate rationale for extension options could be that the program is linked to another project or funding source, which may have extension options.

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1.2.4 Determine Due Date for Market Responses

The minimum recommended call periods are as follows: (note: there are no maximum call periods).

<$220,000 (GST incl) 2 weeks - minimum 3 weeks - recommended

>$220,000 and less than $ 614ki6 (GST incl) 3 weeks - minimum 4 weeks - recommended

>$614k7 (GST incl) 30 days – minimum (mandatory for those procurements subject to Free Trade Agreement requirements) 6 weeks – recommended. For procurements involving not-for-profit providers a longer term (eg 8- 12 weeks) is encouraged, and is desired by the NfP sector.

Whole of Government/DHS Panels 2 weeks - minimum 2 weeks - recommended

Advice must be sought from the Manager Procurement and Grants or Manager Purchasing and Contract Support if these time-frames do not meet the needs of the clients. In order to change these time-frames justification must be provided and written approval is required in the Acquisition Plan.

1.2.5 Update Preliminary Fields in PCMS

Instructions for completing relevant PCMS fields and using PCMS to record tasks completed are contained within PCMS. 1.2.6 Contract Management Plan

Requirements for Contract Management are contained in the SPB Policy Contract Management. Contract Management arrangements must be considered and recorded in the Acquisition Plan. DHS’s Contract Management Guideline requires that for contracts valued at more than $550,000

6 This threshold aligns with the amount above which Free Trade Agreement obligations take effect. Refer to the SPB International Obligations Policy for further information. 7 This threshold aligns with the amount above which Free Trade Agreement obligations take effect. While there are specific procurements that are exempt from the FTA requirements, these durations are recommended in any event to provide sufficient time for responses to be prepared.

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(GST incl) a separate contract management plan must be prepared. The PGU Adviser must provide the Contract Management Plan template to the Business unit, with basic content completed and providing guidance to the business unit contract manager on how to complete the plan, Refer to the Contract Management Handbook and information sheet Complete the SPB contract management plan for further information. The contract management requirements must be considered at this stage, as contract management arrangements may have implications for the specification, the contract and the supplier response document. The draft contract management plan should be finalised and forwarded to the procurement delegate with the acquisition plan for delegate consideration. The CMP must be relevant to the particular contract and type of arrangement. The SPB CMP template and terminology can be modified to ensure it is relevant and useful for the business unit contract manager.

The Contract Management reports – Development and Escalation Process guideline provides additional relevant information.

Ensure the plan articulates who is responsible for advising stakeholders and customers of the existence of the new contract. This will generally be PCS for whole-of-DHS contracts.

1.2.7 Purchase Recommendation Delegation Consider the appropriate officer to be delegated authority to approve the Purchase Recommendation, and include in the Acquisition Plan. This will generally be the same delegate as has approved the Acquisition Plan, but can be delegated where considered appropriate. For example, for high value Acquisition Plans requiring SPB Approval, SPB should be asked to delegate the Purchase Recommendation approval to SPGC. For Approval Plans requiring SPGC approval, delegation of the Purchase Recommendation to the relevant Executive Director can be requested, other than for high risk, sensitive or strategic procurements. Justification for SPGC to delegate Purchase Recommendation must be clearly outlined and is not always approved by SPGC.

1.2.8 Variations to Acquisition Plan The Acquisition should identify who is proposed to approve any variations to or deviations from the approved acquisition plan. This will generally be the same delegate that approves the original acquisition plan. All variations must be managed in accordance with “Managing deviations from Approved Acquisition Plan” section of the SPB Supplier Selection Policy.

Outcomes section 1.2

 Lessons learned reviewed

 Acquisition Plan includes a reference to the lessons learned review and outcomes  Market research completed  Optimal Market Approach determined  Use of “Holistic Acquisition Plan” considered  Length of contract determined  Period for invitation to be open in market determined  Contract Management arrangements considered  Appropriate delegate to approve deviations from Acquisition Plan,

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1.3 Market Approach Document Development

The market approach documents must be attached to the Acquisition Plan to assist the delegate in their consideration of the recommendations in the Acquisition Plan.

For all of the document templates referred to in this section, Advisers must download the template from the SPB website for each procurement. Do not use documents that were used in previous procurements. This will ensure that the current, correct templates are used each time. Templates can be modified by SPB from time to time. Using old/superseded templates will risk delays in the project due to incorrect formatting and/or missing information.

1.3.1 Determine the Market Approach

Where there is an existing DHS, whole-of-government or other lead agency contract in place which will meet the requirements for the goods/service, the market approach and documents are generally specified within the overarching agreement. Ensure the correct process and documentation is followed in these cases, by accessing user guides provided by the relevant agency. Note that as outlined in the SPB Panel Contracts Guideline, for procurements from a supplier via a “secondary procurement process” (ie accessing a pre-existing agreement), the normal procurement approvals process must be followed. That is, an Acquisition/Simple Acquisition Plan is still required.

Where a new approach to the market is required, there are three types of approaches to the market.

1. Request for Quote The Request for Quotation is to be used when seeking quotations from suppliers that are part of panel arrangements – i.e. where contractual terms have already been agreed with suppliers, and for procurements valued up to $550,000 (GST incl). Some panel arrangements have specific templates for RFQ. Determine whether the standard RFQ template is to be used or a panel agreement specific template.

2. Expression of Interest The Expression of Interest template is to be used when seeking expressions of interest for goods and services.

Expressions of Interest are multi-staged processes that are usually used for major acquisitions as an alternative to the conventional public tender.

The EOI involves two stages: EoI Stage 1: The objective is to elicit enough detail to shortlist based on a brief statement of requirements and the capabilities of the organisation.

EoI Stage 2: Invitation to Supply or Request for Quote

An EOI is generally used: • where the specified requirements are broad and general, thus encouraging suppliers to offer a wide range of options, alternatives and new or advanced technology. It is especially suitable for services which require innovative solutions to meet desired outputs and "design and build" type contracts.

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• at the contemplative stage of a project, when there is a need to obtain more information about the product and market, and to assist with further definition of the project. • where a brief functional specification can save time and money for both the agency preparing the document and supplier preparing an offer. The evaluation phase for shortlisting is usually quicker and less onerous than a formal public tender.

3. Invitation to Supply This approach is to be used for the acquisition of goods and/or services above $550,000 (GST incl), including grants and contracts with NfPs.

The Invitation to Supply consists of four parts:

Part A: Invitation to Supply – Process Guidelines Part B: Specification Part C: Draft Conditions of Contract Part D: Invitation to Supply - Response

Documents released to the suppliers being approached for the purchase of goods and services are the primary means of providing information to potential suppliers and for soliciting offers.

The time and cost of responding can be substantially reduced by using the appropriate process, and preparing documents in a logical and consistent manner.

It is generally best to use the procurement method that stimulates competition amongst suppliers, so that the market is able to produce the best available value for money outcome for DHS.

The procurement method chosen must be as simple as circumstances allow. The method recommended, together with the associated rationale, must be documented in the Acquisition Plan.

1.3.2 Invitation to Supply Process Guide (Part A)

Part A sets out the instructions, conditions and guidelines to be followed in responding to an Invitation to Supply, along with relevant government policies including criteria which will be used in the evaluation of Tenders.

Part A contains a brief description of the background to the procurement and project specific information and the scope of the procurement.

Part A contains the conditions upon which the Department is prepared to receive and evaluate responses. Part A also specifies the evaluation criteria against which responses will be evaluated. General Evaluation may include: • Overall level of compliance with Specifications. • Capability – Knowledge and Experience • Capability – Infrastructure and Other Support • Capability – Methodology and Staff Resources • Performance – Current and Previous Work • Overall level of compliance with the draft Contract Agreement. • Innovation and Value Adds • Value for Money

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It is important that the evaluation criteria specified in the Part A document is consistent with the criteria outlined in the acquisition plan as approved by the relevant delegate. Any deviation from the approved acquisition plan must be managed in accordance with “Managing deviations from Approved Acquisition Plan” section of the SPB Supplier Selection Policy.

PGU Advisers must ensure the Part A evaluation criteria section in the template is amended to reflect the evaluation criteria in the acquisition plan. Do not include weights. Note that Part A states “The evaluation criteria include, but are not limited to, the following (in no particular order of priority):” These words must not be changed. Note that inclusion of these words allow for enhancement/additions to the evaluation criteria if approved by the relevant delegate. This would be in very rare circumstances.

Part A identifies a range of Government policies with which the supplier must comply. These policies are: 1. South Australian Industry Participation Policy 2. Employment of Ex-Government Employees 3. Disclosure of Government Contracts 4. Allocation of Risk-Liability 5. State Federal Cooperation on Trade Practice Matters

Using the SPB template, complete the relevant fields of Part A.

The PGU Adviser is the Contact Person for all procurements above $110,000 (GST incl) and all other procurement s in which PGU is involved.

All contact by prospective respondents must be limited to the Contact Person/s specified on the document.

An information sheet for Contact Officers is available to advise of appropriate behaviour and process. This should be forwarded by the PGU Adviser to the contact officer where the contact officer is not a PGU Adviser. 1.3.3 Specification (Part B)

Part B sets out the Department’s specifications for the goods and services to be provided.

Preparation of appropriate specifications is one of the most critical aspects of a procurement and this is where PGU Advisers can use their expertise and knowledge to guide and advise the Business Unit and ensure the specifications are most likely to yield the best value for money outcomes for the department. There are numerous aspects to consider. Refer to the separate document Specification Writing Guidelines (June 2016) for comprehensive advice on this stage.

The cost of the procurement process is reduced if specifications are:  uniform for the same or similar requirements;  clear, specific, complete and reliable (permitting Respondents to evaluate and respond to the documents quickly and with assurance); and  readily incorporated into a contract.

The needs of the business unit must be adequately reflected in the specification. The way the specification is drafted also provides the framework for evaluation of the responses. It is critical that the specification provides the suppliers with sufficient information to enable them to respond in a manner that enables the business to evaluate the response, against the predefined evaluation criteria.

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Specifications vary in length and complexity, depending on the nature of what is to be purchased.

A specification does not include:  conditions of tendering  conditions of contract  proformas, or  questionnaires used by Respondents to submit offers.

The content of the specification shall:  not restrict competition;  not act as a barrier to the introduction of alternative products or new and advanced technology;  encourage Respondents to offer innovative options or solutions which contribute to the department’s ability to carry out its business in a more cost-effective manner;  support standardisation and rationalisation of the end product.

The specification should be developed by the Business Unit in conjunction with users, the Evaluation Team and, if necessary, technical or procurement specialists. In discussing any aspect of the evaluation the PGU Adviser must first obtain a signed Evaluation Team member sign-off template, which outlines probity, confidentiality and conflict of interest requirements.

The specification must be consistent with:  The procurement objectives as outlined in the acquisition plan  The mandatory and desirable elements of the procurement o Mandatory items should be kept to a minimum and must be validated – eg does the incumbent supplier meet the requirement? Is the requirement such that it would restrict suppliers that my meet the need? Is it specified appropriately generically eg compliance with Australian standard “or equivalent” if international standards may also be acceptable.  The evaluation criteria  Any contractual requirements – including proposed KPIs o Consider whether an abatement regime is required. Generally speaking, an “abatement” is a reduction, a decrease, or a diminution. This right would exist in the form of a contract clause in the contract which gives DCIS the right to reduce, decrease, suspend or cease payments due under a contract in specific circumstances. If so, the KPIs need to clear and unambiguous, measureable in a timely way, and relevant to the objective of the procurement. o KPIs/Performance measures are outcome focussed, able to be measured objectively, agreed and understood by all parties and reflect key aspects of the contract. Examples of performance measures include: • Targets to be met. • Key steps or milestones. • Achieving payment/invoicing/reporting deadlines. • Client feedback or customer service metrics. • Technical considerations. • Quality, safety, environmental or social outcomes.

The specification must include the requirements pursuant to the Industry Participation Policy. Refer to the Information sheet Address Industry Participation Policy requirements. In some circumstances the PGU Adviser may be of the view that the IPP requirements are not appropriate, suitable or value adding for a particular procurement. It may be possible to obtain an exemption from the requirements of the IPP. In this case discuss the concerns with the Manager PGU. After consideration, should the Manager concur, an exemption can be requested via email to the OIA. Once the OIA has responded, include or exclude the IPP requirements as agreed.

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Refer to the SPB’s Sustainable Procurement Guideline and DHS’s Sustainable and Social Procurement Guideline and ensure sustainability items are addressed as required.

Once drafted by the business unit, the specification should be reviewed by the PGU Adviser and formally approved by the client/project owner.

1.3.4 Contract Development (Part C)

The Draft Agreement contains the terms of the agreement which the successful respondent is required to sign. Although discouraged, it is possible it may be varied by agreement between the respondent and the Department during the evaluation and negotiation process, but this will be subject to Crown Solicitor’s Office advice. A contract to supply the Department's requirements is not formed until both parties to the Contract have executed the contract.

The SPB has simplified its standard agreement suite. Current templates are “Standard Goods and Services Agreement”, (the “Standard services agreement for NFP funded services” is currently under development), minor works agreement (for minor works up to $165,000) and standard purchase order. At the time of writing a standard not-for-profit funded services agreement is currently being developed by SPB/CSO to simplify the contracting process for NFP funded services.

Contracts for ICT procurements are to be drafted by CSO – unless using pre-existing ICT across Government contracts, in which case use the relevant templates associated with the agreement.

Refer to the user guide on the SPBs website and include any special clauses as required. For example, the DHS Screening Assessment Policy sets out the requirement for all DHS employees and contractors to DHS to undergo the relevant Screening process. The Business Unit must determine its screening requirement. Ensure the requirement of the business unit is reflected in the appropriate clause being included in the draft Part C agreement.

If an abatement regime is required, CSO advice will be required as to the abatement clause to be included.

It is important that any variations to the standard agreement terms and conditions required by the Department are included in the draft issued to market. Any variations to the standard terms and conditions require approval by the Crown Solicitor’s Office. Suppliers are asked to indicate their compliance with the agreement terms, and therefore the agreement must include any special requirements at this stage.

DHS uses the standard contract templates as provided on the SPB’s web site. The template matching the nature of the procurement must be selected.

For high risk procurements and for some other procurements, the SPB Acquisition Planning Policy advises there may be a need for a tailored contract to be prepared. This could be where there are specific requirements in terms of performance standards, unique arrangements around payment terms, links to other arrangements, links to Commonwealth funding arrangements, panel arrangements, complex risks/indemnity/insurance aspects to considered etc.

In these cases, the Crown Solicitor’s Office must be engaged to advise on and draft any particular contract clauses. A request must be forwarded to the DHS Legal Services Unit (using the Legal Services Request Form) from the Business Unit, who has relevant financial authorisations to enable the estimated expenditure of the funds.

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Liability and insurance levels need to be set in the Draft Agreement. The Business Unit is responsible for determining the required level of insurance, based on advice provided by DHS Insurance, or SAICORP. The Acquisition Planning Policy sets out the liability requirements.

PGU Advisers should refer clients to “Government Contracts –A Guide to Insurance Issues” June 2016 for relevant consideration of insurance issues.

1.3.5 Invitation to Supply Response (Part D)

Part D provides a format for the Supplier response.

The purpose of the Response is to provide information related to specifications and evaluation criteria so that the response can be evaluated efficiently and effectively.

The Response is the primary means of obtaining information on offers.

The questions and information requested in Part D must correspond with and be cross referenced to the specification (Part B) and match the evaluation criteria. This is critical to enable the evaluation team members to perform their role, and minimise the potential need to contact respondents throughout the evaluation process for clarifications or further detail.

In preparing the Response Document the PGU Adviser must • Ensure all of the requirements as outlined in the specification are included in the response document to enable an assessment of the supplier’s proposal against the specification • Ensure the requirements are consistent with the specification • Ensure any mandatory items provide for a clear and unambiguous response (ie include a yes/no response field) as to whether or not the criteria is met • Ensure that the template provides for the required level of specificity to enable an assessment to be made • Ensure that every item to be scored/assessed as outlined in the evaluation section of the acquisition plan and scoring sheets is required in the response • Ensure there is appropriate cross referencing to items o each item in the specification should be readily identifiable in the response document through referencing the appropriate Part B item number in the Part D response document, and  each Part D response item should be readily identified in the evaluation matrix through referencing the appropriate Part D number in the evaluation matrix; responses could be assessed as a mandatory yes/no evaluation or a scored/qualitative assessment. Any item not considered or scored must be considered in the risk assessment.

1.3.6 Sole Supplier

In cases where the acquisition plan recommends a single supplier (which must be approved by the CE for acquisitions above $550,000 (GST incl) – refer section 1.5.5 below for process details) it is generally still appropriate to issue the standard suite of market documents, and manage the procurement as though it is a competitive process. This is because:

 The supplier may not be aware that it is the only supplier being approached, and may therefore provide a more advantageous proposal/quote should the supplier believe it is competing for the business

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 Preparing a specification and formal response document, and conducting a formal evaluation, will ensure there is no ambiguity in the services being proposed and conditions and pricing being offered.

1.3.7 Unsolicited Approaches

The SPB Market Approaches and Contracts Guideline outlines the process to be undertaken if an unsolicited proposal is received from a supplier. The guideline sets out the process for proposals valued below $1.1 million (GST incl). For proposals above $1.1 million (GST incl) refer to Department of Premier and Cabinet Circular ‘Unsolicited Proposals’ (PC038).

Where a supplier forwards information about goods or services offered by the company, save the material into the Market Research sharepoint site.

Outcomes section 1.3  Specification (Part B) completed; mandatory items identified; IPP requirements included and Office of the Industry Advocate engaged where relevant  Form of agreement (Part C) determined; CSO engaged if required  Insurance and liability levels required determined  Response document (Part D) finalised and cross referenced to Specification  Invitation to Supply Process Guidelines (Part A) completed  Contact Officer agreed and aware of obligations  PCMS updated and all documentation stored in Objective

1.4 Evaluation Planning 1.4.1 Prepare Evaluation Methodology

The Evaluation Methodology must be considered, finalised and included in the Acquisition Plan/Simple Acquisition Plan in accordance with the AP/SAP template.

For procurements greater than $550,000(GST incl) the Acquisition Plan requires the following: Describe the evaluation strategy to be adopted that reflects the procurement objectives and the public authority’s needs. This includes: • evaluation methodology • criteria and weightings • composition of the evaluation team.

Note an Evaluation Plan must be developed and approved prior to the opening of responses (refer Supplier Selection Guideline). [Note DHS practice is that a separate evaluation plan is not prepared, rather the evaluation plan is incorporated into the Acquisition Plan].

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Provide sufficient detail to demonstrate that the evaluation strategy will facilitate the achievement of the objective.

If life-cycle costing has been identified as applicable to this procurement, consider how it will be utilised in the evaluation process

Refer to the separate DHS document Evaluation Guideline (June 2016) for further guidance on Evaluation Planning. The SPB’s evaluation plan template also provides further guidance.

The PGU Adviser is to develop tailored scoring matrices for each criteria for each procurement, which is to be attached to the Acquisition Plan. Refer to the information sheet evaluation scoring matrices, evaluation criteria and value for money formula for further guidance.

The PGU Adviser must ensure that the evaluation is consistent with the requirements of the Industry Participation Policy.

To determine the evaluation methodology, it is critical that PGU understands the client’s objectives and priorities (these should have been obtained through the use of the procurement acquisition planning meeting agenda), and ensures these are addressed whilst ensuring risks are minimised and value for money and quality are considered.

The process generally followed is a four stage evaluation process.

Stage 1: Mandatory Criteria Assessment Stage 2: Non Price (Qualitative) Weighted Evaluation Criteria Scoring Stage 3: Value for Money (vfm) Stage 4: Risk Assessment

Each stage must be described in detail the evaluation methodology. This includes identifying minimum acceptable scores to allow progression, how shortlisting will occur, how the final ranking will be determined. As any deviation from the evaluation methodology will require separate approval, it is very important to ensure there is sufficient specificity to enable the evaluation team to operate within a clear framework. The methodology should ensure that the preferred supplier should not be determined until after the completion of the risk assessment. The vfm ranking is an input into the decision but is not the final determinant.

For more complex procurements, or those involving new or innovative solutions, consideration of presentations/testing/trialling/sampling the solution may need to be incorporated into the evaluation methodology. The methodology should advise how the results of the presentations/trials etc are to be included in the evaluation. This will generally be through the ET collectively reviewing and revising or confirming scores for particular requirements. Generally, it is not appropriate that a presentation itself is scored as a separate item.

As trials can be costly and time consuming for both DHS and the supplier, the evaluation methodology should be clear about how many suppliers may progress to trial stage, how the trial will be managed, over what period a trial will take place, and how the results of the trial will be measured and evaluated.

For suppliers which are from the not-for-profit sector, and/or which may be small or remote providers in niche/specialist markets, consideration should be given to using presentations early in the evaluation process. This is in recognition that these suppliers may not be familiar with Government procurement documentation requirements, and may lack the administration staff or resources to provide a comprehensive high quality response in the format required, but may nevertheless provide a service that meets the needs of DHS.

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To ensure that all procurement documents and processes are consistent, consideration must be given as to how each requirement is described in the specification, how the tender response will elicit the required information to enable assessment, how the response will be assessed and scored, and how the requirement will be articulated in the eventuating contract.

PGU Advisers will add value to the process for the business unit by ensuring all aspects are considered at this stage, thereby minimising the risk of future delays should later consideration of these areas elicit additional requirements that must be addressed.

1.4.2 Evaluation Team composition

In considering the composition of the Evaluation Team, PGU in liaison with the business unit, must ensure that the ET members are able to represent the interest of their business unit, have appropriate technical skills etc and that all relevant areas of DHS are represented. The value of including an independent member, or a member with specialist expertise (eg IT, Finance) either on the ET or as a specialist/technical adviser to the ET, should also be considered. Consideration must also be given to the availability of the proposed members for both the time required and for the duration of the project as unavailability or absences due to leave or other priorities can severely impact on the timelines for the project, which could impact on the Department’s reputation and also the Government’s commitments under the Better Customer Charter for Business. Any known actual or perceived conflicts of interest must be considered at this time. Members are required to complete an evaluation team member sign-off which addresses conflict of interest requirements. The sign off must be obtained before any detailed discussions occur in relation to evaluation methodology. Any conflicts of interest will need to be managed by the PGU Manager in accordance with the SPB Probity and Ethical Procurement Guideline.

If the PGU Adviser does not believe the composition of the proposed ET is appropriate, then this must be raised with the Business Unit owner; assistance is available from the Manager Procurement and Grants if required.

Should an external technical specialist (eg Finance) be required as a member or adviser to the ET, commence the procurement process to engage an appropriate adviser, for example through the whole of government Procurement Services Panel.

For SAHT procurements, refer to the information sheet Involve RenewalSA in SAHT evaluations.

A member of the PGU must Chair all Tender Evaluation teams. This will be the PGU Adviser, unless the relevant PGU Manager determines otherwise.

Guidelines for the ET include:  Minimum of 3 members  Recommended maximum of 6

Panels larger than 6 may be necessary in some occasions, for example where there are numerous stakeholders or a number of different business units involved. The SPB Supplier Selection Policy states that when evaluating procurements where the majority of potential suppliers are from the NFP sector, consideration is to be given to having an evaluation team member from the NFP sector with relevant expertise to the procurement. The representative is not to have substantial ties to any respondents being evaluated. Probity requirements need to be considered and managed as appropriate including conflict of interest considerations.

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Outcomes section 1.4  Evaluation methodology and criteria determined; scoring matrix developed and cross referenced to response document  Evaluation team members identified; external members engaged where relevant  Evaluation team member sign-off obtained for any ET member

engaged in discussion re evaluation methodology  PCMS updated and all documentation stored in Objective

1.5 Acquisition Plan finalisation, review and approval

1.5.1 Final Review and endorsement

Once the PGU Adviser is satisfied that the Acquisition Plan/Simple Acquisition Plan is robust and well researched, in consultation with the Manager Procurement and Grants or Manager Purchasing and Contract Support, the client is requested to endorse the Acquisition Plan, indicating the plan addresses the needs of the business unit.

1.5.2 Simple Acquisition Plans

For all procurements over $110,000 (GST incl), and for those over $33,000 (GST incl) where PGU has been involved in the procurement process, once the simple acquisition plan has been endorsed by the business unit, these are to be forwarded by the PGU Adviser to the Manager P&G/P&CS for review and endorsement, for forwarding to the Director Screening and Procurement for review and endorsement, prior to being forwarded to the business unit delegate (eg Executive Director) for approval. 1.5.3 Acquisition Plans – more than one supplier approached

Once endorsed by the business owner unit, these are to be forwarded by the PGU Adviser to the Manager P&G/P&CS for review and endorsement, for forwarding to the Director Screening and Procurement for review and endorsement, prior to being forwarded to the business unit Executive Director for endorsement. These are then to be forwarded to the Manager P&G/P&CS for inclusion in the SPGC agenda or to seek out of session approval. The relevant PGU Adviser must attend SPGC to speak to the paper and answer any questions. The Business Unit representative is also encouraged to attend.

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1.5.4 Acquisition Plans - single source

Under State Procurement Board requirements, the CE must approve all single source procurements valued at more than $550,0008 (GST incl) . Therefore, for these procurements, following the process as outlined above, SPGC will endorse rather than approve the acquisition plan. The PGU Adviser then prepares a memo to the CE seeking the CE’s approval of the acquisition plan. The memo will refer to the justification in the Acquisition Plan for the use of a single source arrangement, and refer to the SPB criteria as outlined in the Acquisition Planning Policy.

1.5.5 Acquisition Plans requiring SPB approval

For Acquisitions estimated to cost over $15,000,0009 (GST incl) (other than Grants and SAHT), State Procurement Board approval is required. The only exception is some purchases from strategic across government contracts which do not require State Procurement Board approval.

Upon receipt of SPGC endorsement, (and CE approval if the procurement relates to a single source procurement) the Acquisition Plan is to be forwarded to the State Procurement Board by the PGU Adviser. Some initial consultation with the State Procurement Board support directorate may be required. This is to be coordinated by the Manager P&G/P&CS.

Copies of approvals from the State Procurement Board are to be filed by the PGU administrative officer.

1.5.6 Communication and Records Management Arrangements for processing documentation should be agreed with the Business Unit contact officer. Where the Business Unit has requested documents be forward directly to an Executive Director, the PGU Adviser should contact the Business Unit officer to advise the documents have been forwarded, and suggest that the Business Unit officer may wish to proactively brief the Executive Director to assist in achieving timely consideration of the document.

The signed and approved Acquisition Plan /Simple Acquisition Plan is forwarded to the PGU Adviser. The PGU Adviser is to communicate the outcome to the actioning directorate within 24 hours of receiving the approved and signed Acquisition Plan /Simple Acquisition Plan.

PCMS is to be updated by the PGU Adviser for all approvals obtained, and all documentation is to be stored in Objective.

1.5.7 Evaluation Team meetings booked

As soon as the Acquisition Plan has been approved, or earlier if possible, the PGU Adviser must send meeting invitation requests to all Evaluation Team members for the evaluation process in line with the dates approved in the acquisition plan. Ensure sufficient number and duration of meetings is allowed. The first meeting will be lengthy as it involves the introductory processes as well as

8 check SPB policies for current thresholds and requirements 9 Per footnote 8

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individual scoring. Ensure all team members accept and if any issues arise with respect to availability this must be immediately addressed with the Business Unit Project owner to determine strategies (which could range from directing the ET member to make themselves available, to an amendment to the composition of the team – this is a deviation from the Acquisition Plan and would require appropriate approvals).

Outcomes section 1.5  All associated documents as required finalised – eg risk plan, probity plan  Acquisition Plan (and associated documents) endorsed by business unit; endorsed by PGU; approved by delegate  Business Unit advised of decision  For sole supplier engagements greater than $550k (GST incl) CE approval obtained  Evaluation team meetings invitations sent  PCMS updated and all documentation stored in Objective

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Chapter 2 Supplier Selection

2.1 Market Approach

Following approval by the relevant delegate of the Acquisition Plan, the PGU Adviser must implement the plan. The plan must be followed fully and completely, without deviation (unless specifically approved by the delegate). PGU Advisers must ensure market documents are issued as soon as possible after the acquisition plan has been approved.

From time to time there may be a need to vary the acquisition from the approach proposed in the acquisition plan. In these cases any deviation must be managed in accordance with the “Managing deviations from Approved Acquisition Plan” section of the SPB Supplier Selection Policy and approved by the delegate as nominated in the Acquisition Plan. 2.1.1 Finalise Market Documents

Check that the market documents already prepared are consistent with the procurement delegate’s approvals and any amendments or conditions imposed, and make amendments as required.

The specification developed as part of the acquisition planning phase needs to be finalised, amended as appropriate dependent on any requirements as part of the delegate’s approval, and formatted into the Part B template if not already in that format. Check that the specification clearly describes the essential requirements for the goods or services following any final review comments by endorsers and approvers.

Review the draft Agreement to identify if there are any changes required as a result of the final acquisition plan approval. 2.1.2 Issue and Manage Market Documents 1. Obtain Client Approval to proceed Once the procurement delegate has approved the Acquisition Plan and all associated documents, the PGU Adviser should liaise with the business unit to confirm the release date for the market documents, which was included in the acquisition plan.

Any revisions to documents, other than minor editing/formatting, that were made as a result of the final review and/or conditions attached to the delegate’s approval must be reviewed and agreed by the business unit.

2. Invite Offers RFQs/Invitation to Supply documentation is issued via the Tenders SA website, which allows suppliers to download the document/s. Details of all organisations being issued with the documents are recorded automatically on the Tenders SA website.

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If, for any reason, there is a need to alter documentation once the documents have been issued, an addendum must be sent to all suppliers that have accessed the document, via TendersSA.

The SA Tenders and Contracts Agency Administrator User Guide provides comprehensive information on how to lodge documents and use the TendersSA facility. PGU Purchasing and Contract Support Officers are responsible for ensuring documents are uploaded correctly into TendersSA.

For large or complex or strategic procurements, consideration should be given to issuing an Advance Invitation Notice.

Specific information to be included when uploading a new ITS/RFQ to the TendersSA website:  DHS will only allow electronic lodgement. Do not include an option for the submission of a response via mail/post, tender box or email.  The Complaints Officer is Tony Allwood, Manager Internal Audit, Level 8 Riverside Centre, North Terrace, Adelaide SA 5000/GPO Box 292, Adelaide SA 5001  Include the FoI Officer for the relevant division/agency (refer http://one.dfc.sa.gov.au/AboutDHS/Pages/freedom-of-information.aspx).  Do not include telephone numbers for any contact details, ensure the correct email is included in each relevant field

PGU Advisers must complete the PCMS fields to trigger the upload to Tenders SA by PCS staff. Refer to the instructions in PCMS.

If it is necessary to extend the closing date of for responses, approval must be sought from the Director Screening and Procurement through the Manager, Procurement and Grants. A decision to extend the closing date will be made taking into account the following factors:  impact on project timelines,  whether it increases or decreases the likelihood of achieving a value for money outcome for DHS,  impact on Respondents including whether the extension of the tender period is likely to unfairly advantage or disadvantage one or more Respondents; and  risk.

Suppliers must be notified of the extension through SA Tenders and Contracts.

3. Ensuring Accessibility Copies of the RFQ/Invitation to Supply can in exceptional circumstances be sent direct to identified organisations, for example in cases where there is limited ability for the supplier to access the TendersSA website. This could potentially be for remote suppliers which experience connectivity issues.

However best practice is to upload the documents to Tenders SA to be accessed by the relevant supplier(s).

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If sending invitations outside of the TendersSA process, then the PGU Adviser must ensure documents must be sent to each supplier at the same time or be accessible at the same time. Clear audit trails and evidence of the process must be retained and filed in Objective.

2.1.3 Industry Briefing/Site Visits

It is often useful to invite prospective respondents to a briefing session, referred to as an industry brief. Such sessions expand on complex, unusual or sensitive requirements.

Site visits may be offered either as part of an industry brief or solely to enable prospective Respondents to inspect the site/location/product.

The market document must advise Respondents of any industry briefing session, and/or site visits, and whether attendance at the session is compulsory. Whether to make the session compulsory is at the discretion of the PGU Adviser in consultation with the business unit. However, generally respondents should not be excluded from the process on the basis of a failure to attend an industry briefing.

Industry briefing sessions provide background information and context. It must be made clear to potential Respondents that they cannot rely on a statement made at an industry briefing as amending or adding to the request documentation unless the amendment or addition is confirmed by the Department in writing.

Notes from the briefing must be taken and retained as well as a copy of any presentation material used. Where practical, the briefing should be recorded. A summary of what was discussed at the briefing is to be provided to all those who have been provided with the invitation documents as soon as possible after the briefing (within 3 business days). Once the Manager PGU has reviewed and approved the material to be released, this is to be done by uploading the information to the TendersSA website.  Upload the presentation document but not the speaking points – unless the speaking points reflect verbatim what was said during the presentation  Upload all questions and answers

The SPB Supplier Selection Policy contains more information on Industry Briefings.

All industry briefing presentations, speaking notes, and speakers are to be approved by the Manager PGU prior to finalisation. Any speakers outside of PGU must be advised of the requirements, and reminded of probity and conflict of interest obligations. Speaking notes should be followed precisely.

Site visits must be treated and documented with the same discipline and attention to probity considerations as industry briefings.

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The Manager PGU/PCS can provide examples of recent relevant industry briefing material to use as a guide. Examples are also in the Document Example Bank. 2.1.4 Manage Enquiries by Respondents

All contact with prospective Respondents including what questions were asked and what information was provided must be: . documented in writing, transparent and unbiased . limited to the Contact Person specified on the bid document.

Where possible, prospective Respondents are to be requested to put any questions in writing (email will suffice) and the Contact Person must respond in writing. Information provided must be limited to clarification of procedural issues or documentation.

Additional information that is provided to one prospective respondent must be provided to all respondents (i.e. everyone who has requested or received tender documentation) at the same time. This should be done through the TendersSA website.

Depending on the nature of the information requested, the response issued by the Department must be approved by one of the Manager, Director, or client Executive Director.

Any extension to the closing date must be approved by the Director Screening and Procurement.

Outcomes section 2.1  Market documents reviewed  Client approved issue to market  Market documents issued  Industry Brief held  Notes from Industry Brief Issued  PCMS updated and all documentation stored in Objective

2.2 Receive and Access Reponses

2.2.1 Receive and Access Responses 1 Accessing Responses Once the invitation period has closed, PCS staff manage the process whereby response documents are downloaded and saved into the relevant Objective file. PCS staff record how many responses were downloaded and from which suppliers, the date the responses were accessed and who witnessed the process. This record is filed in Objective. Refer to the Information Sheet How to access responses and record in PCMS. Maintaining the security and confidentiality of responses is critical to ensure the probity of the procurement is not compromised. Responses may only be provided to

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 members of the evaluation team, once the evaluation team member sign-off (covering conflict of interest and confidentiality requirements) is completed  specialist advisers to the evaluation team can be provided with only the relevant sections of the responses, once the evaluation team member sign-off (covering conflict of interest and confidentiality requirements) is completed  the procurement delegate, if requested.

No other officer is to be provided with a copy of any responses document unless explicitly approved by the Director, Screening and Procurement.

The strong preference is that responses are provided to these officers for access at a central location (eg meeting rooms in PGU Office), with copies returned to the PGU Adviser at the end of each evaluation session.

Use the RFQ/ITS movement form to record the provision of documents to evaluation team members, and any other officer if access has been approved by the Director Screening and Procurement.

2 Late Responses From time to time a response may be received/lodged after the closing date/time. Any late response must be handled in accordance with the DHS Late Tender Guideline.

If a later tender is received a briefing must be prepared for the Director, Screening and Procurement. The briefing must detail recommendation to accept or decline acceptance of the tender and should clearly detail justification. If acceptance of the tender is being recommended, the Adviser must be able to independently verify that there were exceptional circumstances. This can include information from Tenders SA administrators.

Outcomes section 2.2  Reponses Accessed and registered  PCMS updated and all documentation stored in Objective

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2.3 Evaluation and Contract Award

2.3.1 Evaluation Team First meeting

Email a copy of the agenda for evaluation meeting and documents as indicated in the guidance (ie specification, probity policy, code of ethics, evaluation principles, evaluation team member sign off, better business charter) to ET members prior to the meeting.

Prepare an Evaluation Pack for distribution on the day of the meeting containing  a copy of each response (excluding price/fee information)  a scoring sheet for each response to each member.  the 1-10 Numerical Scoring Method (DHS Evaluation Guideline) – or alternate scoring methodology approved for this evaluation  Include interpretation for each of the relevant criteria of scores and meanings  where required, specific interpretations for each criteria to be embedded in the scoring sheet

At this first meeting the PGU Adviser is to facilitate the following:  Introduction of members and description of roles and responsibilities  Explain probity and confidentiality requirements and the process to be followed  Obtain an evaluation team member sign-off for all ET members that have not already completed the form. The PGU Adviser is to file the declarations and save a copy into Objective.  Inform the group of the Objective of the procurement  Outline evaluation criteria and methodology (as approved in the acquisition plan)  Explain the scoring methodology and criteria  Explain how ECT is to be scored  Identify any risks that were recorded in the risk assessment and how they are being managed  Confirm time-frames  Oversee the individual scoring process.  Depending on the complexity of the procurement and the number of responses, if individuals complete their scoring at this initial meeting, group scoring may also be able to be commenced.  Remind members of the next scheduled meeting date/time/venue.  Review the meetings that have been scheduled and if additional meeting are likely to be required obtain agreement form the team as to when these can be held.

Should any proposed revisions/amendments to the evaluation plan submitted with the acquisition plan be suggested, this must if required by the Business Unit, be managed in accordance with the deviation from the acquisition plan policy and approved by the delegate nominated in the acquisition plan.

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Refer to the Evaluation Team meeting Agenda with guidance template for further guidance.

In rare cases where an ET member requests to be provided with a copy of the evaluation material for their review/scoring outside of a scheduled meeting, the PGU Adviser must obtain a signed response movement form from the officer taking the pack. The PGU Adviser must ensure the ET member is aware of the importance of appropriately securing the documentation. It is preferable for the packs to remain within PGU, and be accessed by individual members only on an as required basis, with individual scoring to be performed in an office within PGU as booked by the PGU Adviser. This is not always possible however. The PGU Adviser must ensure each member is aware of the scheduled meeting for consensus scoring by which time their individual scoring must have been completed. This may or may not be the first meeting, depending on the complexity of the evaluation and number of responses.

It is preferable that evaluations are undertaken in the offices of the Central PGU in a booked meeting room.

At the first (and all subsequent) meeting, the PGU Adviser needs to ensure that the ET understands the process, the evaluation plan and the confidentiality and probity issues. ET members should be reminded of the conflict of interest declaration, and asked whether there is anything that has occurred since they completed the declarations that changes their declaration. Should any issues be raised the PGU Adviser must discuss this with the PGU Manager to determine next steps (ie continue, review, exclude).

The steps outlined in the evaluation plan as contained in the Acquisition Plan must be followed fully and completely, without deviation (unless specifically approved by the delegate).

Use the Evaluation Team meeting Agenda template for subsequent meetings.

2.3.2 Scoring

If the standard process is applicable in the approved acquisition plan the steps are generally –

Stage 1 - Preliminary screening (mandatory requirements) The PGU Adviser may advise the ET to not evaluate a tender that does not meet the mandatory requirements. If the ET agrees the mandatory criteria have not been met, then this supplier must be excluded from further evaluation. Proceeding to evaluate a response at this stage is likely to raise probity issues. This is because identifying an item as mandatory but then evaluating on the basis that the proposal may meet the needs of the business unit means potentially other suppliers have been excluded on the basis of not being able to meet a mandatory criteria and therefore not providing a response, when in fact the matter was not mandatory.

If the exclusion of a party is likely to cause adverse outcomes for the procurement, then the process should be halted and probity advice obtained.

Stage 2 – Non Price (Qualitative) Weighted Evaluation Criteria Scoring Individual scoring

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Each ET member including the PGU Adviser must read, score and evaluate responses individually. This occurs during the first ET meeting (and subsequent meetings if required due to the number of responses and complexity of assessments) and should ideally occur in the days immediately following the closing date for the responses.

Each ET member is to record notes on their individual scoring sheets that support the score they assign.

The ET can agree to  each read and score all questions for all suppliers and then undertake consensus scoring supplier by supplier, question by question, or  read question 1 response from each supplier, then consensus score question q1 for each supplier, and then move to question 2 etc., or  read and score question 1 for supplier 1, consensus score q1 Supplier 1, then move on to q1 supplier 2 and so on.

The OIA has instituted an online form process whereby suppliers lodge the IPP forms electronically. The business will receive an email from OIA with their ECT and the ECT score in pdf form. The business attaches the pdf from OIA to its Part D response for submission to DHS. For IP Plans, the OIA will provide a copy of the submission and a score to the contact officer via email for inclusion in the evaluation. This process must be described in Part D .

Team qualitative scoring Once every ET member has individually scored the responses, then the ET as a group will discuss the scores and agree on a group score. This process may commence at the first meeting if individual scoring is completed during that time.

Arriving at an agreed score for each criteria is best done by facilitating a process of scoring each individual criteria by  Asking each member for their score for each evaluation criteria  Commencing a discussion if scores are disparate  Seeking to obtain agreement on a team score  Ensuring the score is justified by the evidence presented in the response  Documenting the reason why a particular score was obtained (for example if a respondent was scored as 8 out of 10, this means they missed the criteria on one minor point – this minor point must be described)  Averages are not to be used  Enter the scores in to the pre-prepared spreadsheet  Enter the IPP score provided by the OIA

Clarifications Important clarifications may be required during this evaluation process. Requests for clarifications are to be forwarded in writing to the respondent by the Contact Officer. At least 3 working days are to be allowed for a response.

Stage 3 – Value for money

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The Pricing schedule for the responses is to be summarised by the PGU Adviser. These financial summaries are best provided to the ET after the overall qualitative scoring has been completed. For more complex pricing or fee structures, PGU may seek advice from a finance technical specialist, as provided for in the evaluation plan. All components of the price/fee must be taken into account including indexation arrangements, fees subject to particular contingencies, and irregular as well as regular fee payments. Involving a finance specialist at this stage if not included in the evaluation plan in the Acquisition Plan, will need to be treated in accordance with the Deviation from Acquisition Plan policy. The PGU Adviser will calculate the value for money score in accordance with the approved evaluation methodology. Refer to the Information Sheet evaluation matrices, evaluation criteria and value for money formula.

Stage 4 – Risk Assessment A risk assessment will generally be undertaken at the short-listing stage. The Evaluation Team should record any aspect of the responses that it considers to pose an unacceptable risk for consideration at the shortlisting stage. This includes consideration of any aspect of the Part D response, including items that have not been explicitly scored. This includes reviewing responses at Questions 1-4 from the Part D template relating to supplier information, Financial Viability and Conflict of interest. Following the risk assessment, the supplier with the best value for money rating may be ranked lower than other suppliers. The rationale for recommending a supplier based on combined risk assessment and vfm must be detailed in the Purchase Recommendation and Evaluation Report (where applicable).

For low value and or low risk procurement, a risk assessment may not be required at this stage. This should be considered in the Acquisition Plan evaluation methodology.

Commence drafting Purchase Recommendation Upon completion of the above processes, the Purchase Recommendation or Evaluation Report drafting is to be commenced. Use the SPB templates as a guide. Only final agreed scores of the ET at each stage are to be included in the official documents.

For low value, low risk purchases, a Purchase Recommendation may be sufficient.

For higher value, higher risk, more complex purchases, an Evaluation Report can be used in addition to the Purchase Recommendation. This report provides more extensive detail on the process undertaken, scores achieved and comments on each score. The Evaluation Report also serves as the sign-off document for each member of the ET.

The Purchase Recommendation is the approval document. If an Evaluation Report is used, the Evaluation Report can be an Attachment to the Purchase Recommendation or it can be summarised in the body of the Purchase Recommendation.

The Purchase Recommendation or Evaluation Report can be completed by the client or the PGU Adviser but must be oversighted by the PGU Adviser. The SPB Purchase Recommendation template must be used.

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2.3.3 Shortlist Respondents

After the initial scoring is completed, a shortlisting process is undertaken based on the scores achieved, in accordance with the evaluation plan criteria/requirements

The shortlisting may be of one, two, or more suppliers depending on the process/methodology/criteria outlined in the Acquisition Plan (evaluation plan section), The PGU Adviser will prepare the VfM scores applying the formula as outlined in the evaluation plan. Refer to the Information Sheet evaluation matrices, evaluation criteria and value for money formula. To assist with the process it is advisable for the PGU Advisers have access to a laptop pre-filled with the respondents and the weighting formula and pricing and value for money formula. This way a weighted score can be calculated by simply entering each score for each criteria as it is agreed by the ET and also the VfM can then also be readily calculated once the qualitative scoring has been completed.

Other than for low value low risk procurements, a risk assessment should be undertaken of the suppliers proposed to be short listed. This includes reviewing responses at Questions 1-4 from the Part D template relating to supplier information, Financial Viability and Conflict of interest. Any supplier that is considered may pose an unacceptable risk to DHS should be excluded or have risks explored for example through referee checks, presentations, negotiations, financial viability checks.

Once a shortlist has been selected and agreed to by the ET and noted in the ET meeting minutes – then it is recommended that referee checks are undertaken and presentations and/or negotiations are held.

Referee Checks The purpose of referee checks is to confirm the assessments made by the ET.

A standard set of questions are to be developed by the ET and asked of the referees (usually there are three referees provided by Respondents). The ET must agree who will conduct the referee checks. Best practice is for two members of the ET to be present during the conducting of the referee checks. Notes are to be made of the comments made by the referee and copies of the referee checks are to be distributed to all ET members.

After the referee checks, the ET is reconvened, scores are to be reviewed and amended or confirmed and the Purchase Recommendation or Evaluation Report is to be updated to reflect and revisions to scores and comments.

Presentations The Evaluation Team may request shortlisted Respondents to present to them.

The purpose of a presentation is to address some of the key aspects of the response and to elaborate on the proposal. It is not an opportunity for the supplier to add or propose new or additional offerings.

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The presentation needs to be structured with specific questions provided to the respondent at least 5 working days ahead. A time limit for the presentation should also be set.

It is also appropriate that DHS prepare a presentation that stresses the value of this procurement to the supplier, what outcomes DHS is seeking to achieve and what DHS’s objectives from this process are. This presentation must be documented and used for each supplier.

All ET members should attend the Presentations. After the presentations, scores are then to be reassessed and revised or confirmed and the Purchase Recommendation or Evaluation Report is to be updated to include the fact presentations were held and to update any scores and comments.

The short list can now be reviewed and reduced in accordance with the evaluation plan section of the Acquisition Plan to those Respondents with whom negotiations should occur.

2.3.4 Negotiations

Following shortlisting and/or selection of a preferred Respondent(s), negotiations will be entered into to:  resolve any departures from the specification; and/or  achieve improved terms and conditions, including pricing, value adding extras and efficiencies.

Negotiation is a process by which parties starting from different positions arrive at a position acceptable to both. It is also a process of communication and includes all forms, of communication including letters, facsimiles, telephone calls as well as formal and informal meetings.

Negotiations may take place on any aspect of the proposed contract, however alterations to the standard terms and conditions should generally be strongly resisted.

A Negotiation Team is formed which is likely to be a sub-set of the ET as per the Acquisition Plan (evaluation plan section). The Chair of the ET and any other governing entity (eg project steering committee) may determine the team may include specialist members – provided this is consistent with the evaluation plan methodology included in the acquisition plan. Any negotiating team member that has not been part of the ET must be briefed by at least two members of the ET on the process to date and the objectives of the negotiation. An ET sign off (conflict of interest) will be required by any new members where not already provided.

All negotiations between the parties must be fully documented.

Negotiations shall be carefully planned and well documented (ie both questions and responses). The Negotiating Team is to have discussed and agreed to tactics before each meeting. Written negotiation plans and strategies are to be prepared before each meeting identifying DHS’s preferred position and its negotiating position on major issues. The SPB’s Negotiation Plan Template provides useful guidance and this plan should be used for more complex, high risk and higher value procurements. For less complex lower risk procurements, as a minimum the negotiation strategy must be documented, which includes listing all negotiation points, prioritising the issues, and

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identifies the target outcome, the minimum acceptable outcome, strengths and weaknesses in relation to each issue, points of leverage and potential concession. The role of each Team member including the lead negotiator and any legal/CSO and/or probity representatives is to be specified by the Lead Negotiator. A note taker is to be identified before each meeting.

File notes are to be taken of all meetings and telephone discussions and other communications (email, facsimile) with the preferred Respondent/s. A Negotiation meeting agenda template is available.

Refer to the information sheet Conduct negotiations, which provides additional important information and includes a suggested template email to suppliers inviting them to the meeting.

Refer to the information sheet Confidentiality, Disclosure and Freedom of Information for information on these issues which may arise during negotiations.

Contract Terms Prior to finalising the Purchase Recommendation, agreement to contract terms must be confirmed.

As part of the negotiation process, resolution of any amendments to the contract requested by the respondent should be achieved.

Legal assistance is to be sought to finalise complex contracts.

Due Diligence Due diligence can refer to checking on a company’s financial viability/credentials, or checking the service/product proposed to be supplied can in fact be delivered.

A financial viability check is generally undertaken where there is a new or unknown supplier being considered, where there may be media or other intelligence suggesting there may be some concerns about the supplier’s viability or conduct, where the proposed agreement will involve provision of funding in advance, and where there is very high or extreme risk around the service, or where the this is a very high value engagement (more than $15 million). In some cases, a more detailed/deep dive analysis (eg interviewing creditors) may be required into the supplier’s financial and governance position/policies, based on risks or other intelligence obtained through the process. There are a number of private companies that can provide both a standard financial viability check service or a more detailed analysis.

Due diligence relating to services and/or products may involve a period of testing a product, or for services may involve a sample work phase.

Due Diligence needs to be undertaken before final recommendations are made and contracts are awarded. Refer to the information sheet due diligence.

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2.3.5 Purchase Recommendation Approval

The purchase recommendation should be finalised to include all relevant aspects of the evaluation process including clarifications, presentations, negotiations, risk assessment and referee checks. In some cases, negotiations, or further negotiations, may need to be held with the preferred respondent following approval of the Purchase Recommendation. This could be because suppliers may be unwilling to concede any aspect of their proposal in the absence of being advised that they have achieved preferred supplier status. Follow the guide in the section above on Negotiations. In this case the Purchase Recommendation should recommend the engagement of the supplier subject to an acceptable position being achieved in relation to the particular negotiation point. The Purchase Recommendation should be clear and specific (unambiguous) about what constitutes an acceptable outcome. The Purchase Recommendation should also approve what should occur if an acceptable position cannot be negotiated eg procurement ceases without a successful award, or proceed to the second preferred (which may itself be subject to acceptable outcomes on certain aspects).

The evaluation team should conduct a risk assessment in relation to the preferred respondent, and highlight any residual risks or issues in the Purchase Recommendation. Use the risk assessment template that was provided with the Acquisition Plan as a starting point.

The purchase recommendation should seek approval for the relevant procurement delegate to approve any future variations to the contract. The delegation parameters must be consistent with the requirements of the SPB Contract Management Policy and DHS Contract Management Guideline. The form of words for inclusion is “The Executive Director, , may approve future variations over the term of the contract to a cumulative value of 10% of the total estimated contract value ($xxx). The Variation Agreements will be executed, pursuant to Treasurer’s Instruction 8. Any approved variations will be noted in the contract management reports and the contract closure report.” Note that this approval relates to the procurement approval. A separate financial approval will be required by a delegate with the appropriate level of financial authorisation. Actual contract variations that need to be executed by the supplier and DHS must be executed by an officer with the appropriate level of contact execution delegation. Approval from the delegate as approved in the Acquisition Plan can now be sought for the Purchase Recommendation. Once the PGU Adviser is satisfied that the Purchase Recommendation is robust and well argued, then the Purchase Recommendation is forwarded to the Manager P&G and Director Screening and Procurement for final review prior to forwarding to the Evaluation Team members and Business Unit Owner for signing. The PGU Adviser will forward or authorise the forwarding of the signed, endorsed Purchase Recommendation to the delegate in accordance with the approval in the Acquisition Plan. Version 2.0 January 2019 For Use of PGU Staff Only - 47 - Chapter 2 Supplier Selection 2.3 Evaluation and Contract Award 2.3.6 Communication and Records Management Where the Purchase Recommendation was approved but subject to an acceptable outcome being negotiated on one or more points, follow the guide in the section above on Negotiations. If the negotiations result in an acceptable outcome, the outcome should be noted and filed within PCMS and Objective. Proceed to contract finalisation. If an acceptable outcome is not able to be negotiated, then follow the steps as outlined in the Purchase Recommendation eg conclude the procurement process, proceed to the second preferred. 2.3.6 Communication and Records Management Arrangements for processing documentation should be agreed with the Business Unit contact officer. Where the Business Unit has requested documents be forward directly to an Executive Director, the PGU Adviser should contact the Business Unit officer to advise the documents have been forwarded, and suggest that the Business Unit officer may wish to proactively brief the Executive Director to assist in achieving timely consideration of the document. The signed and approved Purchase Recommendation is forwarded to the PGU Adviser. The PGU Adviser is to communicate the outcome to the actioning directorate within 24 hours of receiving the approved and signed Purchase Recommendation and provide the relevant officer with a copy of the approved and signed Purchase Recommendation. PCMS is to be updated by the PGU Adviser for all approvals obtained, and all documentation is to be stored in Objective. 2.3.7 Contract Development & Finalisation 1. Notify Successful Respondents Once the Purchase Recommendation has been approved, and the majority of negotiations have been completed, a Preferred Respondent letter is to be forwarded to the successful respondent/s by the PGU Adviser, unless otherwise advised by the Manager PGU. The engagement must be subject to contract finalisation “and approvals”. This is particularly important where the TI8 financial delegate has not yet approved the financial authorisation for the contract. 2. Notify Unsuccessful Respondents/Bidders Inform unsuccessful Respondents in writing. The letter advises that DHS reserves the right to reopen discussions in the event the contract with the preferred supplier does not reach finalisation. Provide respondents with an opportunity to obtain feedback via a debrief. Debriefs must not commence until the contract with the successful supplier has been fully executed. Formal debriefs, preferably in person, are to be offered to all respondents. Informal debriefs over the phone may be offered for low risk, low value tenders. Version 2.0 January 2019 For Use of PGU Staff Only - 48 - Chapter 2 Supplier Selection 2.3 Evaluation and Contract Award 2.3.8 Contract Execution 3. Finalise Contract Ensure that the deliverables in the contract reflect the final approved position. Do not just insert the Part B Specification into the contract. The specification may not reflect the actual deliverables proposed by the preferred supplier, or as clarified and/or negotiated during the procurement process. Ensure the deliverables, KPIs, pricing (including detailed budget where relevant for NfPs) etc inserted into the Part C agreement reflect the outcome of the negotiations and approvals. Use the contract execution checklist as a final review of contract readiness. Once the successful supplier has been notified, and when the PGU and the Legal Advisor (if required) have agreed that the Contract is ready for execution the final draft contract is to be forwarded either by mail or via a meeting in person to the Supplier to confirm it reflects the outcome of negotiations and that it is suitable for execution. Refer to the Fact sheet on the use of Ministerial Seals by Minister and Ministerial Staff for information on the appropriate template execution blocks, and on when a Ministerial Seal is required – this is generally for Deeds and not Agreements. 2.3.8 Contract Execution Once advice has been obtained from the Supplier that they are willing to sign the contract, then at least two executable copies of the contract will be prepared by the PGU Adviser. The contract is to be forwarded to the successful respondent first and they will execute the contract as appropriate. The contract is then to be returned to the Central PGU for execution by DHS as per contract signing delegations, and affixation of seal if required. Treasurer’s Instruction 810 requires that no contract can be executed (there are some exceptions to this as outlined in TI8) unless first approved by an authorised officer. In DHS, certain officers hold both the TI8 Financial Authorisation and the authority to execute contracts. Therefore, the delegates are exercising both delegations when they execute the contract. For the avoidance of doubt though, a memo requesting that the delegate approves the financial expenditure is prepared and forwarded with the executable contracts. For contracts above $1.5 million (GST incl), the memo seeking Minister’s TI8 approval must also request that the Minister authorises the relevant Executive Director to authorise the financial expenditure of up to a further 10% of the value of the contract should a variation be required, and to execute the resultant contract variation. Use the current DHS and Disabilities delegations to determine the appropriate approver. 10 The Crown Solicitor has advised (reference CSO:M00124279FS03948836.doc) that the requirements of TI8 do not apply to the LSA. For LSA, its instruments of delegations override the requirements of TI8. Therefore, LSA contracts need to be executed by an officer with the delegation from the Authority, with no additional authorisation (as would normally be required by TI8). Version 2.0 January 2019 For Use of PGU Staff Only - 49 - Chapter 2 Supplier Selection 2.3 Evaluation and Contract Award 2.3.8 Contract Execution There are four contract execution delegations relevant for PGU: For contracts in the name of one of Minister Bettison’s portfolios: 1. Minister for Communities and Social Inclusion – refer DHS delegations 2. Minister for Social Housing or Minister for Disabilities (Minister Hildyard)- refer to the Disabilities delegations or SAHT/Minister for Housing and Urban Development (Minister Mullighan) or for Lifetime Support Agency/Minister for Health (Minister Malinauskas). Arrangements for processing documentation should be agreed with the Business Unit contact officer. Where the Business Unit has requested documents be forward directly to an Executive Director, the PGU Adviser should contact the Business Unit officer to advise the documents have been forwarded, and suggest that the Business Unit officer may wish to proactively brief the Executive Director to assist in achieving timely consideration of the document. Upon signature by the approved delegate, then the two executed contracts are to be returned to the Central PGU. One of the original signed copies is to be forwarded to the Supplier and the other signed copy is to be kept by the Central PGU in the Fire Proof safe in the Procurement Secure Storage Area. Copies of the contract can be made for the Contract Manager and other required personnel. A file note must be kept as to what copies have been taken and who has them. This must be recorded in PCMS. The PGU Adviser must ensure the Business Unit is made aware of any aspect of the contract that is considered confidential. Any approvals for non-disclosure and FoI exemptions must be advised to the Business Unit. If the confidential content, or sections that have been exempted from disclosure are not required by the business unit, these can be redacted (obscured) by manually deleting or striking out, the sections from any copy provided to the Business Unit. The PGU Adviser must provide the Contract Manager (Business Unit) with a copy of the RFQ/ITS response document from the successful provider, together with notes of any outcomes from clarifications, presentations and negotiations that occurred with the supplier. This will generally be facilitated through granting the Contract Manager access to the PGU Objective files. While the executed agreement contains the final position agreed between the parties, the response and other information can be useful to the contract manager/business unit both during transition/implementation and ongoing management of the relationship and deliverables. On occasions, the Client may request the original copy, in particular for training type services. The Central PGU’s preferred position is to keep the original copy of the contract. If it has been agreed during negotiations to include an exemption from FoI requirements, then only an authorised delegate can execute that clause. Version 2.0 January 2019 For Use of PGU Staff Only - 50 - Chapter 2 Supplier Selection 2.3 Evaluation and Contract Award 2.3.9 Post Sourcing Review 2.3.9 Post Sourcing Review The State Procurement Board Supplier Selection Policy requires that Public authorities must undertake a ‘post sourcing review’ for procurements valued at or above $4.4 million(GST incl) and for significant contracts below $4.4 million (GST incl) (as determined by the public authority). DSCI has determined that a significant contract is any contract with a value above $550,000(GST incl). The PGU Adviser must undertake this review and provide the review outcome to the Manager PGU. The review is to be undertaken on completion of the supplier selection process to:  confirm if the objectives of the procurement were achieved  identify key aspects of the selection process which worked well (strengths)  identify key aspects of the selection process which could be improved (weaknesses)  seek internal stakeholder feedback regarding the process undertaken  consider supplier feedback from the debriefing sessions as appropriate  make recommendations for improvement of future processes if applicable (lessons learned). The primary benefit of undertaking post sourcing reviews is to formally assess the process undertaken and to identify potential improvements for future processes. Identified improvement opportunities need to be considered by public authority procurement units to ensure findings are implemented as appropriate. Refer to the Information Sheet Conduct a post sourcing review for guidance and template. 2.3.10 Debrief Unsuccessful Respondents/Bidders Debriefs are a valuable mechanism to assist suppliers to learn from the experience and improve their responses in the future. This is valuable to DHS as it assists in developing the supplier market and potentially reaping rewards from more competition in future procurements. Appropriately conducted debriefs provide Respondents with an opportunity to seek feedback and understand the process better. The SPB Supplier Selection Policy provides comprehensive information on how to conduct a supplier debrief and provides in an attachment a framework with extensive guidance that can be used for the agenda. The PGU Adviser must ensure the debriefs take place for all suppliers indicating they wish to receive a debrief, and keep a record of notes from the meeting in Objective. Once a request has been received for a formal debrief, the unsuccessful respondent is to be e- mailed with the following: The debrief will be at (state location) in the fortnight commencing <…> We will provide you with a general overview of the process and the outcomes. Version 2.0 January 2019 For Use of PGU Staff Only - 51 - Chapter 2 Supplier Selection 2.3 Evaluation and Contract Award 2.3.10 Debrief Unsuccessful Respondents/Bidders Please advise what days and time you are available, any specific questions you have and who will be attending. The debrief will be undertaken by (specify DHS People preferably from the Evaluation Team; state names and titles. Ensure that if the DHS legal representative is attending this is made clear). Please advise by return email by no later than <allow a week> A minimum of two DHS personnel are to be present for the debrief including the PGU Adviser and business unit representative from the ET. If there was a particular aspect of the response that should be discussed with the supplier, it is important to have a representative that is familiar with that content area present. For example, if the supplier scored very poorly in the Industry Participation Pan, then a representative from the OIA should be invited to attend the debrief. If the supplier advises their legal representative is to attend, and DHS had not intended to have its legal representative in attendance, then the legal representative must be invited, and the meeting should not proceed unless the DHS legal representative is available. However, the meeting can progress without a supplier legal representative, provided they were informed that DHS would have a legal representative in attendance. Should the supplier attend the meeting with a legal adviser/representative which had not previously been advised to DHS, then the meeting cannot go ahead unless the DHS legal representative is also in attendance. The supplier must be advised that unfortunately, DHS were not aware the supplier’s legal representative was to attend, and the meeting cannot go ahead without the DHS legal representative in attendance. The formal debrief is to be prepared in advance as a document that is predominantly to be read out. Refer to the SPB Supplier Debriefing Framework (Attachment 4 of the Supplier Selection Policy) for a table that can be used as an agenda. Once the debrief is completed, then the Formal Debrief document is filed as a record of what occurred along with any meeting notes or comments as relevant. The formal debrief document is not to be given to the unsuccessful respondent. If further information or written information is requested, then advice is to be sought after the debrief from the Manager Procurement as to what can be provided. Debriefs for low value and low risk tenders. can be undertaken over the phone. Preparation still needs to occur, and two officers must be present during the conversation and take notes. Phone debriefs can occur for other procurements if it is impractical for the supplier to attend in person (for example if offices are located remotely, interstate or overseas). Version 2.0 January 2019 For Use of PGU Staff Only - 52 - Chapter 2 Supplier Selection 2.3 Evaluation and Contract Award 2.3.11 Supplier Complaints 2.3.11 Supplier Complaints Any complaint received by a supplier must be dealt with in accordance with the SPB Supplier Complaints Policy and the DHS Supplier Complaints Guideline. PGU Advisers must advise their Manager of any complaints, or of any contact from a supplier that they feel may ultimately lead to a complaint. The response to the supplier must be approved by the Manager prior to being provided. Each complaint must be considered on a case by case basis. In extreme cases the complaint may warrant a halt to the procurement process. This will be determined by the Manager in liaison with the Director. In the event of a complaint received from a supplier after a supplier de-briefing session has been held, the PGU Adviser is not to disclose any additional information to the supplier, and should refer the matter to the Manager to determine an appropriate response. 2.3.12 Disclose the contract and advise OIA of outcome DPC Circular 027 and DHS YCO/33 Contract Register and Disclosure Policy contains information on information to be disclosed. Where a project concludes in the award of numerous contracts, only individual contracts which exceed the disclosure limit needs to be disclosed. For consultancy agreements valued up to $25,000 information as outlined in DPC027 must be disclosed. For consultancy contract valued above $25,000 the entire contract must be disclosed. For procurements managed by business units, the business units must forward the information and the contract to PGU in accordance with the DHS Policy. The template Contract Register Disclosure Form is available for business units to use. Exemption from Disclosure The Chief Executive may decide whether to disclose part of an eligible or a significant contract, provided there are compelling reasons. Refer to the Information sheet Confidentiality Disclosure and Freedom of Information. Approval for the Release of Contract Disclosure Information The release of contract disclosure information MUST be authorised by the Manager PGU. Version 2.0 January 2019 For Use of PGU Staff Only - 53 - Chapter 2 Supplier Selection 2.4 Finalise procurement stage and handover to Contract Support team 2.3.12 Disclose the contract and advise OIA of outcome The PGU Adviser is responsible for the disclosure of the contract via TendersSA. Refer to the SA Tenders and Contracts Agency Administrator User Guide for instructions. DHS requires that contracts ae disclosed within 30 days of final execution. SPGC receive reports detailing contracts that have not been disclosed within this timeframe. Advise OIA/PPP/DSD The Office of the Industry Advocate/Public Projects and Participation (Department of State Development) must be advised of the outcome of the procurement involving Industry Plans using the pro forma that is forwarded to the PGU Adviser with the assessment of industry plans. PCMS must be updated with all contract details. The Project Status is to be changed from current to complete or contract management depending on the type of project. Outcomes section 2.3 • Evaluation Packs created and distributed • Response movement form maintained • ET meetings held - individual scoring completed, group score completed, vfm completed, clarifications held, shortlisting, referee checks, presentations, negotiations • Evaluation Report (where appropriate) and Purchase Recommendation drafted and endorsed • PR approved • Successful respondents notified • Contract Management Plan/Implementation Plan finalised • TI8 authorisation obtained  Contract Execution Checklist completed • Contract Executed  Unsuccessful respondents notified • Post sourcing review completed • Supplier debriefs completed • Contracts disclosed  OIA/PPP/DSD advised of outcome  PCMS updated and all documentation stored in Objective2.4 Finalise procurement stage and handover to Contract Support team Once the procurement process has been finalised the contract is to be handed over by the PGU Adviser to the Contract Support team. Follow the instructions in PCMS to convert the preliminary to a contract. Version 2.0 January 2019 For Use of PGU Staff Only - 54 - Chapter 2 Supplier Selection 2.5 Finalise Contract Management Plan 2.5.1 Contract Management Framework The PGU Adviser must complete the Contract Handover to PCS checklist and provides it to the Manager Purchasing and Contract Support. Outcomes section 2.4  Contract Handover to PCS checklist completed  PCMS updated and all documentation stored in Objective 2.5 Finalise Contract Management Plan Refer to the SPB Contract Management Policy and the DHS Contract Management Guideline, and Contract Management Handbook and ensure that the contract management plan developed in the early acquisition stages complies with requirements. Contract Management Plans must be relevant to the particular contract and type of arrangement. The templates can be modified to ensure they are relevant and useful for the business unit contract manager. Provide the draft CMP to the business unit for their completion and final approval. Refer to the complete a contract management plan information sheet. 2.5.1 Contract Management Framework The SPB defines contract management as the process of managing a contractual relationship between a supplier and a public authority to achieve the agreed contract outcomes, including risks and disputes that arise. Effective Contract Management is critical to ensure goods and services are provided to the required standard, within the agreed timeframe and achieve value for money. The DHS CM guideline requires a contract management plan for all contracts valued over $550,000 (GST inclusive). The following mandatory requirements must be undertaken for these contracts:  A skilled and adequately resourced contract manager must be appointed.  The contract manager must have completed the Board’s contract management training program (or similar) and refresher training every three years for contracts greater than $1.1 million.  Contract Management Plan must be developed, implemented and monitored (except for one-off nature contracts with minimal management tasks).  A contract management report must be completed for consideration by the contract governance committee or senior managers – 6 monthly or annually as required in the CM guideline. Version 2.0 January 2019 For Use of PGU Staff Only - 55 - Chapter 2 Supplier Selection 2.6 Handover to Business Unit contract manager 2.5.2 Contract Management Activities  A contract closure report must be prepared as required in the Contract Management guideline. 2.5.2 Contract Management Activities The key processes and activities undertaken to achieve effective contract management are:  Privacy and confidentiality of all information handled and maintained appropriately throughout the contract management process.  Probity, ethical behaviour, accountability and transparency. The highest standard of probity and ethical behaviour must be maintained with suppliers during contract management. Employees involved in any aspect of a procurement process including contract management are not to accept gifts or benefits as they can be, or may be seen to be, a means of influence that can compromise, or appear to compromise, neutrality and integrity. Further information is contained in the SPB Probity and Ethical Procurement Guideline and the Code of Ethics for the South Australian Public Sector which requires employees to declare any conflicts of interest that may exist in relation to contract management. .  Stakeholder engagement and management through managing the needs and expectations of internal and external stakeholders.  Contract management activities must also be applied when utilising an across government contract through a secondary procurement process. Outcomes section 2.5  Contract Management Plan finalised  Contract Manager Appointed  PCMS updated and all documentation stored in Objective 2.6 Handover to Business Unit contract manager The PGU Adviser is responsible for conducting a formal handover to the business unit contract manager. The Adviser is responsible for: 1. Ensuring the business unit has been provided with a copy of the contract 2. Advising the Manager Procurement and Grants which representatives from the business unit require access to PGU Objective files. The Objective files may include ITS response, contract and contract management folders. The Manager will submit a request to the Objective Support team. 3. Advise the Contract Manager of the filing structure and which documents (eg ITS response, notes of any outcomes from clarifications, presentations and negotiations that occurred with the supplier) are stored where. While the executed agreement contains the final position agreed between the parties, the Version 2.0 January 2019 For Use of PGU Staff Only - 56 - Chapter 2 Supplier Selection 2.6 Handover to Business Unit contract manager 2.5.2 Contract Management Activities response and other information can be useful to the contract manager/business unit both during transition/implementation and ongoing management of the relationship and deliverables. 4. Ensuring the contract manager has a copy of and understands the Contract Management Plan. 5. Completing the CMR and CCR templates and provide a copy to the contract manager. 6. Completing the deliverables in PCMS and providing those details to the contract manager, including due dates. The PGU Adviser must complete the Contract Handover to Business Unit checklist, and once all items are complete make a time with the Manager, Purchasing and Contract Support to go over the checklist and formally close the Preliminary. The separate document Contract Management Handbook provides further information and guidance on contract management processes and activities. Outcomes section 2.6  Contract Handover to Business Unit checklist completed  PCMS updated (preliminary closed) and all documentation stored in Objective Version 2.0 January 2019 For Use of PGU Staff Only - 57 - Attachment 1 – Acquisition Planning and Supplier Selection Process Checklist Attachment 1 – Acquisition Planning and Supplier Selection Process Checklist Date completed Note Outcomes section 1.1 Procurement Preliminary Established in PCMS and Objective Completed Acquisition Planning meeting agenda Template Acquisition Planning Documentation Requirements Determined Risk Assessment commenced Business Unit confirms funding (where relevant) CE has approved the engagement of a consultant Probity issues considered and Probity Adviser engagement commenced (where appropriate) Procurement Milestones discussed and agreed with client Procurement project milestone timetable template completed PCMS updated and documentation stored in Objective Outcomes section 1.2 Lessons learned reviewed Acquisition Plan includes a reference to the lessons learned review and outcomes Market research completed Optimal Market Approach determined Use of “Holistic Acquisition Plan” considered Length of contract determined Period for invitation to be open in market determined Contract Management arrangements considered Appropriate delegate to approve deviations from Acquisition Plan, Purchase Recommendation and Contract Variations agreed PCMS updated and all documentation stored in Objective Outcomes section 1.3 Specification (Part B) completed; mandatory items identified; IPP requirements included and Office of the Industry Advocate engaged where relevant Form of agreement (Part C) determined; CSO engaged if required Insurance and liability levels required determined Response document (Part D) finalised and cross referenced to Specification Invitation to Supply Process Guidelines (Part A) completed Attachment 1 – Acquisition Planning and Supplier Selection Process Checklist Contact Officer agreed and aware of obligations PCMS updated and all documentation stored in Objective Outcomes section 1.4 Evaluation methodology and criteria determined; scoring matrix developed and cross referenced to response document Evaluation team members identified; external members engaged where relevant Evaluation team member sign-off obtained for any ET member engaged in discussion re evaluation methodology PCMS updated and all documentation stored in Objective Outcomes section 1.5 All associated documents as required finalised – eg risk plan, probity plan Acquisition Plan (and associated documents) endorsed by business unit; endorsed by PGU; approved by delegate Business Unit advised of decision For sole supplier engagements greater than $550k (GST incl) CE approval obtained Evaluation team meetings invitations sent PCMS updated and all documentation stored in Objective Outcomes section 2.1 Market documents reviewed Client approved issue to market Market documents issued Industry Brief held Notes from Industry Brief Issued PCMS updated and all documentation stored in Objective Outcomes section 2.2 Reponses Accessed and registered PCMS updated and all documentation stored in Objective Outcomes section 2.3 Evaluation Packs created and distributed Response movement form maintained ET meetings held: individual scoring completed group score completed vfm completed clarifications held shortlisting referee checks presentations negotiations Evaluation Report (where appropriate) and Purchase Recommendation drafted and endorsed PR approved Version 2.0 January 2019 For Use of PGU Staff Only - 59 - Attachment 1 – Acquisition Planning and Supplier Selection Process Checklist Successful respondent notified TI8 authorisation obtained Contract Execution checklist completed Contract Executed Unsuccessful respondents notified Post sourcing review completed Supplier debriefs completed Contracts disclosed OIA/PPP/DSD advised of outcome PCMS updated and all documentation stored in Objective Outcomes section 2.4 Contract Handover to PCS checklist completed PCMS updated and all documentation stored in Objective Outcomes section 2.5 Contract Management Plan finalised Contract Manager Appointed PCMS updated and all documentation stored in Objective Outcomes section 2.6 Contract Handover to Business Unit checklist completed PCMS updated and all documentation stored in Objective Contract Management Activities are not included in this checklist. These activities are the responsibility of the Contract Manager. Version 2.0 January 2019 For Use of PGU Staff Only - 60 - Attachment 2 – Policy, Guideline, Template and Information Sheet List Attachment 2 – Policy, Guideline, Template and Information Sheet List Acquisition Initiation (section 1.1) Policies/Guidelines 1. DHS Policy YO/41 “Procurement and Grants Approvals and Processes Policy” 2. SPB Risk Management Guideline 3. DHS Risk Management Policy 4. DHS Risk Management Framework 5. SPB Acquisition Planning Policy 6. SPB Simple Procurement 7. Treasurer’s Instruction 8 Financial Authorisations 8. Treasurer’s Instruction 17 Public Sector Initiatives 9. DPC028 Construction Procurement Policy 10. DPC044 Funding Policy for Not for Profit sector Templates/Information Sheets 1. DHS Procurement Request Form 2. PGU Objective Filing Structure and document naming requirements 3. Acquisition Planning Meeting Agenda 4. DHS Risk Assessment template 5. DHS checklist for managing work health and safety risks 6. Risk Management Plan 7. Guideline for determining if a contractor is a consultant 8. Engage a Probity Adviser 9. Non-compliance register 10. SPB Simple Acquisition Plan 11. SPB Acquisition Plan 12. Complete the SPB Acquisition Plan template 13. Project timetable template 14. Workflow Instructions Acquisition Planning (section 1.2) Policies/Guidelines 1. SPB Acquisition Planning Policy 2. DSD Aboriginal Business Procurement Policy 3. SPB Market Analysis Guideline 4. SPB Contract Management Policy 5. SPB Supplier Selection Policy 6. DHS eProjects Panel Guideline 7. DHS Contract Management Reports – Development and Escalation Process guideline 8. Specification Writing Guideline 9. DHS Contract Management Guideline 10. SPB International Obligations Policy Version 2.0 January 2019 For Use of PGU Staff Only - 61 - Attachment 2 – Policy, Guideline, Template and Information Sheet List Acquisition Planning (section 1.2) (contd) Templates/Information Sheets 1. Holistic Acquisition Pan 2. Conduct Market Research 3. Market Analysis 4. Contract Management Plan 5. A-Z listing of contracts 6. Listing of Aboriginal Business Enterprises 7. Listing of Australian Disability Enterprises 8. Complete the SPB Acquisition Plan template 9. Complete the SPB Contract Management Plan template Market Approach Document Development (section 1.3) Policies/Guidelines 1. SPB Supplier Selection Policy 2. Industry Participation Policy 3. SPB Sustainable Procurement Guideline 4. DHS Screening Assessment Policy 5. SPB Market Approaches and Contracts Guideline 6. DPC Circular 038 Unsolicited Proposals 7. DHS Sustainable and Social Procurement Guideline 8. SPB Panel Contract Guideline 9. Specification writing guidelines 10. SPB Acquisition Planning Policy Templates/Information Sheets 1. SPB Market Approach template user guide 2. Request for Quotation < $550,000 (GST incl) 3. Expression of Interest 4. Minor Works Agreement 5. Standard Purchase Order 6. Part A: Invitation to Supply – Process Guidelines 7. Part B: Specification 8. Part C: Standard Goods and Services Agreement 9. Part D: Invitation to Supply – Response 10. Not-for-Profit Agreement 11. Contact Officer 12. Evaluation Team member sign off 13. Industry Policy Requirements 14. Legal Services Request form 15. Government contracts – A Guide to Insurance Issues Version 2.0 January 2019 For Use of PGU Staff Only - 62 - Attachment 2 – Policy, Guideline, Template and Information Sheet List Tender Evaluation Planning (section 1.4) Policies/Guidelines 1. Better Customer Charter for Business 2. SPB Probity and Ethical Procurement Guideline 3. DHS Evaluation Guideline Templates/Information Sheets 1. Evaluation scoring matrices, evaluation criteria and value for money formula 2. SPB Evaluation Plan template (for guidance) 3. Acquisition Plan 4. Simple Acquisition Plan 5. Evaluation team member sign-off 6. Involve RenewalSA in SAHT evaluations Acquisition Plan Approval (section 1.5) Templates/Information Sheets 1. CE approval of sole supplier memo Market Approach (section 2.1) Policies/Guidelines 1. SPB Supplier Selection Policy Templates/Information Sheets 1. SA Tenders and Contracts Agency User Guide Receive and Access Responses (section 2.2) Templates/Information Sheets 1. DHS Late Tender Guideline 2. Access responses and record in PCMS 3. Evaluation team member sign-off 4. RFQ/ITS movement form Evaluation and Contract Award (section 2.3) Policies/Guidelines 1. DPC Circular 027 Contract Disclosure 2. SPB Contract Management Policy 3. DHS Contract Management Guideline 4. Treasurer’s Instruction 8 Financial Authorisations 5. SPB Supplier Selection Policy 6. SPB Supplier Complaints Policy 7. DHS Supplier complaints guideline 8. DHS YCO/33 Contract Register and Disclosure Policy 9. DHS Evaluation Guideline Version 2.0 January 2019 For Use of PGU Staff Only - 63 - Attachment 2 – Policy, Guideline, Template and Information Sheet List Evaluation and Contract Award (section 2.3) (contd) Templates/Information Sheets 1. Agenda for evaluation team meeting (with guidance for PGU) 2. Evaluation Principles 3. Evaluation Team member sign-off 4. Response movement form 5. Negotiation Plan template 6. Conduct negotiations 7. Confidentiality, Disclosure and Freedom of Information 8. Purchase Recommendation 9. Preferred Respondent letter 10. Fact sheet on the use of Ministerial; Seals by Minister and Ministerial Staff 11. Letter to Unsuccessful Respondent 12. Conduct Post Sourcing Review 13. SPB Supplier Debrief Framework 14. SA Tenders and Contracts Agency User Guide 15. Contract execution checklist 16. Scoring sheet 17. Evaluation matrices, evaluation criteria and vfm formula 18. Negotiation meeting agenda 19. Due Diligence 20. Contract register and disclosure form Finalise Procurement Stage and handover to Contract Support (section 2.4) Templates/Information Sheets 1. Handover (PGU to PCS) checklist Finalise Contract Management Plan (section 2.5) Policies/Guidelines 1. SPB Contract Management Policy 2. DHS Contract Management Guideline 3. SPB Probity and Ethical Procurement Guideline 4. Code of Ethics 5. Complete a Contract Management Plan Handover to Business Unit Contract Manager (section 2.6) Templates/Information Sheets 1. Contract Handover (PGU to Business Unit) checklist 2. Contract Management Handbook Version 2.0 January 2019 For Use of PGU Staff Only - 64 - 21 DHS Strategic Plan 2017/18 PGU’s response and proposed actions for 2018/19 to support the DHS Strategic Plan: DHS Strategic Plan: 1. We facilitate procurement related to the first ‘3 columns’ of the DHS Strategic Plan 1. Supporting Wellbeing and Safety 2. We embed continuous improvement and innovation in DHS procurement 2. Social and Economic Participation 3. We ensure that procurement is conducted with the highest standards of privacy, security and process integrity 3. Design and Deliver the Best Services 4. We will be a responsible steward of contract information and Together procurement performance 5. The Procurement and Grants Unit is a work environment 4. Be Accountable and Transparent that promotes wellbeing, and is inclusive and safe 6. We promote staff learning and development to build procurement skills capability and engagement both within the Procurement and Grants Unit and across DHS 7. Procurement staff are accountable and recognised for high performance PROCUREMENT AND GRANTS UNIT Our VisionTo be a leader in procurement for customer service, innovation, commercial focus and creating social outcomes for the South Australian community. Our MissionWe strive to support DHS Business Units by providing professional procurement services and the tools required to effectively manage their contracts. We add value by being innovative and commercial. We actively seek social outcomes through procurement. Positioning StatementWe are here to help! PROCUREMENT AND GRANTS ANNUAL BUSINESS PLAN 2017/18 – EXECUTIVE SUMMARY Our Drivers & ValuesOur Vision 1. Supporting wellbeing and safety 2. Social and economic participation Our Mission 3. Design and deliver the best services together 4. Be accountable and transparent Positioning 5. Ethical and sustainable sourcing The Not‐Negotiables: Objective decision making, respect for confidentiality, policy compliance, probity, respectful communication (internal & external), and ethical behaviour Suppliers and sourcing Tools Processes and Systems and Technology People projects Governance 1. Effective supplier debriefs 1. Communication Plan 1. User training 1. Effective induction 2. Market research development 2. Spend analytics 2. Accessibility for BUs 2. Employer of choice 3. Being easier to deal with 3. Strategic planning sessions 3. Records management 3. Mentoring Program 4. Embed social procurement 4. Procurement & Contract 4. Initiate BU collaboration 5. Contract management handover Management System 5. Routine all‐in team session 6. Currency of our documents & 5. Funds management system 6. PGU knowledge database other resources 6. Effective reporting 7. Performance management 8. Resource & workforce planning 9. Customer service culture 10. Positive staff engagement 11. Skill building & staff developmentKey goals and measures of our success will be: • Meet our Top 5 KPIs • Customer satisfaction score over 70% • Pulse Survey ‐ Staff engagement score up 10% PGU Goals & Actions for 2018/19 Our 3 longer‐term step‐change Improvement Strategies are to: 1 ‐Improve collaboration 1. Develop Access and Training Plan for BUs using PGU services 1. BUs access to data & training in relevant systems 2. Facilitate information sessions or attend BU team meetings to educate on & 2. Interactive procurement sessions with BUs promote the role of PGU & procurement process 3. Weekly PGU team share session “the pulse” 3. PGU team meeting, Tues mornings, 15 mins, hot topics and help needed 4. Events & activities that bind PGU together. Promoting 4. Coordinate the 2018 PGU Volunteering Day teamwork 2 ‐Promote change 1. Finalise Communications Plan and implement with target 2018/19 audience 1. Communications Plan covering BUs, SPGC and SPB 2. Refresh DHS supplier selection template to include social procurement outcomes 2. Understand & promote social procurement outcomes 3. Develop Social Procurement Action Plan 3. Remove barriers for social enterprises to compete for government business 4. Draft Resource Plan to ensure Department’s procurement capacity is maintained 5. Establish a process to ensure PGU documents do not fall out of date or compliance 4. Resource Plan to match workload with staff capacity 5. Document update & review methodology 3 ‐Drive performance 1. Design PGU induction program 1. Effective people processes to drive results 2. Develop a semi‐structured mentoring scheme for PGU staff 2. Rigour in strategic planning, objectives & KPIs setting 3. Schedule next planning day and strategy revisit 3. Confirm strategic alignment of PGU to DHS 4. Prepare for approval, the PGU strategy, objectives and KPIs 4. Equip contract managers with tools and resources 5. Utilise new Contract Handover Checklist. Full briefing for PGU staff on its use 5. Spend management reporting to Executive level 6. Draft a spend report suitable for Executive level and consult with SPGC 6. Creating service excellence & monitoring it 7. Include service as part of our training plan & objectively measure customer satisfaction 7. Skills Gap Analysis driving specific training and development 8. Utilise Skills Gap findings, draft training plan to suit. Link with PDP Our 3 longer‐term step‐change Improvement 2019/20 Goals & actions for future planning, likely Strategies are to: considered in March 2019 (next Planning Day) 1 ‐Improve collaboration 1. Pilot the use of comparative diagrams to help unsuccessful suppliers understand 1. Supplier debriefs in conjunction with the BUs their shortcomings 2. Initiatives to simplify how suppliers can participate 2. Improve effectiveness of Meet the Buyer, industry briefings and tender debriefs 3. Voice of the supplier 3. Pilot our first survey of key suppliers on their views of us as a customer 2 ‐Promote change 1. Develop a suite of market data sources to enhance our market understanding 1. Tracking market dynamics for trends & insights 2. Explore new technologies available to us for improved FGMS/PCMS systems 2. Embrace new technology for efficiencies in next generation 3. Explore new options for customisation and automation of reports for PGU and BUs systems 4. Explore document digitisation options and test practicality and legal compliance 3. Customisable reporting from procurement systems 4. Document digitisation capability 3 ‐Drive performance 1. Effective people processes to drive results 1. Develop a way to recognise staff performance and achievements 2. Spend profiling by supplier, category and BU 2. Explore an IT solution to create a spend cube or similar mechanic 3. Capitalise on the PGU team’s broader skills & knowledge 3. Create knowledge and special skills database across the PGU team 4. Maintaining accurate and confidential records 4. Ensure record keeping is part of our next internal audit 5. Equip new procurement project manager with a full dossier 5. Develop a new Project Management Handover Checklist with full briefing for staff when a project is handed over 22 Divisional Business Plan – Finance and Business Services Strategic Alignment Division Key Activity Numeric KPIs Deliverables Achieve By Date Management and oversight Maintain performance July 2019 of the End of Year Projections. of the budgeted expenses against the actual expenses at a department wide and divisional level Savings Monitoring Ongoing Finance and Business Services Services Business Finance and FTE Monitoring Invoices TI11 Monitoring Leave Balance Management Divisional Business Plan – Finance and Business Services Strategic Alignment Division Key Activity Numeric KPIs Deliverables Achieve By Date Increase inclusion, Provide leadership on social Two contracts by June Implement DHS social Ongoing participation and access procurement initiatives 2019 with social outcomes procurement action across government and plan the community Procurement Procurement Assess all procurement process to identify any social procurement outcomes Maintain the highest Management and oversight Less than four instances Develop simple Ongoing standards of governance of procurement compliance per quarter of non- procurement training for and accountability across the Department compliances escalated to DHS staff Finance and Business Services Services Business Finance and SPGC Provide support and advice to business areas responsible for procurement Understand our Oversight of contract Zero contract Provide support and Ongoing community and our management (including management reports advice to contract business and monitor our funding arrangements) across escalated to Executive managers on performance the Department Director or Chief Executive monitoring performance Disseminate contract management handbook and tools Reduce red tape as we Reduce barriers for Two consultation sessions Investigate current June 2019 administer grants and organisations to apply for with not for profit sector on barriers funding for the funding or tender for services tendering community Develop program to educate organisations on tender processes Streamline current processes for funding/tendering Champion collaboration Manage high value and high 70% satisfaction rating Maintain satisfactory Ongoing and engagement to get risk procurement processes from stakeholders performance of PGU results with business areas Divisional Business Plan – Finance and Business Services staff working on procurement processes Divisional Business Plan – Finance and Business Services Strategic Alignment Division Key Activity Numeric KPIs Deliverables Achieve By Date Business Technology Finance and Business Services Services Business Finance andDivisional Business Plan – Finance and Business Services Strategic Alignment Division Key Activity Numeric KPIs Deliverables Achieve By Date Improvement ImprovementFinance and Business Services Services Business Finance andQuality Assurance, Risk and Quality Assurance, Business23DHS Social Procurement Action Plan July 2018 – June 2019 Social Procurement Action Plan / 2018-2019 Social Procurement “Social procurement is when organisations use their buying power to generate social value above and beyond the value of goods, services, or construction procured.”1 Social procurement happens when the Department intentionally chooses to purchase a social outcome when engaging with suppliers or buying goods. The procurement process becomes a vehicle to address social or economic objectives, or to maximise local or regional community benefits. Social procurement is using an appropriate procurement opportunity to generate targeted employment/training (or other such benefits) for a specific population group, such as people with a disability, the long-term unemployed, indigenous, culturally and linguistically diverse groups, children and youth, public housing tenants, or a regional, rural or disadvantaged metropolitan area.2 These specific population groups are referred to herein as the ‘target group’. Social procurement can be direct or indirect: Direct social procurement includes procuring goods and/or services from not for profit organisations (NFPs), social enterprises, Aboriginal Business Enterprises (ABEs), and Australian Disability Enterprises (ADEs). Indirect social procurement includes taking actions such as inserting social clauses in contracts, assessing tenderers’ social procurement credentials via ECT/tender responses, requiring suppliers/service providers to report on outcomes via contract reporting mechanisms (including Industry Participation Plans). Please note: Procurement of Social Services (i.e. community welfare services) is not social procurement. Social procurement requires the addition of social benefits over and above the procurement of the goods services or works, irrespective of the end use.3 1The State of Victoria 2018, Victoria’s Social Procurement Framework, Victorian Government, Victoria. 2 Social Procurement Australasia (2018). Social Procurement: The Business Case. [online] Available at: http://socialprocurementaustralasia.com [Accessed 25 Jul. 2018]. 3 Ibid. Social Procurement Action Plan / 2018-2019 Our Vision Our vision is to make social procurement our normal way of doing procurement, so that social procurement becomes widely accepted by internal stakeholders and our suppliers as a normal part of doing business with the Department of Human Services (DHS). Every procurement managed by the DHS Procurement and Grants Unit (PGU) should be assessed for its potential to incorporate social outcomes using the Social Value Positioning Model. DHS is committed to improving employment outcomes for the target group, which will provide significant benefits to workplaces, the economy, the community and individuals themselves. Overview PGU is responsible for managing the procurement of goods and services over $110,000 (GST inclusive) and the distribution of all grant funding for all agencies within DHS. The DHS Strategic Procurement and Grants Committee (SPGC) has delegation from the Principal Officer to approve all procurement and grant processes above $550,000 (GST inclusive) up to $15 million (GST inclusive). Procurement delegation below $550,000 (GST inclusive) rests with Business Units. The aim of this action plan is to serve as a framework to:  increase social outcomes for South Australian communities through procurement;  provide a consistent approach to social procurement across DHS; and  provide practical guidance to PGU and Business Unit staff on social procurement. Social Procurement Action Plan / 2018-2019 Social Procurement Action Plan 2018 Participation and Collaboration Improve opportunities for participation and collaboration for the target group, in partnership with Government, Community Sector and Community. Outcome:  Achieve target of 0.5% of DHS procurement spend to be with ABEs  Increase social outcomes for South Australian communities through procurement Action Deliverable Timeline Responsibility 1. Investigate and utilise the opportunity to  Procurement strategy to include engagement of an ABE 31/03/2019 Karen Lang incorporate social outcomes into the upcoming to provide at least part of DHS cleaning requirements ‘Cleaning Services’ procurement process. 2. Analyse the opportunity to incorporate social  Work with successful grocery supplier to engage Housing 28/02/2019 Stephanie outcomes into the upcoming ‘Groceries’ Trust tenants identified through Housing SA’s Kostevsek procurement process. participation broker scheme in their business 3. Work with the current DHS mandated stationery  Meet with Winc to analyse opportunities to purchase from Completed Sarah Scott supplier (Winc) to analyse opportunities to ABEs and/or ADEs via online catalogue leverage off their supply chain to increase social  Trial cleaning products from ABE at AYTC 9/11/2018 outcomes.  Develop Business Case 30/11//2018  Implement either hard or soft substitution of ABE and/or 31/03/ 2019 ADEs products 4. Review DHS forward procurement plan (FPP) to  Build on work already previously undertaken by Housing 31/12/2019 Caroline Lock identify opportunities to incorporate social SA and review/update FPP outcomes into upcoming procurement processes; and to increase participation and collaboration with NFPs, ADEs ABEs and other social enterprises. 5. Liaise with other government agencies and  Meet with Obela Foods to share learnings on social Completed Caroline Lock private sector organisations to ‘idea share’ procurement and discuss various social procurement  Meet with Wesley Social Enterprises to discuss Completed initiatives. social enterprise sector and opportunities for providing services to DHS Version: 15/1/19 Social Procurement Action Plan 2018  Meet with KIK Enterprises to discuss social 29/03/2019 enterprise sector and opportunities for providing services to DHS Promote Change Embed continuous improvement and innovation in our organisational culture. Outcome:  Provide a consistent approach to social procurement across DHS;  Provide practical guidance to PGU and Business Unit staff on social procurement; and  To provide practical guidance to PGU and Business Unit staff on social procurement. Action Deliverable Timeline Responsibility 6. Develop and implement an Engagement and  Meet with key Directors to discuss benefits of social 31/12/2018 Caroline Lock/Jody Awareness Strategy with BUs, SPGC, ELT and procurement and prepare them for future social King suppliers including dispelling common procurement opportunities misconceptions.  Present Social Procurement Action Plan to SPGC and 29/03/2019 ELT  Briefing to Minister on social procurement 30/06/2019 7. Update acquisition planning & tender documents  Develop ‘model clauses’ and paragraphs that can be 31/12/2018 Karen Lang to incorporate social procurement. inserted into acquisition plans and tender documents  Develop a bank of questions to be included in Part D 8. Update Procurement Instructions to provide  Relevant sections of Procurement Instructions to include 31/12/2018 Jody King guidance on how to incorporate social information and guidance on how to incorporate social procurement into appropriate procurement procurement, with reference to ‘model clauses’ and processes paragraphs 9. Update intranet to provide information on social  Update intranet pages, “Procurement Framework Home”, 31/03/2019 Jody King / Sandra procurement and guidance on how to “Procurement Processes”, “Below $33,000” and “Between Clarke incorporate it into procurement practices 33,000 and $110,000” Version: 15/1/19 Social Procurement Action Plan 2018 10. Work with Dept. for Industry and Skills to  Develop template similar to Horticultural Maintenance so 31/03/2019 Jody King develop ECT/IPP template for DHS that social procurement outcomes can be considered as procurements that records social procurement part of local employment outcomes commitments Governance and Reporting Action Deliverable Timeline Responsibility 11. Review and update Social Procurement  Table updated Guideline with SPGC and ELT 31/05/2019 Caroline Lock Guideline. 12. Develop reporting template to report to  No. of SAHA tenants 30/06/2019 Caroline Lock / SPGC/ELT on social procurement outcomes.  No. Aboriginal staff Jody King  No. of staff with disability 13. Report to OIA/SPGC on % of ABE spend.  NB Report to OIA not required until September 2019. In 30/06/2019 Caroline Lock / the meantime, report to SPGC Sandra Clarke 14. Publish/ update FPP with info about social  Publish updated FPP on SA Tenders & Contracts, DHS 31/03/2019 Jody King / procurement objectives. website and intranet, and provide a copy to SPGC and Caroline Lock ELT for consideration. Version: 15/1/19 Key Stakeholders  DHS Procurement and Grants Unit Staff  DHS Business Units  Strategic Procurement and Grants Committee (SPGC)  SA Housing Authority  Office for Industry Advocate Related Documents  SPGC Terms of Reference  DHS Sustainable and Social Procurement Guideline  Office for Industry Advocate 2018/19 spend target of 0.5% with ABEs  SPB Sustainable Procurement Guideline  Social Traders Social Procurement Materials  Disability Access and Inclusion Act 2018 (SA)  Industry Participation Policy Contact Details Name: Caroline Lock Position: Director, Procurement Phone: (08) 8124 4097 / 0428 104 661 Email: Caroline.Lock@sa.gov.au Version: 15/1/19 24Commencement Status Contract No. Contract Finish Date Execution Contract Value Ref # Option Forecast Date Exercise Date Business Level 1 Business Level 2 Business Level 3 Supplier Category Contract Type Date Date (Inc. GST) 15/01/2018 Header Grant/Contract DCSI1095 National Youth Week 2018 / 2019 / 2020 30/04/2018 $ 100,000 (blank) (blank) (blank) (blank) DHS Community and Support Community Services (blank) Services‐Grants Grant Services 1/04/2018 Current DCSI1327 One‐off Emergency Financial Assistance 31/12/2018 $ 89,100 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants (blank) Services‐Grants Grant Funding 31/01/2018 Current DCSI1154 OFY026‐01 Youth Engagement and 29/09/2018 $ 55,000 (blank) (blank) (blank) (blank) DHS Community Services Office for Youth Carclew Inc Services‐Grants Grant Media project 1/02/2018 Current DCSI1103‐1 CARF 17‐18 Multicultural SA Water 31/12/2018 $ 59,950.00 (blank) (blank) (blank) (blank) DHS Community Services Social Policy Colmar Brunton Pty Ltd Services One off Consumer Project 1/02/2018 Current DCSI1103‐2 CARF 17‐18 Supporting Regional 31/12/2019 $ 124,080.00 (blank) (blank) (blank) (blank) DHS Community Services Social Policy The Trustee for the Love Family Services One off Cutomers in Financial Difficulty Project Trust 8/05/2018 Current DCSI1310 Counter Violence Extremism 30/11/2018 $ ‐ (blank) (blank) (blank) (blank) DHS Community Services Multicultural SA (blank) Services‐Grants Grant 5/02/2018 Current DCSI1103‐3 CARF 17‐18 Achieving Water Security for 31/12/2018 $ 55,000.00 (blank) (blank) (blank) (blank) DHS Community Services Social Policy University of South Australia Services One off Sustainable Farming Families and Communites Project 16/03/2018 Current DCSI1302 ALP05‐02 SACOSS Conference 30/06/2018 $ 16,500 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants South Australian Council of Social Services‐Grants Grant Sponsorship 2018 Services Inc 29/03/2018 Current DCSI1279 Trauma Informed Awareness Learning 30/06/2019 29/03/2018 $ 64,460.00 1 1x1 to 30 June 2020 28/06/2019 (blank) DHS Housing SA Property and Contract Blue Knot Foundation Services One off Program Management 1/06/2018 Header Grant/Contract DHS‐18 2018 Youth Strategy 31/05/2019 $ ‐ (blank) (blank) (blank) (blank) DHS Community Services Strategic Projects (blank) Services‐Grants Grant 30/06/2018 Current DHS‐50 Changing Places Facility Grants 27/02/2019 $ ‐ (blank) (blank) (blank) (blank) DHS NDIS Reform National Disability (blank) Services‐Grants Grant (Previously DCSI1161) Insurance Scheme 1/07/2018 Current DCSI1321 ALP ‐ Foodbank Operational Funding 30/06/2021 $ ‐ (blank) (blank) (blank) (blank) DHS Community and Support Community Services (blank) Services‐Grants Grant Services 1/04/2018 Current DCSI1327‐1 EFAP15020‐01 One‐off Emergency 31/12/2018 $ 30,800 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants Australian Refugee Association Inc Services‐Grants Grant Financial Assistance Funding 1/04/2018 Current DCSI1327‐2 EFAP15021‐01 One‐off Emergency 31/12/2018 $ 27,500 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants Lutheran Community Care Services‐Grants Grant Financial Assistance Funding 1/04/2018 Current DCSI1327‐3 EFAP15022‐01 One‐off Emergency 31/12/2018 $ 30,800 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants Uniting Care Wesley Bowden Services‐Grants Grant Financial Assistance Funding Incorporated 1/04/2018 Current DCSI251‐11 Service to Aboriginal Youth in Coober 30/06/2019 26/02/2018 $ 118,750 (blank) (blank) (blank) (blank) DHS Community Services Community Development Aboriginal Family Support Services Services‐Grants Grant Pedy (Jan 2018‐Dec 2019) Programs Incorporated 1/07/2018 Current DCSI236‐07 Multicultural Letters of Offer to 30/06/2019 $ 274,550 (blank) (blank) (blank) (blank) DHS Community Services Multicultural SA (blank) Services‐Grants Grant 20/04/2018 Current DCSI1288 PCD033‐01 Corporate Training ‐ 30/06/2019 20/04/2018 $ 140,000 1 1 x 1yr to 30 June 2020 (if 28/06/2019 (blank) DHS Community Services Engagement and Grants Volunteering of SA and NT Inc Services‐Grants Grant Volunteering SA&NT extended) 24/04/2018 Current DHS‐9 PCD036‐01 ‐ Strengthening Families – 14/12/2018 23/04/2018 $ 20,000 1 DHS‐9‐V01 extend to 14 27/07/2018 20/07/2018 DHS Community Services Engagement and Grants Uniting Country SA Ltd Services‐Grants Grant Moonta December 2018 1/07/2018 Current DCSI269‐02 Community Services Support Program 30/06/2021 $ ‐ (blank) (blank) (blank) (blank) DHS Community Services Community Development (blank) Services‐Grants Variation‐Grant (2018 to 2021) Programs 8/05/2018 Current DCSI1310‐1 PCD031‐01 Counter Violence Extremism 30/11/2018 20/04/2018 $ 23,100 (blank) (blank) (blank) (blank) DHS Community Services Multicultural SA Islamic Society Of South Aust Inc Services‐Grants Grant 8/05/2018 Current DCSI1310‐2 PCD032‐01 Counter Violence Extremism 30/11/2018 8/05/2018 $ 93,500 (blank) (blank) (blank) (blank) DHS Community Services Multicultural SA Multicultural Communities Council Services‐Grants Grant of SA Inc 1/07/2018 Current DHS‐10 Minister's Social Priorities Fund 18/19 & 30/06/2020 $ 242,000 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants (blank) Services‐Grants Grant 19/20 1/07/2018 Current DHS‐4 Safety and Wellbeing Transport Service 30/06/2019 $ 666,000 1 1x1 yr to 30/06/2020 3/06/2019 (blank) DHS Community Services Social Policy (blank) Services‐Grants Grant Ceduna 22/05/2018 Current DHS‐1 OFY027‐01 Feast for LGBTIQ Event 30/11/2018 4/05/2018 $ 1,650 (blank) (blank) (blank) (blank) DHS Community Services Strategic Projects Feast Adelaide Lesbian & Gay Services‐Grants Grant Consultation Cultural Festival 1/06/2018 Current DHS‐18‐1 2018 Youth Strategy ‐ OFY029‐01 31/03/2019 24/05/2018 $ 16,540 1 3 month extension 1/01/2019 25/01/2019 DHS Community Services Strategic Projects Sexual Health Information Services‐Grants Grant Regional Foundations of LGBTI Inclusion Networking & Education SA Inc Training (SHINE SA) 1/06/2018 Current DHS‐18‐2 2018 Youth Strategy ‐ OFY028‐01 How2 31/12/2019 30/05/2018 $ 16,000 (blank) (blank) (blank) (blank) DHS Community Services Strategic Projects Sexual Health Information Services‐Grants Grant Training Subsidy Networking & Education SA Inc (SHINE SA) 1/07/2018 Current DHS‐53 Homelessness Funding 2018/19 (to 31 31/01/2020 $ ‐ (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract (blank) Services‐Grants Grant Jan 2020) Management 4/06/2018 Current DCSI1292 ATSI072‐01 ‐ Ceduna Street Beat 30/06/2019 1/06/2018 $ 7,500 (blank) (blank) (blank) (blank) DHS Community Services Aboriginal Policy and Australian Red Cross Society Services‐Grants Grant Initiative Projects 12/06/2018 Current DHS‐11 OFW047‐01 ‐ International Women's 31/12/2018 3/05/2018 $ 3,300 (blank) (blank) (blank) (blank) DHS Office for Women Office for Women Working Women’s Centre SA Services‐Grants Grant Day March 2018 Incorporated 13/06/2018 Current DHS‐34 PCD038‐01 ‐ Whalers Peninsula 1/01/2019 12/06/2018 $ 49,500 (blank) (blank) (blank) (blank) DHS Community Services Community Development Whalers Peninsula Community Services‐Grants Grant Community Association Programs Association Inc 18/06/2018 Current DHS‐16 PCD037‐01 Yunga Nungas: Future 31/12/2018 18/06/2018 $ 28,612 (blank) (blank) (blank) (blank) DHS Community Services Aboriginal Policy and Incompro Aboriginal Association Services‐Grants Grant Leaders Projects Incorporated 29/06/2018 Current DCSI1208 NDIS0058‐01 Support for Aboriginal 20/12/2018 29/06/2018 $ 100,000 (blank) (blank) (blank) (blank) DHS NDIS Reform National Disability First Peoples Disability Network Services‐Grants Grant Clients with Complex Needs Insurance Scheme (Australia) Limited 1/07/2018 Current DHS‐53‐HP Homelessness Funding 2018/19 ‐ HP‐ 31/12/2018 1 DHS‐53‐V04 & DHS‐53‐V05 28/12/2018 (blank) SAHA Customers and Services Homelessness Contract (blank) Services‐Grants Grant MCACF to 31/01/2020 Management 30/06/2018 Current DHS‐50‐1 DPU001‐1 Changing Places Facility 27/02/2019 25/06/2018 $ 55,000 (blank) (blank) (blank) (blank) DHS NDIS Reform National Disability Adelaide Oval SMA Limited Services‐Grants Grant Grants (previously DCSI1161‐1) Insurance Scheme 1/07/2018 Current DHS‐53‐1 SHS0109‐02 ‐ (AH) Youth 31/01/2020 5/10/2018 $ 1,831,500 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Aboriginal Family Support Services Services‐Grants Grant Accommodation Aboriginal and Torres Management Incorporated Strait Islander Specific Homelessness Service 1/07/2018 Current DHS‐53‐2 SHS0095‐02 ‐ (AH) Western Adelaide 31/01/2020 24/08/2018 $ 1,161,600 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Aboriginal Sobriety Group Services‐Grants Grant Aboriginal Specific Homelessness Management Indigenous Corporation 1/07/2018 Current DCSI1321‐1 ALP07‐01 Foodbank Operational 30/06/2021 17/07/2018 $ 726,000 (blank) (blank) (blank) (blank) DHS Community and Support Community Services Foodbank Of South Australia Inc Services‐Grants Grant Funding Services 1/07/2018 Current DHS‐53‐3 SHS5075‐03 ‐ (GH) Southern Country 31/01/2020 5/10/2018 $ 1,225,554 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglican Community Care Inc Services‐Grants Grant Generic Homelessness Service Management 1/07/2018 Current DHS‐53‐4 SHS5075‐03 ‐ (GH) Southern Country 31/01/2020 5/10/2018 $ 1,225,554 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglican Community Care Inc Services‐Grants Grant Generic Homelessness Service ‐ Management Limestone Coast 1/07/2018 Current DCSI269‐02‐1 F&CD201‐02 Community Services 30/06/2021 12/01/2018 $ 2,559,372 (blank) (blank) (blank) (blank) DHS Community Services Community Development Anglican Community Care Inc Services‐Grants Variation‐Grant Support Program Programs 1/07/2018 Current DHS‐53‐5 SHS5075‐03 ‐ (GH) Southern Country 31/01/2020 5/10/2018 $ 1,184,702 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglican Community Care Inc Services‐Grants Grant Generic Homelessness Service ‐ Murray Management Bridge/Adelaide Hills 1/07/2018 Current DHS‐53‐6 SHS5075‐03 ‐ (GH) Southern Country 31/01/2020 5/10/2018 $ 1,674,924 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglican Community Care Inc Services‐Grants Grant Generic Homelessness Service ‐ Management 1/07/2018 Current DCSI592‐V09 CPN020‐01 ‐ Mid Murray 30/06/2020 15/06/2018 $ 422,180 (blank) (blank) (blank) (blank) DHS Disability SA Funds Management Australian Red Cross Society Services‐Grants Grant 1/07/2018 Current DCSI269‐02‐ F&CD235‐02 Community Services 30/06/2021 11/12/2017 $ 235,818 (blank) (blank) (blank) (blank) DHS Community Services Community Development Community House Port Lincoln Inc Services‐Grants Variation‐Grant 13 Support Program Programs 1/07/2018 Current DCSI269‐02‐6 F&CD234‐02 Community Services 30/06/2021 18/12/2017 $ 623,040 (blank) (blank) (blank) (blank) DHS Community Services Community Development Centacare Catholic Country SA Services‐Grants Variation‐Grant Support Program Programs Limited 1/07/2018 Current DHS‐53‐22 SHS0107‐03 ‐ (DV) Ceduna Regional 31/01/2020 10/09/2018 $ 1,660,890 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Centacare Catholic Country SA Services‐Grants Grant Domestic Violence and Aboriginal Management Limited Family Violence Service 1/07/2018 Current DHS‐53‐23 SHS0126‐02 ‐ (GH) Ceduna Generic 31/01/2020 24/08/2018 $ 994,730 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Centacare Catholic Country SA Services‐Grants Grant Homelessness Service Management Limited 1/07/2018 Current DHS‐3 MoAA between Housing SA and DPTI 30/06/2019 $ 310,894.10 (blank) (blank) (blank) (blank) DHS Housing SA Property and Contract Department of Planning Transport Services MoAA or MoU (for sealing of road at Fregon) Management & Infrastructure 1/07/2018 Current DHS‐37‐1 Property & Tenancy Management and 30/06/2019 $ 50,000 (blank) (blank) (blank) (blank) DHS Housing SA Statewide Services UnitingSA Ltd Services‐Grants Grant Support Services to the Employment Related Accommodation Program 2018/19 1/07/2018 Current DHS‐53‐HP‐1 HP08‐06 ‐ (MHACF GH) Community 30/06/2020 29/08/2018 $ 269,700 1 extension until 30/06/2020 (blank) 31/12/2018 SAHA Customers and Services Homelessness Contract Community Housing Council of SA Services‐Grants Grant Housing Council of SA (CHCSA) Management Inc 9/05/2018 Current DCSI1300 SI003‐01 Young Entrepreneur Program 30/08/2019 9/05/2018 (blank) (blank) (blank) (blank) DHS Community Services Engagement and Grants Department for Education Services‐Grants MoAA or MoU (Pilot) (MoAA) 1/01/2018 Current DCSI1224 OFY025‐01 Duke of Edinburgh's Award 31/12/2018 $ 23,112 (blank) (blank) (blank) (blank) DHS Community Services Strategic Projects Duke Of Edinburgh'S Scheme In Services‐Grants Grant 2018 Aust 4/04/2018 Current DCSI1011 Restorative Framework Pilot ‐ School 30/11/2018 1 DCSI1101‐RO1 12m 30/11/2018 (blank) DHS Community Services Office for Youth G.E Moncrieff & K Sellen Services‐Grants Grant training extension to 30/11/19 1/07/2018 Current DHS‐53‐10 SHS5037‐03 ‐ (GH) Northern Generic 31/01/2020 5/10/2018 $ 2,231,114 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglicare SA Ltd Services‐Grants Grant Homelessness Service ‐ Outer North Management 1/07/2018 Current DHS‐31 F&CD241‐01 Information and Referral 30/06/2019 9/08/2018 $ 369,000 1 1x1 to 30 June 2020 if 30/06/2019 (blank) DHS Community and Support Community Services Grandparents for Grandchildren SA Services‐Grants Grant Services for Grandparents and Kinship required (3m notice req'd) Services Inc A38726 Carers 1/07/2018 Current DHS‐31 F&CD241‐01 Information and Referral 30/06/2019 9/08/2018 $ 369,075 1 1x1 to 30 June 2021 if 30/06/2020 (blank) DHS Community and Support Community Services Grandparents for Grandchildren SA Services‐Grants Grant Services for Grandparents and Kinship required (3m notice req'd) Services Inc A38726 Carers 1/07/2018 Current DHS‐53‐24 SHS5189‐03 ‐ (GH) Common Ground 31/01/2020 30/08/2018 $ 1,163,250 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Housing Choices South Australia Ltd Services‐Grants Grant Adelaide Management 1/07/2018 Current DHS‐53‐25 SHS0105‐02 ‐ (GH) Eastern Adelaide 31/01/2020 10/09/2018 $ 2,057,990 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Hutt Street Centre Services‐Grants Grant Generic Homelessness Service Management 1/07/2018 Current DHS‐53‐26 SHS0104‐02 ‐ (DV) Fleurieu and 31/01/2020 4/09/2018 $ 455,730 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Junction Australia Ltd Services‐Grants Grant Kangaroo Island Domestic Violence Management 1/07/2018 Current DHS‐53‐27 SHS5016‐02 ‐ (YH) Outer Southern Youth 31/01/2020 5/10/2018 $ 2,331,230 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Junction Australia Ltd Services‐Grants Grant Homelessness Service Management 1/07/2018 Current DHS‐53‐28 SHS5174‐03 ‐ (GH) Fleurieu & Kangaroo 31/01/2020 4/09/2018 $ 585,420 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Junction Australia Ltd Services‐Grants Grant Island Generic Homelessness Service Management 1/07/2018 Current DHS‐53‐29 SHS0135‐02 ‐ (DV AH) Intervention 31/01/2020 24/08/2018 $ 189,750 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Kornar Winmil Yunti Aboriginal Services‐Grants Grant Order Response Model Management Corporation 1/07/2018 Current DHS‐53‐30 SHS5194‐02 ‐ (GH) Riverland 31/01/2020 11/09/2018 $ 605,990 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Life Without Barriers Services‐Grants Grant Homelessness Assertive Outreach Management 1/07/2018 Current DHS‐53‐31 SHS5113‐03 ‐ (GH) Outer Southern 31/01/2020 5/10/2018 $ 2,381,170 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Lutheran Community Care Services‐Grants Grant Generic Homelessness Service Management 6/08/2018 Current DHS‐40 F&CD242‐01 CSSP Community and 3/08/2022 3/08/2018 $ 132,000 (blank) (blank) (blank) (blank) DHS Community and Support Community Services MarionLIFE Community Services Inc Services‐Grants Grant Neighbourhood Development Services 1/07/2018 Current DCSI1200 DZ010‐03 Dry Zone MYSA 30/06/2021 9/01/2018 $ 526,185 (blank) (blank) (blank) (blank) DHS Community Services Community Development Multicultural Youth South Australia Services‐Grants Grant Programs Inc 1/07/2018 Current DHS‐53‐32 SHS0118‐03 ‐ (AH) NPY Women's Council 31/01/2020 28/08/2018 $ 910,030 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Ngaanyatjarra Pitjantjatjara Services‐Grants Grant Domestic and Family Violence Service Management Yankunytjatjara Women's Council (Aboriginal Corporation) 1/07/2018 Current DHS‐53‐33 SHS0112‐02 ‐ (AH) Northern Regional 31/01/2020 21/09/2018 $ 1,382,810 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Nunga Mi:Minar Inc Services‐Grants Grant Domestic Violence and Aboriginal Management Family Violence Service 1/07/2018 Current DHS‐53‐34 SHS5073‐04 ‐ (GH) Ex‐Custodial 31/01/2020 10/09/2018 $ 3,751,990 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Offenders Aid & Rehabilitation Services‐Grants Grant Homelessness Support Service Management Services of SA Inc 1/07/2018 Current DCSI269‐02‐ F&CD222‐02 Community Services 30/06/2021 18/12/2017 $ 619,467 (blank) (blank) (blank) (blank) DHS Community Services Community Development Plaza Youth Services‐Grants Variation‐Grant 27 Support Program Programs 1/07/2018 Current DCSI269‐02‐ F&CD223‐02 Community Services 30/06/2021 18/12/2017 $ 313,110 (blank) (blank) (blank) (blank) DHS Community Services Community Development Port Augusta Youth Centre Services‐Grants Variation‐Grant 28 Support Program Programs Incorporated 1/07/2018 Current DHS‐53‐35 SHS5186‐02 ‐ (YH) Child Focused 31/01/2020 10/09/2018 $ 2,273,920 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Relationships Australia (SA) Health Services‐Grants Grant Support Management Promotion Services 1/07/2018 Current DHS‐53‐HP‐2 HP01‐06 ‐ (MHACF GH) Shelter SA 30/06/2020 18/09/2018 1 extension 30/06/2020 (blank) 31/12/2018 SAHA Customers and Services Homelessness Contract Shelter SA Inc Services‐Grants Grant Management 1/07/2018 Current DHS‐53‐36 SHS5191‐02 ‐ (YH) Ladder St Vincent 31/01/2020 13/09/2018 $ 1,150,270 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract St John's Youth Services Services‐Grants Grant Street Management Incorporated 1/07/2018 Current DHS‐53‐YCS SHS5000‐04 ‐ (YH) Youth Crisis Service 30/06/2019 5/10/2018 $ 2,484,680 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract St John's Youth Services Services‐Grants Grant (Youth 110) to 30/06/2019 Management Incorporated 1/07/2018 Current DHS‐53‐37 SHS5195‐02 ‐ (GH) St Vincent De Paul 31/01/2020 10/09/2018 $ 1,949,530 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract St Vincent De Paul Society (SA) Inc Services‐Grants Grant Homeless Men's Crisis Accommodation Management Service 1/07/2018 Current DCSI269‐02‐ F&CD225‐02 Community Services 30/06/2021 29/12/2017 $ 225,960 (blank) (blank) (blank) (blank) DHS Community Services Community Development Survivors of Torture and Trauma Services‐Grants Variation‐Grant 29 Support Program Programs Assistance and Rehabilitation 1/07/2018 Current DHS‐53‐38 SHS0092‐02 ‐ (YH) Eastern Adelaide 31/01/2020 28/08/2018 $ 946,000 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract SYC Ltd Services‐Grants Grant Youth Homelessness Service Management 1/07/2018 Current DHS‐53‐39 SHS0097‐02 ‐ (YH) Youth Homelessness 31/01/2020 28/08/2018 $ 849,420 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract SYC Ltd Services‐Grants Grant Gateway Management 1/07/2018 Current DHS‐53‐40 SHS5185‐02 ‐ (YH) Integrated Housing 31/01/2020 28/08/2018 $ 683,210 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract SYC Ltd Services‐Grants Grant Exits (Youth Justice) Management 1/07/2018 Current DHS‐53‐HP‐3 HP03‐07 ‐ (MHACF GH) Tenant's 31/01/2020 28/08/2018 $ 288,750 1 extension 31/01/2020 (blank) 4/01/2019 SAHA Customers and Services Homelessness Contract SYC Ltd Services‐Grants Grant Information and Advocacy Service (TIAS) Management 1/07/2018 Current DHS‐53‐HP‐4 HP04‐07 ‐ (MHACF YH) Get a Place 31/01/2020 28/08/2018 $ 59,290 1 Extension 19/20 (blank) 4/01/2019 SAHA Customers and Services Homelessness Contract SYC Ltd Services‐Grants Grant Management 1/07/2018 Current DCSI269‐02‐ F&CD238‐02 Community Services 30/06/2021 18/12/2017 $ 42,804 (blank) (blank) (blank) (blank) DHS Community Services Community Development Tailem Bend Community Centre Inc Services‐Grants Variation‐Grant 30 Support Program Programs 1/04/2018 Current DCSI1243 GRF202‐01 Flinders University 30/09/2018 $ 33,281 (blank) (blank) (blank) (blank) DHS Corporate Services Concessions and Support The Flinders University of South Services‐Grants Grant Accommodation Services Australia 11/05/2018 Current DCSI1182‐V01‐SC0010‐01 Be a Job Maker (BaJM) 31/12/2018 (blank) (blank) (blank) (blank) DHS Community Services Northern Connections The Flinders University of South Services‐Grants Grant 1 Australia 11/05/2018 Current DCSI1182‐V01‐SC0011‐01 LGBITQ 30/11/2018 (blank) (blank) (blank) (blank) DHS Community Services Northern Connections The Flinders University of South Services‐Grants Grant 2 Australia 31/07/2018 Current DHS‐48 ALP09‐01 Financial Resilience Research 30/11/2018 30/07/2018 $ 32,890 (blank) (blank) (blank) (blank) DHS Community and Support Community Services The Flinders University of South Services‐Grants Grant Project Services Australia 1/07/2018 Current DCSI269‐02‐ F&CD209‐02 Community Services 30/06/2021 18/12/2017 $ 292,248 (blank) (blank) (blank) (blank) DHS Community Services Community Development The Food Centre Inc Services‐Grants Variation‐Grant 31 Support Program Programs 1/07/2018 Current DCSI269‐02‐ F&CD226‐02 Community Services 30/06/2021 18/12/2017 $ 642,147 (blank) (blank) (blank) (blank) DHS Community Services Community Development The Hut Community Centre Inc Services‐Grants Variation‐Grant 32 Support Program Programs 1/07/2018 Current DCSI269‐02‐ F&CD227‐02 Community Services 30/06/2021 11/12/2017 $ 389,217 (blank) (blank) (blank) (blank) DHS Community Services Community Development The Junction Community Centre Inc Services‐Grants Variation‐Grant 33 Support Program Programs 1/07/2018 Current DHS‐4‐1 MAP02‐01 Safety and Wellbeing 30/06/2019 27/06/2018 $ 666,000 1 1x1 yr to 30/06/2020 3/06/2019 (blank) DHS Community Services Social Policy The trustee for Edmonds Family Services‐Grants Grant Transport Service Ceduna Trust 1/07/2018 Current DCSI291‐1 AFSA01‐03 Affordable SA Helpline 30/09/2018 29/05/2018 $ 121,704 1 DCSI291‐1‐RO‐1 Extension 28/09/2018 (blank) DHS Community Services Community Development The Trustee for the Salvation Army Services‐Grants Grant to 31 December 2018 Programs (SA) Property Trust 1/07/2018 Current DHS‐53‐42 SHS0108‐02 ‐ (DV) Adelaide Domestic 31/01/2020 4/09/2018 $ 500,500 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract The Trustee for the Salvation Army Services‐Grants Grant Violence Crisis Accommodation Service ‐ Management (SA) Property Trust Bramwell House 1/07/2018 Current DHS‐53‐43 SHS0119‐02 ‐ (GH) Port Augusta Generic 31/01/2020 4/09/2018 $ 1,200,870 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract The Trustee for the Salvation Army Services‐Grants Grant Homelessness Service Management (SA) Property Trust 1/07/2018 Current DHS‐53‐44 SHS5040‐02 ‐ (YH) Inner North & North 31/01/2020 5/10/2018 $ 2,399,430 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract The Trustee for the Salvation Army Services‐Grants Grant East Youth Homelessness Service Management (SA) Property Trust 1/07/2018 Current DHS‐53‐51 SHS0094‐02 ‐ (YH) Port Augusta Youth 31/01/2020 11/09/2018 $ 1,033,450 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Country SA Ltd Services‐Grants Grant Homelessness Service Management 1/07/2018 Current DHS‐53‐52 SHS0098‐02 ‐ (DV) Yorke and Mid North 31/01/2020 11/09/2018 $ 819,280 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Country SA Ltd Services‐Grants Grant Domestic Violence Service Management 1/07/2018 Current DHS‐53‐53 SHS0101‐02 ‐ (DV) Port Augusta 31/01/2020 11/09/2018 $ 864,160 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Country SA Ltd Services‐Grants Grant Regional Domestic Violence and Management Aboriginal Family Violence Service 1/07/2018 Current DHS‐53‐54 SHS0106‐02 ‐ (DV) Coober Pedy Regional 31/01/2020 11/09/2018 $ 1,076,130 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Country SA Ltd Services‐Grants Grant Domestic Violence and Aboriginal Management Family Violence Service 1/07/2018 Current DHS‐53‐55 SHS5172‐03 ‐ (GH) Yorke & Mid North 31/01/2020 5/10/2018 $ 2,679,600 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Country SA Ltd Services‐Grants Grant Generic Homelessness Service Management 1/07/2018 Current DHS‐53‐56 SHS0096‐02 ‐ (GH) Western Adelaide 31/01/2020 10/09/2018 $ 2,840,200 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract UnitingSA Ltd Services‐Grants Grant Generic Homelessness Service Management 1/07/2018 Current DHS‐53‐57 SHS5015‐02 ‐ (YH) Western Adelaide 31/01/2020 10/09/2018 $ 2,441,340 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract UnitingSA Ltd Services‐Grants Grant Youth Homelessness Service Management 1/07/2018 Current DHS‐53‐45 SHS5087‐03 ‐ (GH) Towards 31/01/2020 5/10/2018 $ 1,830,730 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract The Trustee for the Salvation Army Services‐Grants Grant Independence Management (SA) Property Trust 1/07/2018 Current DCSI269‐02‐ F&CD229‐02 Community Services 30/06/2021 5/02/2018 $ 2,565,477 (blank) (blank) (blank) (blank) DHS Community Services Community Development Uniting Care Wesley Bowden Services‐Grants Variation‐Grant 36 Support Program Programs Incorporated 1/07/2018 Current DHS‐53‐46 SHS5190‐02 ‐ (GH) Inner Southern 31/01/2020 5/10/2018 $ 2,178,770 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Care Wesley Bowden Services‐Grants Grant Generic Homelessness Service Management Incorporated 1/07/2018 Current DCSI269‐02‐ F&CD228‐02 Community Services 30/06/2021 18/01/2018 $ 1,739,013 (blank) (blank) (blank) (blank) DHS Community Services Community Development Uniting Communities Incorporated Services‐Grants Variation‐Grant 34 Support Program Programs 1/07/2018 Current DHS‐53‐47 SHS0122‐02 ‐ (AH) Kurlana Tampawardli 31/01/2020 5/10/2018 $ 1,895,850 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Communities Incorporated Services‐Grants Grant (Aboriginal Transitional Housing Management Outreach Service) 1/07/2018 Current DHS‐53‐62 SHS0110‐02 ‐ (DV) Statewide CALD 31/01/2020 24/08/2018 $ 1,071,840 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant Domestic Violence Service Management 1/07/2018 Current DHS‐53‐63 SHS0111‐02 ‐ (DV) Western Adelaide 31/01/2020 5/10/2018 $ 2,013,660 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant Domestic Violence Service Management 1/07/2018 Current DHS‐53‐64 SHS0113‐02 ‐ (DV) Northern Adelaide 31/01/2020 10/09/2018 $ 2,765,400 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant Domestic Violence Service Management 1/07/2018 Current DHS‐53‐65 SHS0114‐02 ‐ (DV) Eastern Adelaide 31/01/2020 10/09/2018 $ 1,967,020 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant Domestic Violence Service Management 1/07/2018 Current DHS‐53‐66 SHS0115‐02 ‐ (AH) Domestic Violence 31/01/2020 24/08/2018 $ 1,157,090 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant and Aboriginal Family Violence Gateway Management Service 1/07/2018 Current DHS‐53‐67 SHS0116‐02 ‐ (AH) Southern Regional 31/01/2020 24/08/2018 $ 1,364,550 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant Aboriginal Domestic Violence and Management Family Violence Service 1/07/2018 Current DHS‐53‐68 SHS0117‐02 ‐ (DV) Southern Adelaide 31/01/2020 10/09/2018 $ 1,886,280 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Women's Safety Services SA Inc Services‐Grants Grant Domestic Violence Service Management 1/07/2018 Current DHS‐53‐48 SHS5200‐02 ‐ (GH) Extreme Weather 31/01/2020 14/09/2018 $ 176,440 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Communities Incorporated Services‐Grants Grant Response Brokerage Service Management 1/07/2018 Current DHS‐53‐7 SHS0093‐02 ‐ (GH) Financial Services 31/01/2020 6/09/2018 $ 159,280 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglicare SA Ltd Services‐Grants Grant Clinic Management 1/07/2018 Current DHS‐53‐8 SHS5037‐03 ‐ (GH) Northern Generic 31/01/2020 5/10/2018 $ 2,231,114 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglicare SA Ltd Services‐Grants Grant Homelessness Service Management 1/07/2018 Current DHS‐53‐9 SHS5037‐03 ‐ (GH) Northern Generic 31/01/2020 5/10/2018 $ 2,726,917 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Anglicare SA Ltd Services‐Grants Grant Homelessness Service ‐ Inner North & Management North East 1/07/2018 Current DHS‐53‐49 SHS5196‐02 ‐ (GH) Homelessness 31/01/2020 5/10/2018 $ 1,888,040 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Communities Incorporated Services‐Grants Grant Gateway Service Management 1/07/2018 Current DHS‐53‐50 SHS5012‐02 ‐ (YH) Therapeutic Youth 31/01/2020 5/10/2018 $ 6,517,610 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Communities Incorporated Services‐Grants Grant Service (Adelaide & Mt Gambier) Management 1/07/2018 Current DHS‐53‐58 SHS0001‐03 ‐ (GH) The Terrace Boarding 31/01/2020 11/09/2018 $ 508,640 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Unity Housing Company Ltd Services‐Grants Grant House Management 1/07/2018 Current DHS‐53‐59 SHS5182‐02 ‐ (GH) The Terrace Boarding 31/01/2020 11/09/2018 $ 235,400 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Unity Housing Company Ltd Services‐Grants Grant House Liaison Worker Program Management 1/07/2018 Current DCSI639‐02 OFV004‐07 Sustainable Online 30/06/2019 23/05/2018 $ 65,458 (blank) (blank) (blank) (blank) DHS Community Services Office for Volunteers University of South Australia Services‐Grants Grant Community Engagement Program 2018/2019 1/07/2018 Current DHS‐53‐60 SHS5203‐02 ‐ (DV) Domestic Violence 31/01/2020 28/08/2018 $ 1,171,060 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Victim Support Services Services‐Grants Grant Safety Packages Program Management Incorporated 1/07/2018 Current DCSI269‐02‐ F&CD208‐02 Community Services 30/06/2021 11/12/2017 $ 300,633 (blank) (blank) (blank) (blank) DHS Community Services Community Development Vietnamese Community in Australia Services‐Grants Variation‐Grant 38 Support Program Programs 1/08/2018 Current DHS‐38 Domestic Violence Disclosure Scheme 30/09/2019 27/07/2018 $ 521,400.00 (blank) (blank) (blank) (blank) DHS Office for Women Office for Women Women's Safety Services SA Inc Services One off 6/08/2018 Current DCSI1321‐2 ALP08‐01 Foodbank Operational 30/06/2019 6/08/2018 $ 99,000 1 1x1yr to 30 June 2020 30/06/2019 (blank) DHS Community and Support Community Services Uniting Country SA Ltd Services‐Grants Grant Funding Services 6/08/2018 Current DCSI1321‐2 ALP08‐01 Foodbank Operational 30/06/2019 6/08/2018 2 1x1yr to 30 June 2021 30/06/2020 (blank) DHS Community and Support Community Services Uniting Country SA Ltd Services‐Grants Grant Funding Services 1/07/2018 Current DHS‐53‐HP‐5 HP09‐06 ‐ (MHACF GH) Housing Legal 30/06/2019 24/08/2018 $ 48,620 1 DHS‐53‐V02 extend to 30 28/09/2018 31/10/2018 SAHA Customers and Services Homelessness Contract Welfare Rights Centre SA Inc Services‐Grants Grant Clinic (expires 30/06/2019) June 2019 Management 1/09/2018 Current LSA‐4‐22 Complex Care and Attendant Care Panel 31/08/2020 27/09/2018 (blank) (blank) (blank) (blank) LSA LSA Lifetime Support Uniting Communities Incorporated Services Panel 1/07/2018 Current DHS‐37‐2 Property & Tenancy Management and 30/06/2019 $ 50,000 (blank) (blank) (blank) (blank) DHS Housing SA Statewide Services Wesley Country Housing Services‐Grants Grant Support Services to the Employment Incorporated Related Accommodation Program 2018/19 1/07/2018 Current DCSI269‐02‐ F&CD232‐02 Community Services 30/06/2021 18/12/2017 $ 309,915 (blank) (blank) (blank) (blank) DHS Community Services Community Development West Coast Youth & Community Services‐Grants Variation‐Grant 39 Support Program Programs Support Inc 1/07/2018 Current DHS‐53‐61 SHS5002‐04 ‐ (GH) Port Lincoln Generic 31/01/2020 4/09/2018 $ 1,277,100 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract West Coast Youth & Community Services‐Grants Grant Homelessness Service (Youth Focus) Management Support Inc 24/09/2018 Current DHS‐79‐1 Assistance with Care and Housing (ACH) ‐ 30/06/2019 24/09/2018 $ 112,384 (blank) (blank) (blank) (blank) DHS Disability and Reform Disability Community Anglicare SA Ltd Services‐Grants One off Exceptional Needs Unit Services 28/09/2018 Current DHS‐79‐2 Assistance with Care and Housing (ACH) ‐ 30/06/2019 28/09/2018 $ 112,384 (blank) (blank) (blank) (blank) DHS Disability and Reform Disability Community Offenders Aid & Rehabilitation Services‐Grants One off Exceptional Needs Unit Services Services of SA Inc 1/01/2019 Awaiting Contract DCSI758 CC02‐01 Consumer Credit Legal Service 30/06/2022 $ 3,241,960 1 1 x 3 year extension to 30 30/06/2022 (blank) DHS Community and Support Community Services Uniting Communities Incorporated Services‐Grants Grant Execution (DCSI701) June 2025 Services 1/01/2019 Current DHS‐57 Murray Mallee Community Passenger 30/06/2020 9/11/2018 $ 295,401.00 (blank) (blank) (blank) (blank) DHS NDIS Reform National Disability Tailem Bend Community Centre Inc Services One off Network (DCSI588‐6) Insurance Scheme 1/07/2018 Current DHS‐53‐69 SHS0100‐02 ‐ (DV) Port Lincoln Regional 31/01/2020 24/08/2018 $ 1,029,820 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Yarredi Services Inc Services‐Grants Grant Domestic Violence Service Management 3/09/2018 Current DHS‐60 OFY030‐01 LGBTIQ Youth Engagement 14/12/2018 24/08/2018 $ 8,360 (blank) (blank) (blank) (blank) DHS Community and Support Community Services Youth Affairs Council of South Services‐Grants Grant Proposal Services Australia 1/12/2018 Current DHS‐103 Adolescent Community Brokerage 30/06/2019 6/12/2018 $ 353,780.00 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract Uniting Communities Incorporated Services One off Program Management 31/12/2018 Current DHS‐99 Assisted Technology Upgrade 30/12/2019 31/12/2018 $ 77,374.00 1 3 month extension of time 30/12/2019 (blank) DHS Disability and Reform Strategy and Partnerships Julia Farr Association Inc Goods and Services One off 1/06/2019 Current DHS‐ Port Augusta Youth Centre Activities 30/06/2021 19/12/2018 $ 264,000 (blank) (blank) (blank) (blank) DHS Community and Support Community Services Port Augusta Youth Centre Services‐Grants Grant 64OFY009‐03 Services Incorporated 1/03/2019 Current DHS‐114 PCD039‐01 The Hummocks Brighter 28/02/2020 7/01/2019 $ 30,000 (blank) (blank) (blank) (blank) DHS Community and Support Community Services Uniting Country SA Ltd Services‐Grants Grant Futures Services 1/07/2016 Current DCSI550‐ One Grant Program 30/06/2019 $ 3,018,256 (blank) (blank) (blank) (blank) DHS Community Services Community Development (blank) Services‐Grants Grant Header Programs Sum of Contract Org/Division/Business Unit Count of Contracts Value (Inc. GST) DHS $32,405,156 92 Community and Support Services $5,372,285 12 Community Services $5,372,285 12 Community Services $24,824,814 65 Aboriginal Policy and Projects $36,112 2 Community Development Programs $22,052,063 39 Engagement and Grants $596,700 8 Multicultural SA $391,150 4 Northern Connections Office for Volunteers $65,458 1 Office for Youth $55,000 1 Social Policy $1,571,030 5 Strategic Projects $57,302 5 Corporate Services $33,281 1 Concessions and Support Services $33,281 1 Disability and Reform $302,141 3 Disability Community Services $224,767 2 Strategy and Partnerships $77,374 1 Disability SA $422,180 1 Funds Management $422,180 1 Housing SA $475,354 4 Property and Contract Management $375,354 2 Statewide Services $100,000 2 NDIS Reform $450,401 4 National Disability Insurance Scheme $450,401 4 Office for Women $524,700 2 Office for Women $524,700 2 LSA LSA Lifetime Support Authority SAHA $109,295,258 75 Customers and Services $109,295,258 75 Homelessness Contract Management $109,295,258 75 Grand Total $141,700,414 167 Sum of Contract Count of Row Labels Value (Inc. GST) Contracts (blank)$ 4,389,906 12 Aboriginal Family Support Services Incorporated$ 1,950,250 2 Aboriginal Sobriety Group Indigenous Corporation$ 1,161,600 1 Adelaide Oval SMA Limited$ 55,000 1 Anglican Community Care Inc$ 7,870,106 5 Anglicare SA Ltd$ 8,392,418 6 Australian Red Cross Society$ 429,680 2 Australian Refugee Association Inc$ 315,800 2 Baptist Care (SA) Inc$ 3,636,490 3 Blue Knot Foundation$ 64,460 1 Camden Community Centre Inc$ 54,930 1 Carclew Inc$ 55,000 1 Catherine House Inc$ 1,741,960 1 Catholic Family Services (Centacare)$ 12,423,824 8 Centacare Catholic Country SA Limited$ 3,278,660 3 Colmar Brunton Pty Ltd$ 59,950 1 Community House Port Lincoln Inc$ 235,818 1 Community Housing Council of SA Inc$ 269,700 1 Department for Education Department of Planning Transport & Infrastructure$ 310,894 1 Duke Of Edinburgh'S Scheme In Aust$ 23,112 1 Eastwood Community Centre Inc$ 236,295 1 Feast Adelaide Lesbian & Gay Cultural Festival$ 1,650 1 First Peoples Disability Network (Australia) Limited$ 100,000 1 Foodbank Of South Australia Inc$ 726,000 1 G.E Moncrieff & K Sellen Gawler Community House$ 202,065 1 Grandparents for Grandchildren SA Inc A38726$ 738,075 2 Housing Choices South Australia Ltd$ 1,163,250 1 Hutt Street Centre$ 2,057,990 1 Incompro Aboriginal Association Incorporated$ 28,612 1 Islamic Society Of South Aust Inc$ 23,100 1 Julia Farr Association Inc$ 77,374 1 Junction Australia Ltd$ 3,541,601 4 Kornar Winmil Yunti Aboriginal Corporation$ 189,750 1 Kura Yerlo Incorporated$ 93,222 1 Life Without Barriers$ 605,990 1 Lifeline South East SA$ 185,076 1 Lutheran Community Care $ 3,009,624 3 MarionLIFE Community Services Inc$ 132,000 1 Marra Dreaming$ 263,871 1 Midway Road Community House Inc$ 215,160 1 Milang Old School House Community Centre$ 252,993 1 Multicultural Communities Council of SA Inc$ 93,500 1 Multicultural Youth South Australia Inc$ 699,375 2 Murray Bridge Community Centre Inc$ 125,643 1 Ngaanyatjarra Pitjantjatjara Yankunytjatjara Women's Council (Aboriginal Corporation) $ 910,030 1 North East Community House Incorporated$ 337,770 1 Northern Area Community & Youth Services Inc$ 1,357,224 1 Nunga Mi:Minar Inc$ 1,382,810 1 Offenders Aid & Rehabilitation Services of SA Inc$ 3,864,374 2 Plaza Youth$ 619,467 1 Port Augusta Youth Centre Incorporated$ 577,110 2 Relationships Australia (SA) Health Promotion Services$ 2,273,920 1 Sexual Health Information Networking & Education SA Inc (SHINE SA) $ 32,540 2 Shelter SA Inc South Australian Council of Social Services Inc $ 16,500 1 St John's Youth Services Incorporated $ 3,634,950 2 St Vincent De Paul Society (SA) Inc $ 1,949,530 1 Survivors of Torture and Trauma Assistance and Rehabilitation Service $ 225,960 1 SYC Ltd $ 2,826,670 5 Tailem Bend Community Centre Inc $ 338,205 2 The Flinders University of South Australia $ 66,171 2 The Food Centre Inc $ 292,248 1 The Hut Community Centre Inc $ 642,147 1 The Junction Community Centre Inc $ 389,217 1 The trustee for Edmonds Family Trust $ 666,000 1 The Trustee for the Love Family Trust $ 124,080 1 The Trustee for the Salvation Army (SA) Property Trust $ 6,053,234 5 Uniting Care Wesley Bowden Incorporated $ 4,775,047 3 Uniting Communities Incorporated $ 15,812,693 7 Uniting Country SA Ltd $ 7,251,206 9 UnitingSA Ltd $ 5,799,492 4 Unity Housing Company Ltd $ 744,040 2 University of South Australia $ 120,458 2 Victim Support Services Incorporated $ 1,171,060 1 Vietnamese Community in Australia $ 300,633 1 Volunteering of SA and NT Inc $ 140,000 1 Welfare Rights Centre SA Inc $ 48,620 1 Wesley Country Housing Incorporated $ 50,000 1 West Coast Youth & Community Support Inc $ 1,587,015 2 Whalers Peninsula Community Association Inc $ 49,500 1 Women's Safety Services SA Inc $ 12,747,240 8 Working Women’s Centre SA Incorporated $ 3,300 1 Yarredi Services Inc $ 1,029,820 1 Youth Affairs Council of South Australia $ 8,360 1 Grand Total $ 141,700,414 167 Commencement Status Contract No. Contract Finish Date Execution Date Contract Value Ref # Option Forecast Date Exercise Date Business Level 1 Business Level 2 Business Level 3 Supplier Not‐For‐ Category Contract Type Date (Inc. GST) Profit? 6/01/2018 Current DCSI993 Linen and Laundry 5/01/2020 $ 1,138,907.00 1 1x1 to 05/01/2021 6/01/2020 (blank) DCSI Disability and Domiciliary (DS) Accommodation Minda Laundry and Linen Services Yes Goods and Services Recurrent Care Services Operations 1/09/2018 Current LSA‐4‐19 Complex Care and Attendant Care Panel 31/08/2020 6/09/2018 (blank) (blank) (blank) (blank) LSA LSA Lifetime Support Authority Australian Home Care Services Services Panel 1/09/2018 Current LSA‐4‐20 Complex Care and Attendant Care Panel 31/08/2020 6/09/2018 (blank) (blank) (blank) (blank) LSA LSA Lifetime Support Authority Community Living Options Inc Services Panel 1/09/2018 Current LSA‐4‐21 Complex Care and Attendant Care Panel 31/08/2020 6/09/2018 (blank) (blank) (blank) (blank) LSA LSA Lifetime Support Authority Community Support Inc Services Panel Commencement Status Contract No. Contract Finish Date Execution Date Contract Value Ref # Option Forecast Date Exercise Date Business Level 1 Business Level 2 Business Level 3 Supplier Category Contract Type Date (Inc. GST) 1/07/2018 Current DCSI269‐02‐7 F&CD210‐02 Community Services 30/06/2021 11/12/2017 $ 722,376 (blank) (blank) (blank) (blank) DCSI Community Services Community Development City of Marion Services‐Grants Variation‐Grant Support Program Programs 2/10/2018 Current DHS‐50‐4 DPU004‐1 Changing Places Facility Grants 1/06/2019 2/10/2018 $ 110,000 (blank) (blank) (blank) (blank) DHS Disability and Reform Strategy and Partnerships City of Mount Gambier Services‐Grants Grant 2018/19 1/07/2018 Current DCSI269‐02‐8 F&CD204‐02 Community Services 30/06/2021 18/01/2018 $ 1,666,548 (blank) (blank) (blank) (blank) DCSI Community Services Community Development City of Onkaparinga Services‐Grants Variation‐Grant Support Program Programs 1/07/2018 Current DCSI269‐02‐9 F&CD205‐02 Community Services 30/06/2021 8/02/2018 $ 639,429 (blank) (blank) (blank) (blank) DCSI Community Services Community Development City of Salisbury Services‐Grants Variation‐Grant Support Program Programs 1/07/2018 Current DCSI269‐02‐ F&CD206‐02 Community Services 30/06/2021 11/12/2017 $ 555,459 (blank) (blank) (blank) (blank) DCSI Community Services Community Development City of Tea Tree Gully Services‐Grants Variation‐Grant 10 Support Program Programs 1/07/2018 Current DCSI269‐02‐ F&CD211‐02 Community Services 30/06/2021 18/12/2017 $ 136,677 (blank) (blank) (blank) (blank) DCSI Community Services Community Development City of Unley Services‐Grants Variation‐Grant 11 Support Program Programs 1/07/2018 Current DCSI269‐02‐ F&CD207‐02 Community Services 30/06/2021 29/12/2017 $ 126,501 (blank) (blank) (blank) (blank) DCSI Community Services Community Development City of Victor Harbor Services‐Grants Variation‐Grant 12 Support Program Programs 21/11/2018 Current DHS‐50‐5 DPU005‐1 Changing Places Facility Grants 20/07/2019 21/11/2018 $ 110,000 (blank) (blank) (blank) (blank) DHS Disability and Reform Strategy and Partnerships City of Victor Harbor Services‐Grants Grant 2018/19 30/06/2018 Current DHS‐50‐2 DPU002‐1 Changing Places Facility Grants 30/06/2019 18/06/2018 $ 110,000 1 Extension to 30 June 2019 (blank) 19/12/2018 DCSI NDIS Reform National Disability The Corporation of the City of Services‐Grants Grant (previously DCSI1161‐2) Insurance Scheme Adelaide 1/07/2018 Current DHS‐53‐41 SHS0079‐05 ‐ (GH) Homeless and 31/01/2020 27/08/2018 $ 71,280 (blank) (blank) (blank) (blank) SAHA Customers and Services Homelessness Contract The Corporation of the City of Services‐Grants Grant Vulnerable People Project Management Adelaide 19/11/2018 Current DHS‐50‐3 DPU003‐1 Changing Places Facility Grants 18/07/2019 19/11/2018 $ 110,000 (blank) (blank) (blank) (blank) DHS Disability and Reform Strategy and Partnerships Whyalla City Council Services‐Grants Grant 2018/19 $ 4,358,270 Grants SA (consolidated grant program) Minor Round 1 $166,713 Round 2 $212,768 Medium Round 1 $199,938 Round 2 $271,437 Major Round 1 $1,083,700 Round 2 $1,083,700 $3,018,256 25PROCUREMENT AND GRANTS COMMUNICATION PLAN 2018/19 How do we help achieve DHS objectives (why do we do, what we do)TARGET DESIRED OUTCOME OR COMMUNICATION Current RAG status NO. KEY MESSAGES TO CONVEY MEASUREMENT OF OUTCOME FREQUENCY OWNER PRIORITY ACTION Comments if any AUDIENCE RESULT CHANNEL OR MEDIA All DHS officers • Increased understanding of •How can PGU assist each business unit •PGU Intranet Pages •Increased hits on intranet and less Messages to be JK 1.Content to reviewed who undertake importance to adhere to achieve their objectives •Procurement Blog simple queries (people have the answers updated as 2.Stakeholders consulted on procurement Policies and Procedure •How can PGU assist business units •DHS Updates straight away) required layout and content processes • Increased compliance with undertake their project efficiently and in •Increased compliance through reduced 3.Content/layout to be updated DHS and across Government a timely manner processes requiring PGU intervention or 4.Provide Procurement Blog policies, and reduction in non‐ •Achievable outcomes from good the number of incorrect processes being update when content is updated compliance reports to SPGC procurement practice noted by relevant procurement 5.Include content review and • Increased understanding of •Value delivered by Procurement and delegates updates as topic during when and why to engage PGU Grants Unit •Decreased complaints about the partnerships meetings 1 •Risks of not complying to processes procurement process (people 1 6.Develop series of small topic Red and policies (including breach of Code of understand roles and responsibilities updates for Procurement Blog – to Conduct, Maladministration, reduction and planning stage) highlight area of non‐compliance in value for money, •Decreased non‐compliance reports and increase knowledge, new purchasing/procurement not aligned to sent to SPGC and/or ELT initiatives, tips and hints DHS Objectives)Chief Financial Increased understanding of: •Compliance requirements from State • Briefings and case • Confirmation by CFO that they • Regular during CL 1.Dra� brieﬁng schedule to Officer, •outcomes achieved by Procurement Board Accreditation (i.e. studies understand the benefits of PGU and core fortnightly meeting highlight achievements Financial and Procurement and Grants Unit Accreditation Handbook and • Executive meetings functions delivered by the Unit • Bi‐monthly 2.Develop template for case Business •con�nuous improvement Accreditation Review), DPC Circulars (CFO and Director • Complimentary feedback received by divisional meeting studies highlighting achievements Services strategies and Industry Participation Policy regular meetings) CFO from procurement processes •the beneﬁts that can be •Detail cost savings achieved and other • Divisional 3.Summary of Procurement delivered through processes value adds delivered, including social Managers meetings Review process (to be done after managed by Procurement and procurement outcomes (through every procurement process) 2 1 Red Grants Unit procurement review process) •compliance requirement of the Department (to satisfy SPB accreditation, Industry Participation Policy, Government policies and legislation)Managers and • Stronger partnerships with • Update on key projects and upcoming Business Partner • Reduction in same reoccurring issues Monthly JK 1. Identify key units to meet with 2018/19 review meeting Senior staff of key business areas projects Meetings • Business units identify benefits 2. Set reoccurring meetings with schedule and stakeholder list key business • Increased understanding of • Changes to processes achieved through Procurement and key business units units key objectives from each • Areas of improvement Grants Unit other’s team • Solutions to issues • Increased satisfaction with processes 3 undertaken, measured through feedback 2 Green at Partner meetings and through the PIP All DHS officers Users are aware of • Update users of new policies, Procurement Blog or • Number of users subscribing/accessing As required JK 1. Prepare templates for regular Standardised template not who undertake procurement changes in a procedures or tools DHS Updates Blog update types completed procurement timely manner • Key areas to remember • Users convey they are aware of 2. Have templates approved by processes • Tips and tools changes through PIP Marketing to ensure updates are Departmental updates provided attractive and readible and sent via Communications Unit and 4 4 out as quickly as possible Amber Blog2018/19 develop streamlined process to provide updates as quickly as possibleContract • Increased compliance of • Government Contract management • Intranet Number of users engaging in group • User group JK/SC 1. Develop new intranet site 2018/19 First CM forum to be Managers policies/guidelines and best requirements • User group meetings meeting – 2. Finalise new tools scheduled praactice by DHS Contract • Assistance available to help them meetings • Feedback on usefulness of tools bimonthly 3. Test new tools with selected Develop stand‐alone site for managers achieve their objectives through PIP • Updates as contract managers CM to ensure content is not • Increases consistent • What other contract managers are • All Contract managers attend required 4. Set bimonthly contract manager lost within Procurement approaches by contract doing across the Department and State mandatory training meetings information 5 managers across DHS Government • Increased number of mandatory 3 Red contract reports delivered in time – less than 10% of all CMRs/CCRs escalated to SPGC Executive Increased understanding of • Compliance requirements from State Briefings/memos • Confirmation by ELT that they Annually CL/JK Prepare briefing on last 12 months Verbal updates provided by Leadership the Procurement and Grants Procurement Boards, DPC Circulars and understand the benefits of PGU and core SPGC members to ELT Team Unit role and achievable Office of the Industry Advocate functions delivered by the Unit outcomes • Previous achievements and awards • Complimentary feedback received by Briefings provided to CE on • Detail cost savings achieved and other ELT reports required to SPB and OIA value adds delivered, including social 6 procurement outcomes 3 Amber 2018/19 need new reporting schedule to be developed in consultation with SPGCStrategic • Increased understanding of • Compliance requirements from State Fortnightly meetings • Confirmation by SPGC that they Fortnight CL/JK 1. Prepare forward list of Briefing schedule to be Procurement the Procurement and Grants Procurement Board Accreditation (i.e. understand the benefits of PGU and core issues/projects for briefing SPGC developed and Grants Unit role and achievable Accreditation Handbook and functions delivered by the Unit 2. Seek list of issues/projects from Committee outcomes Accreditation Review), DPC Circulars • Complimentary feedback received by Chair/Deputy Chair that require • Support for emerging issues and Industry Participation Policy ELT information/update • Input into strategic direction • Detail cost savings achieved and other 3. Develop briefing template • compliance requirement of value adds delivered, including social 7 the Department (to satisfy procurement outcomes 2 Amber SPB accreditation, Industry • Updates on projects/initiatives from Participation Policy, PGU Government policies and • Items for escalations/assistance legislation)Suppliers to • Reduced barriers to tender • Process to tender • FAQs • Increased number of suppliers Quarterly JK 1. Develop FAQs Government or for all suppliers, especially • How to tender successfully • Video tendering 2. Develop story “how to tender….” potential new smaller NGOs and small • Tips and hints • Peak body updates • Positive feedback from peak 3. Outline of video suppliers businesses bodies/supplier groups 4. Meeting schedule with Peak • Reduction red tapes • Increase tender compliance Bodies 8 • Increase competition • Increased participation small NGOs 3 Red through increased number of and small businesses suppliers that tender • Ensure compliance with PC044 2627Cranwell, Denise (DPC)From: Evans, Peter (DCP) Sent: Wednesday, 27 February 2019 4:54 PM To: Witthoeft, Aaron (OSAPC) Subject: RE: SA Productivity Commission - Procurement Inquiry - DCP Consultation Attachments: Draft DCP Productivity Commissioner response.pdfHi Aaron Please find attached our response to the 7 questions. It is still showing as draft as it still requires final CE sign off however our Deputy CE has indicated that she is happy to provide as a draft so you can start to review. Please let us know if you intend to use any specific content in your report so we can ensure that any sensitive matters are considered. I will send through a final (non draft) version when approved by our CE Happy to take any questions on any of the content. Kind Regards Peter Evans Project Manager Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3297 6(1) Personal affairs e peter.evans3@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) Sent: Wednesday, 27 February 2019 3:17 PM To: Evans, Peter (DCP) Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ DCP Consultation Hi Peter – thanks for the update – cheers. From: Evans, Peter (DCP) Sent: Wednesday, 27 February 2019 3:16 PM To: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ DCP Consultation Hi Aaron Quick update – the document is with our Deputy CE and should be reviewed by around 4.30 today It will include responses to the seven questions however we are finalising the information on the case studies so that will need to come later this week Kind Regards 1Peter Evans Project Manager Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3297 6(1) Personal affairs e peter.evans3@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Wednesday, 27 February 2019 8:41 AM To: Evans, Peter (DCP) <Peter.Evans3@sa.gov.au> Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ DCP Consultation Great, cheers Peter; I was going to reach out this morning in any case as the opportunity to draw on your information for the Draft Report is fast closing. Many thanks for the update. Aaron. From: Evans, Peter (DCP) Sent: Tuesday, 26 February 2019 5:23 PM To: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ DCP Consultation Hi Aaron Just a quick update We have pulled together some information for you and it is just going through final review and I hope to have it to you in the morning Kind Regards Peter Evans Project Manager Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3297 6(1) Personal affairs e peter.evans3@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Thursday, 14 February 2019 4:09 PM To: Evans, Peter (DCP) <Peter.Evans3@sa.gov.au>; Odgers, Deborah (DCP) <Deborah.Odgers@sa.gov.au>; Comeadow, Kristal (DCP) <Kristal.Comeadow2@sa.gov.au> Cc: Browne, Jennifer (DCP) <Jennifer.Browne2@sa.gov.au>; MacDonald, Gerard (OSAPC) <Gerard.MacDonald@sa.gov.au> Subject: SA Productivity Commission ‐ Procurement Inquiry ‐ DCP Consultation Hi Peter, Deborah and Kristal, Thank you for taking Matt, Gerard and I through your contract management reforms on Tuesday. We clearly only scratched the surface and I’d like to connect with you to get a more detailed understanding of where DCP has come from and where you are heading to from a procurement perspective. I have a particular focus on the NFP sector, 2 which has become an area of interest for the Commission in this inquiry. I have prepared the following questions in relation to some baseline data, along with some specific issues. We are aware of DCP’s unique position in terms of the extent of your reforms and the context in which they are occurring i.e. Royal Commission, so if there are questions that cannot be responded to/addressed we can perhaps deal with those in terms of future reforms or work program commitments etc. As discussed with Peter briefly this afternoon, I would be most grateful if you could please consider these lines of inquiry, and suggest a time when we could come together and have a chat before you respond. I am aware that you are all extremely busy doing very important work so any support you can provide to the inquiry is greatly appreciated.Many thanks and I look forward to discussing with you. Aaron. --- Data 1. Is data available illustrating the size and composition of the procurement/grants spend on DCP’s NFP services: a. Total public sector (DCP) spend on human services contracted through NFPs i.e. total value of contracts under management where NFP is supplier; b. A breakdown of this by service type (e.g. family-based care, commercial care etc) – in the absence of specific data a list of the programs being procured/granted will assist the Commission to contextualise this type of procurement; c. Data showing the time to respond to tender for contracts NFPs are competing for (i.e. the tender call period); and d. Data supporting/not supporting the contention that over the last 5 years there has been a shift in the provision of human/community services from services provided “by” the government to services provided “for” the government i.e. any increase in the number of NFP contracts and the services being sought. 2. How many contracts with NFPs have been struck since the SANFRAG reforms came into operation (i.e. that were developed under PC044 and/or using the new Funding and Grant Agreements etc)? 3. From the Department’s perspective, what is the more effective way of funding NFP human/community services – grants or procurements? 4. Has the Department received any feedback from either the NFP or for-profit sectors in terms of any advantage or disadvantage either sector has in the procurement process? e.g. have NFPs indicated they are at a disadvantage compared to for-profits in terms of contract reporting requirements (this example is not based on any evidence I have at hand). 5. Is there anything that the recent SANFRAG and associated reforms didn’t capture that would be beneficial to procuring with/granting NFPs that are providing DCP services (and if there is anything is DCP is implementing/looking to implement reforms unilaterally)? 6. Do procurements/grants with NFPs require wider/more complex/additional considerations compared to other procurements? What are these? 7. Are there system design, policy or procedural impediments or influences that impact upon the Department’s ability to collaborate and/or design services with the NFP sector in a procurement or grant context? E.g. does procurement policy adversely impact on the ability to engage in continuous improvement/practice improvement with service providers over the course of a contract? Case Studies Examples of and information to support case studies in relation to: 1. Areas DCP has identified for improvement that can be illustrated through a specific example; and 2. Examples of where DCP innovation, initiative and best-practice procurement is already demonstrating improvements and benefits. In relation to 1. it may be that the payment arrangements in relation to family-based services growth numbers we canvassed briefly during our discussion on Tuesday could be a useful case study from a number of perspectives? Documents If any documents could be provided to underpin any response to the 7 questions above that would be advantageous. 3 Aaron Witthoeft T: 08 8226 7107 Principal Inquiry Economist W: www.sapc.sa.gov.au aaron.witthoeft@sa.gov.au Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. 428SA Productivity Commission – Government Procurement Inquiry Responses 1. Is data available illustrating the size and composition of the procurement / grants spend on DCP’s NFP services a. Total public sector (DCP) spend on human services contracted through NFPs i.e. total value of contracts under management where NFP is supplier Out of Home Care (OOHC) service provision by Not for Profits (NFPs) and/or Non- Government Organisations (NGOs) is the primary contracted spend for DCP. - DCP’s 2018/2019 overall approximate annual contracted spend of $253m, equates to approximately 47% of DCP’s annual budget - Out of home care contracted services provided by NFPs/NGOs, annual budget of approximately $182m, equates to approximately 34% of DCP’s 2018/2019 budget or 72% of overall annual contracted spend The whole of life contract value for existing OOHC service provision by NFPs/NGOs is approximately $801m. At least 60% of these contracts have an annual funding amount greater than $1m. Across the current Out of Home Care Service Contracts provided by NFPs/NGOs, whole of life contract value ranges from: - Minimum agreement value over life of contract = $415,975 - Maximum agreement value over life of contract = $95,525,733 The longest contract term period is 9 years, comprising of a 3 year base term + 3 + 3 extension options. b. A breakdown of this by service type (e.g. family based care, commercial care), in the absence of specific data, a list of the programs being procured / granted will assist the Commission to contextualise this type of procurement A breakdown by service category of current Out of Home Care Service Contracts provided by NFPs/NGOs included below: Out of Home Care Service Category Approximate Approximate Number of 2018/2019 whole of life contracts Annual spend contract value (million) (million) Advocacy and support services $3,415 $10,387 6 Commercial care $61,001 $88,501 4 (Emergency / Immediate) Family based care $38,443 $274,161 21 (Foster care general and specialist, respite, Kinship, Specific child only) Family preservation / reunification $6,772 $23,502 9 Residential care $62,391 $365,960 28 Supported Independent living $10,268 $38,803 7 Approximate total $182,290 $801,314 73 1 Draft – Commercial in Confidence / Sensitive c. Data showing the time to respond to tender for contracts NFPs are competing for (i.e. the tender call period) In the past 12 months, DCP has had little market approach for NFP, in the main concentrating on either extensions or renewals of existing arrangements. In accordance with the State Procurement Board International Obligations Policy and associated Free Trade Agreement provisions, minimum tender call periods of 30 days have been adhered to. Extracted below is a representation of the planned estimated procurement timeline for the Agency child and youth worker temporary staff services tender demonstrating the elongated call period. (Sourced from tender briefing presented 19 February 2019 via web conference). d. Data supporting / not supporting the contention that over the last 5 years there has been a shift in the provision of human / community services from services provided “by” the government to services provided “for” the government i.e. increase in the number of NFP contracts and the services being sought For DCP, there hasn’t been any significant shift from government to the NFP sector. While DCP does operate Residential Care Facilities (RCF), the majority of Out of Home Care Services is reliant on the child protection sector (i.e. NFPs) to provide. 2. How many contracts with NFPs have been struck since SANFRAG reforms came into operations (i.e. that were developed under PC044 and/or using the new Funding and Grant Agreements etc)? (how has DCP implemented the reforms developed under PC044) With the introduction of SANFRAG reforms developed under PC044, the Department for Child Protection has been working towards how to best implement reform requirements such as: a) Early engagement - The 2019/2020 Procurement Program is seeking to utilise technology and more robust change and engagement mechanisms in which to communicate upcoming tenders, explain the procurement process and specifications of the tender, as well as create avenues for feedback and sharing of information. Examples include: o DCP’s inaugural Industry Day held 24 September 2018 (DCP Industry Day Link) focused on ensuring DCP’s current and potential service providers understand the impacts of reform and are prepared for the 2019 contracting and tendering 2 Draft – Commercial in Confidence / Sensitive process. As well as looking at how the child protection sector can better work together to provide services that best meet the needs of children and young people in care. o Dedicated Service Provider webpage (on DCP’s website) providing information, tools and resources to assist service providers navigate procurement and contracting requirements with the Department for Child Protection (Service Provider Webpage Link) o Introduction of web conferencing options for tender briefings and the introduction of pre-tender briefings to gather service provider feedback on the proposed tender, that can be fed into the Invitation to Supply documents b) Agreement templates - The new Not-for Profit (NFP) Agreement will be introduced as part of DCP’s 2019/2020 Procurement Program. This will see new contracts set up on the new agreements, as well as existing service providers being transitioned to ensure a standardised, consistent and equitable approach to managing and administering service contracts with NFPs. DCP will be hosting sector briefings on the transition process and components of the new NFP agreement, at this stage proposed to occur in March 2019. c) Indexation - DCP has been applying the mandatory indexation rates to all NFP agreements, and Equal Remuneration Order (ERO) rates have also been applied. d) Proportionality – ensuring effort to tender, administer and manage contracts is aligned with service complexity and value - DCP applies Procurement practice as per State Procurement Board requirements dependent on the value and business risk of the procurement (i.e. Simple procurements vs Procurements greater than $550,000) - The DCP Contract Management Framework provides flexibility for administering and management of contracts based on the value and risk classification. The approach to each phase of contract management can vary, depending on whether the contract is classified as ‘routine/lower value’ or ‘strategic/ high value’. This value/risk approach to contract management recognises that strategic contracts which are high risk and high value require a lot more rigour, and experienced resources, to manage than a routine contract. 3. From the Department’s perspective, what is the more effective way of funding NFP human / community services – grants or procurements? The implementation of Department of the Premier and Cabinet Circular 044 and the revised definitions of “procurement” and “grant” prompted by the SANFRAG amendments has resulted in the majority of DCP spend with the NFP sector now being classified as procurement activity, rather than grants. As a result of this shift, DCP does not consider the services as grants, but as procured services, i.e. the department does not seek to subsidise a service, but rather procure a service from a viable and self-sustaining organisation that would be a more feasible option to deliver the service, than the Department would be at the time of procurement. 3 Draft – Commercial in Confidence / Sensitive The Department typically utilises two types of contractual agreements in the procurement of Out of Home Care Services: - Block funded arrangements contracted under a Not for Profit Agreement - Fee for service arrangements contracted under a Goods and Services Agreement The nature of the arrangement will determine the agreement to be used, the differences between the two are highlighted below: Procurement Characteristics type Block funded Provides the service provider with funding quarterly in advance to establish and maintain adequate funding to cover the cost of service provision. Requires more extensive quarterly reporting in order to ensure reconciliation of public money provided, against money spent and services provided. Fee for Invoices are assessed and approved once the service has been service provided, no financial acquittals required. 4. Has the Department received any feedback from either the NFP or for profit sectors in terms of any advantage or disadvantage either sector has in the procurement process? E.g. have NFPs indicated they are at a disadvantage compared to for profits in terms of contract reporting requirements (this example is not based on any evidence that I have) The Department ensures that standardised procurement processes and practices are applied regardless of the type of agreement being procured. The perception of advantage or disadvantage between NFP or for profit sectors has not been brought to the attention of DCP. However, DCP have observed varying levels of maturity in terms of capability in collating and reporting data required for responses and meeting contractual obligations. Anecdotally the for profit sector are more advanced in the systems and practices they have available to assist in the provision of accurate and consistent data. The Family and Community Services Act 1972 (SA) section 24 (3) states that where contracts for service are established, these should be with not for profit as far as practicable. As a consequence of this legislation DCP has historically contracted services predominantly with Not for profit organisations where practicable. DCP recognises that Aboriginal Community Controlled Organisations are often best placed to provide Aboriginal specific services. To assist in strengthening their procurement capability, DCP have introduced a number of initiatives, such as: - Competitive dialogue model rather than traditional tender - Selective tendering processes for Aboriginal specific services - Commitment to and exceeding across government Aboriginal spend targets 0.5% anecdotally DCP’s Aboriginal spend is 1.5% 4 Draft – Commercial in Confidence / Sensitive - Raising awareness of State Procurement Board Policy to directly appoint Aboriginal Community Controlled Organisations for values up to $220,000 5. Is there anything that the recent SANFRAG and associated reforms didn’t capture that would be beneficial to procuring with / granting NFPs that are providing DCP services (and if there is anything is DCP implementing / looking to implement reforms unilaterally)? The reforms did not provide the opportunity to effectively and efficiently manage service growth. This is particularly significant for the Child Protection sector following Nyland Royal Commission Recommendation 128 Phase out the use of commercial carers in any rotational care arrangements except in genuine short term emergencies. This includes strategies to increase and better support foster and kinship care placements through incentivised growth payments to NFPs providing Family based care services. The South Australian Child Protection sector has seen significant growth in Out of Home Care placement numbers in recent years, on average 8.91% annual increase since 2014/2015. Management of this growth is further complicated, as the needs of the children and young people entering child protection is unpredictable and often complex and specialised to their individual circumstance. This complexity requires matching of a suitable service at the time of the child or young person being placed under the guardianship of the Chief Executive. This means that growth requirements cannot be reliably reflected in individual contracts with service providers. One of the Treasury and Finance base budget parameters for child and young people placement growth, is 3% across the forward estimates, which is not commensurate with the growth rate experienced by DCP. This leads to regular budget adjustments to accommodate actual growth experienced. The SANFRAG reforms have encouraged the establishment of longer term contracts (i.e. 9 years) to provide greater stability for the NFP sector. Establishing contracts for this period without flexible means of managing the growth experienced has led to increased levels of administration for both service providers and DCP. This increase in administration is primarily associated with Treasurer’s Instruction 8, which requires any adjustment to contract value in excess to 5% to be managed through a new procurement process. The Department is seeking opportunities to enable governance arrangements that would enable flexible growth management across multiple contracts managed within the approved DCP Family based budget, rather than managed at an individual contract level. 6. Do procurements / grants with NFPs require wider/more complex / additional considerations compared to other procurements? What are these? Out of home services DCP procure from NFPs are complex. They are providing services underpinned by therapeutic models to South Australia’s most vulnerable. This will mean that at times service providers may be expected to develop consortiums, understand and respond to in depth service specifications, develop service models, ensure relevant level of quality assurance and accreditation and demonstrable experience and organisational 5 Draft – Commercial in Confidence / Sensitive capability to deliver these critical services that must be to a certain quality standard to ensure the safety of children and young people under guardianship. However, this is no different to the expectation placed on For-Profits in the procurement of goods and services. For example, the procurement of Information and Communication Technology (ICT), like an Enterprise Resource Program (ERP) would have the same level of complexity and consideration applied as a NFP responding to a human service procurement. The Department is working towards implementation of more early engagement practices to support the child protection sector understand the Department’s service specifications and requirements to deliver these services (i.e. the introduction of pre-tender briefings). The main difference between DCP’s procurements (Block funded and Fee for Service), is that block funded arrangements contracted on the Not-for Profit Agreement require additional obligations to ensure that public money, paid in advance of the service being delivered, has been spent as intended i.e. acquittal reporting. Whereas, fee for service arrangements contracted under a Goods and Services Agreement are paid on invoice, after the service has been provided and can be demonstrated as occurring. 7. Are there system design, policy or procedural impediments or influences that impact upon the Department’s ability to collaborate and/or design services with the NFP sector in a procurement or grant context? E.g. does procurement policy adversely impact on the ability to engage in continuous improvements/ practice improvement with service providers over the course of the contract? As part of contract management practices, contracts do allow for improvement opportunities that are fed back into the contracts and future procurement cycles. The sector (including DCP) requires a cultural shift to move to a supplier/buyer relationship that is underpinned by transparency and accountability around roles, responsibilities and service requirements to support the efficient and effective spending of public money. The Contract Management Reform project is seeking to support stakeholders transition through: - Clarification of roles and responsibilities - Development and introduction of Contract Management Governance & Framework - Development and introduction of Contract Performance Management Framework - Implementation of structured engagement and relationship models - Improved contract management tools, processes and practices To strengthen the sector collaborating, address the needs, capabilities and strategies required to effectively co-design services that best meet the needs of children and young people in care, DCP is currently: - Reviewing service models as part of the 2019/2020 Procurement Program - Looking to strengthen or improve co-design opportunities and sector engagement - Reviewing and analysing demographic data of children in care to identify current and future service needs 6 Draft – Commercial in Confidence / Sensitive 7 Draft – Commercial in Confidence / Sensitive 29Cranwell, Denise (DPC)From: Swann, Quinton (Health) Sent: Monday, 4 March 2019 3:19 PM To: Witthoeft, Aaron (OSAPC) Cc: Johns, Suzanne (Health) Subject: RE: SA Productivity Commission - Procurement Inquiry - SAH Consultation Attachments: NGO Spend Data_FY18-19_Feb 19.xlsx; Directive_Framework+for+the+Management+of+SA+Health+Grants+Policy_v1.1 _Oct2015.pdfFollow Up Flag: Follow up Due By: Monday, 4 March 2019 4:00 PM Flag Status: FlaggedHI Aaron See attached documents: 1. Spreadsheet with 2 tabs for : a. Contracted Services b. Grants (note that the column D on both is for financial spend in this FY year to date) 2. SA Health Policy directive on grants Regards Quinton Swann Director Procurement T 08 8425 9276 F 08 8425 9216 6(1) Personal affairs www.sahealth.sa.gov.au SA Health Procurement & Supply Chain Management Level 1 , Citicentre, 11 Hindmarsh Square Adelaide, SA, 5000 This email may contain confidential information, which also may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this e-mail. If this e-mail is received in error, please inform the sender by return e-mail and delete the original. If there are doubts about the validity of this message, please contact the sender by telephone. It is the recipient's responsibility to check the e-mail and any attached files for viruses. From: Witthoeft, Aaron (OSAPC) Sent: Thursday, 28 February 2019 3:31 PM To: Swann, Quinton (Health) Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ SAH Consultation Hi Quinton, Are you able to offer an update please? Cheers. Aaron. 1From: Johns, Suzanne (Health) Sent: Wednesday, 27 February 2019 1:16 PM To: Witthoeft, Aaron (OSAPC) ; Williams, Julie (Health) ; Swann, Quinton (Health) Cc: Urukalo, Mick (Health) Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ SAH Consultation Hello Aaron, Mick provided me the input from Julie’s area. That information, together with the rest is with Quinton. He will be in touch. Suzanne From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Wednesday, 27 February 2019 1:13 PM To: Williams, Julie (Health) <Julie.Williams@sa.gov.au>; Swann, Quinton (Health) <Quinton.Swann@sa.gov.au> Cc: Johns, Suzanne (Health) <Suzanne.Johns@sa.gov.au>; Urukalo, Mick (Health) <Mick.Urukalo@sa.gov.au> Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ SAH Consultation Hi everyone, Would it be possible for you to forward whatever you have prepared to me by COB today please? I will need to complete the relevant chapter of the Commission’s draft report tomorrow and would like the opportunity to consider your input. Happy to chat – many thanks. Aaron. From: Witthoeft, Aaron (OSAPC) Sent: Monday, 25 February 2019 9:23 AM To: Williams, Julie (Health) <Julie.Williams@sa.gov.au>; Urukalo, Mick (Health) <Mick.Urukalo@sa.gov.au> Cc: Swann, Quinton (Health) <Quinton.Swann@sa.gov.au>; Johns, Suzanne (Health) <Suzanne.Johns@sa.gov.au> Subject: RE: SA Productivity Commission ‐ Procurement Inquiry ‐ SAH Consultation Hi Julie, Thanks for coming back to me – I understand you have been out of the office. I met with Quinton and Suzanne Johns on Friday last week and have since sent them a revised and confined request for some information – see attached email. If Mick could assist/liaise with Suzanne in that regard I would be most grateful. Many thanks. Aaron. From: Williams, Julie (Health) Sent: Monday, 25 February 2019 8:19 AM To: Urukalo, Mick (Health) <Mick.Urukalo@sa.gov.au> Cc: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Subject: FW: SA Productivity Commission ‐ Procurement Inquiry ‐ SAH Consultation Importance: High Mick 2 Could you please provide an urgent response to Aaron for me? Thank you Julie Julie Williams Manager, NGO Performance Management Quality, Information and Performance SA Health Government of South Australia Phone: 08 8226 6281 | 6(1) Personal affairs | Email: julie.williams@sa.gov.au www.sahealth.sa.gov.au This e-mail may contain confidential information, which also may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this e-mail. If this e-mail is received in error, please inform the sender by return e- mail and delete the original. If there are doubts about the validity of this message, please contact the sender by telephone. It is the recipient’s responsibility to check the e-mail and any attached files for viruses. From: Witthoeft, Aaron (OSAPC) Sent: Tuesday, 19 February 2019 1:06 PM To: Williams, Julie (Health) Cc: Miller, Tyson (OSAPC) Subject: FW: SA Productivity Commission - Procurement Inquiry - SAH Consultation Hi Julie, I evidently sent my email to the wrong Julie… Please see below – I look forward to discussing with you. Thanks. Aaron. From: Witthoeft, Aaron (OSAPC) Sent: Tuesday, 19 February 2019 12:21 PM To: Swann, Quinton (Health) <Quinton.Swann@sa.gov.au>; Williams, Julie (Health) <Julie.Williams3@sa.gov.au> Cc: Miller, Tyson (OSAPC) <Tyson.Miller@sa.gov.au> Subject: SA Productivity Commission ‐ Procurement Inquiry ‐ SAH Consultation Hi Quinton and Julie, My colleague Tyson Miller has suggested I reach out to both of you in relation to SAH’s procurement and grants with the Not-for-Profit sector (NFPs). I understand Tyson has been liaising with Quinton in relation to our inquiry into government procurement more generally, but I have a specific remit in relation to NFPs. The NFP sector has engaged strongly with the Commission in the course of our inquiry, hence our interest in this area of procurement and grants specifically. I would like to get together with both of you later this week if possible to discuss this area of procurement/grants. I would like to discuss:  How SAH conducts procurements/grants with NFPs, including the level of collaboration between the central procurement function and SAH business units;  The issues raised by NFPs in consultation with the Commission;  What data and other information you may be able to share to inform the inquiry; and  Whether you can inform any case studies for inclusion in our draft report. I have set out some potential questions we can discuss and/or data I would like to consider. I have made similar requests of both DCP and DHS. If you could please suggest some times that we could get together this week that would be great. Many thanks. 3 --- Data 1. Is data available illustrating the size and composition of the procurement/grants spend on SAHs’ NFP services: a. Total SAH spend on NFPs contracts/grants i.e. total value of contracts under management where NFP is supplier; b. A breakdown of this by service type – in the absence of specific data a list of the programs being procured/granted will assist the Commission to contextualise this type of procurement; c. Data showing the time to respond to tender for contracts NFPs are competing for (i.e. the tender call period); and d. Data supporting/not supporting the contention that over the last 5 years there has been a shift in the provision of human/community services from services provided “by” the government to services provided “for” the government i.e. any increase in the number of NFP contracts and the services being sought. 2. How many contracts with NFPs have been struck since the SANFRAG reforms came into operation (i.e. that were developed under PC044 and/or using the new Funding and Grant Agreements etc)? 3. From the Department’s perspective, what is the more effective way of funding NFP human/community/health services – grants or procurements? 4. Has the Department received any feedback from either the NFP or for-profit sectors in terms of any advantage or disadvantage either sector has in the procurement process? e.g. have NFPs indicated they are at a disadvantage compared to for-profits in terms of contract reporting requirements (this example is not based on any evidence I have at hand). 5. Is there anything that the recent SANFRAG and associated reforms didn’t capture that would be beneficial to procuring with/granting NFPs that are providing SAH services (and if there is anything is SAH is implementing/looking to implement unilaterally)? 6. Do procurements/grants with NFPs require wider/more complex/additional considerations compared to other procurements? What are these? 7. Are there system design, policy or procedural impediments or influences that impact upon the Department’s ability to collaborate and/or design services with the NFP sector in a procurement or grant context? E.g. does procurement policy adversely impact on the ability to engage in continuous improvement/practice improvement with service providers over the course of a contract? Case Studies Examples of and information to support case studies in relation to: 1. Areas SAH has identified for improvement that can be illustrated through a specific example; and 2. Examples of where SAH innovation, initiative and best-practice procurement is already demonstrating improvements and benefits. Aaron Witthoeft T: 08 8226 7107 Principal Inquiry Economist W: www.sapc.sa.gov.au aaron.witthoeft@sa.gov.au Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. 4 30 NGO Spent Data for Current FY (Jul‐18 to Feb 19) ‐ Contracted Services Supplier/Projects SAH Number PCMS Contract Value Oracle Spent data Aboriginal Health Council of South Australia Ltd 7(1)(c) Business affairs Aboriginal Blood Borne Virus Prevention Project SAH2017‐948 AHCSA Rheumatic Heart Disease Activities SAH2018‐1398 South Australian Aboriginal Sexual Health Program SAH2017‐22 South Australian Aboriginal Viral Hepatitis Program SAH2017‐23 Aboriginal Sobriety Group Indigenous Corporation 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐1 Master Agreement: Aboriginal Sobriety Group Inc & CNAHS SAH2008‐5020 Adelaide Community Healthcare Alliance Incorporated Flinders Private Hospital Service Agreement SAH2018‐1171 liquid oxygen supply with Memorial Hsp SAH2017‐643 Winter Inpatient Beds for NALHN Public Patients SAH2018‐917 Adelaide Fringe Adelaide Fringe ‐ Adelaide Fringe 2019 ‐ Partnership SAH2019‐155 Adelaide Hills Division of General Practice Inc Contractor Agreement ‐ Oct to Dec 2018 ‐ ATAPS SAH2019‐58 Contractor Agreement July ‐ Sep 2018 ‐ ATAPS SAH2019‐19 ADELAIDE PRIMARY HEALTH NETWORK LIMITED Partnership Agreement 2016‐2019 APHN, NHN & NALHN SAH2016‐2105 Transition of the Mental Health Shared Care with General Practitioners Pr SAH2018‐1509 Aged & Community Services SA & NT Inc 2016‐2020 Aged & Community Services Membership SAH2016‐1029 Aged Care & Housing Group Inc Customer Agreement CALHN TCP & Aged Care and Housing Incorporated SAH2018‐495 Transitional Care Programme (TCP) Customer Agreement 2018‐2021 ‐ Age SAH2018‐467 Alcohol and Drug Foundation Incorporated Crystal Methamphetamine Taskforce Sporting Clubs Initiative SAH2017‐1895 Alwyndor Aged Care ‐ City of Holdfast Bay Rehab & Aged Care ‐ Agreement for the provision of the Transition Care P SAH2018‐425 Anangu Ngangkari Tjutaku Aboriginal Corporation Ngangkari Services for NALHN SAH2018‐1018 Anglican Community Care Inc 2016‐2020 Accommodation Support Program ‐ Riverland SAH2016‐2053 Anglicare SA Ltd Allied Health‐ Agreement for the transition of care program between SALH SAH2018‐266 Customer Agreement CALHN TCP & Anglicare SA Ltd SAH2018‐498 Transitional Care Programme (TCP) Customer Agreement 2018‐2021 ‐ Ang SAH2018‐157 Australasian Society for HIV Medicine South Australian HIV, HBV and HCV s100 Prescriber Accreditation System SAH2015‐546 Australian Red Cross Blood Service 2016‐19 BloodSafe Service Support Program SAH2016‐2141 Medical Writer and Editor SAH2018‐933 Australian Red Cross Society Donor Breast Milk Bank ‐ Flinders Medical Centre SAH2017‐1231‐2 Donor Breast Milk Bank ‐ WCHN SAH2017‐1231‐1 Tissue Typing and Bone Marrow Donor Registry ARCS 2016 SAH2015‐1680 Baptist Care (SA) Inc 2017‐2020 Accommodation Support Program ‐ Eyre SAH2017‐1361 Boandik Lodge Inc 2018‐2021 Transition Care Program ‐ Boandik Lodge SAH2018‐271 Calvary Health Care Adelaide Ltd Plastic Surgery Procedures ‐ CCDH SAH2018‐1806 Calvary Home Care Services Ltd South Australian Community Care Program SAH2017‐1896‐1 Calvary Hospital Adelaide Inc A phase 3 randomised study of neoadjuvant chemotherapy R1518 SAH2019‐46 Cancer Council South Australia Smoking Cessation Services SAH2015‐950 Carers Association of SA Inc 2017‐2018 Commonwealth Carer & Respite South & East Country ‐ Carers SAH2017‐2030 2018‐2019 Brokerage Agreement ‐ Carers SA SAH2018‐1822 Catholic Church Endowment Society Inc Interim Spiritual Care Coordinator SAH2018‐1465 Catholic Family Services (Centacare) 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐2 2016‐2020 Accommodation Support Program ‐ Wakefield SAH2016‐2055 South Australian Individualised Support Program for People with HIV SAH2014‐923‐1 Ceduna Koonibba Aboriginal Health Service (Aboriginal Corporation) 2018‐2019 Primary Health Service ‐ Ceduna Koonibba SAH2018‐1687 2018‐2019 Sobering Up Unit Services ‐ Ceduna Koonibba SAH2018‐1746 Ceduna Sobering Up Unit SAH2015‐208 Chaplaincy Services SA Incorporated 7(1)(c) Business affairs Allied Health ‐Agreement between SALHN and Chaplaincy Services for Spi SAH2018‐421 NALHN Chaplaincy Services 2018‐2019 SAH2017‐2257 Churches of Christ Life Care Inc Customer Agreement CALHN TCP & Churches of Christ Life Care Incorpora SAH2018‐502 Transitional Care Programme (TCP) Customer Agreement 2018‐2021 ‐ Chu SAH2018‐161 Community Bridging Services (CBS) Inc 2018‐2020 Individual Placement & Support ‐ Local Partnership Agreement SAH2018‐744 Delta Society Australia Ltd Therapy Dog Visits Northgate 2018‐2020 ‐ Delta Society Australia SAH2018‐1293 Eldercare Inc Allied Health‐ Agreement for the provision of transitional care between SA SAH2018‐265 Flinders Medical Centre Clinical trial to determine safety of ULG barley in coeliac disease R1500 SAH2018‐1439 Heart FID Protocol 1VIT 15043 R1507 SAH2018‐1829 Immunogenicity of recombinant H7 hemagglutinin influenza vaccine R140 SAH2017‐109 Initiation and diversification of systemic autoimmunity R1529 SAH2019‐48 Lease Proposal ‐ Shop 3A Ground Fl Carpark Building SAH2015‐134 Multicentre neuroprotective study of newborn babies R1391 SAH2016‐1614 Study to evaluate efficacy and safety of Elafibranor in patients with non‐A SAH2017‐540 The effect of chemotherapy on metabolic and cardiovascular function in e SAH2018‐395 The incidence of Influenza and RSV in adults hospitalised with Acute Resp SAH2018‐580 The perioperative administration of dexamethasone and infection R1453 SAH2017‐2121 Theo's Cafeteria FMC SAH2015‐136 Fullarton Lutheran Homes Inc Customer Agreement CALHN TCP & Fullarton Lutheran Homes Incorporat SAH2018‐500 Gawler GP Incorporated Complex Service Agreement ‐ A&E Services at Gawler Hospital SAH2015‐381 Headspace Services Ltd 2016‐2018 Secondment Agreement ‐ Headspace Services SAH2016‐1744 Health Consumers Alliance of South Australia Incorporated Consultancy ‐ Consumer and Community Engagement Strategy SAH2017‐2022 The Statewide Consumer and Community Engagement Strategic Framewo SAH2019‐114 The Statewide Consumer Feedback and Complaints Management Strategi SAH2019‐115 Helping Hand Aged Care Inc Transitional Care Programme (TCP) Customer Agreement 2018‐2021 ‐ Hel SAH2018‐160 Hepatitis SA Incorporated Clean Needle Program Transitional Sessional Peer Education Support Proj SAH2017‐971 CNP Primary Sites & Sessional Peer Education Projects 2014‐2019 SAH2013‐10749 South Australian Viral Hepatitis Workforce Development Program SAH2014‐923‐3 Viral Hepatitis Prevention and Workforce Development Program SAH2014‐923‐2 Home Nurses South Australian Community Care Program SAH2017‐1896‐3 Life Without Barriers 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐3 Housing and Accommodation Support Partnership (HASP) Program: Rehab SAH2016‐1203 Intensive Home based Support Services Program (IHBSS) 2018 ‐ Metro SAH2017‐2228‐1 Lifeline South East SA Lifeline South East Suicide Prevention Services SAH2018‐1709 Matthew Flinders Home Inc 2018‐2021 Transition Care Program ‐ Matthew Flinders Homes SAH2018‐178 McGrath Foundation Ltd 2015‐2018 McGrath Breast Care Nurse ‐ Whyalla SAH2015‐1830 2017‐2021 McGrath Breast Care Nurse ‐ Barmera SAH2017‐1342 2017‐2021 McGrath Breast Care Nurse ‐ Mt Barker SAH2017‐1505 2017‐2021 McGrath Breast Care Nurse ‐ Mt Gambier SAH2017‐1343 2017‐2021 McGrath Breast Care Nurse ‐ Murray Bridge SAH2017‐1334 2017‐2021 McGrath Breast Care Nurse ‐ Pt Lincoln SAH2017‐1344 2017‐2021 McGrath Breast Care Nurse ‐ Pt Pirie SAH2017‐1341 2017‐2021 McGrath Breast Care Nurse ‐ South Coast SAH2017‐1506 2017‐2021 McGrath Breast Care Nurse ‐ Wallaroo SAH2017‐1398 2018‐2021 McGrath Breast Care Nurse ‐ Gawler SAH2018‐1641 2018‐2021 McGrath Breast Care Nurse ‐ Port Augusta SAH2018‐965 2018‐2021 McGrath Breast Care Nurse ‐ Whyalla SAH2018‐1952 McGrath Sponsored Breast Care Nurse Funding Agreement ‐ McGrath Fou SAH2017‐1076 McLaren Vale & Districts War Memorial Hospital Incorporated Corporate‐ Agreement between (Minister) SALHN FMC Executive and McL SAH2019‐98 Rehab and Aged Care Agreement Extension between McLaren Vale & Dist SAH2018‐1548 Rehab and Aged Care Agreement Extension between McLaren Vale & Dist SAH2018‐1549 MIND Australia Housing and Accommodation Support Partnership (HASP) Program ‐ Sout SAH2016‐1204 Housing and Accommodation Support Partnership (HASP) Program Cluste SAH2016‐1205 Monash University The safety and tolerability of a peptide immunotherapy for patients with SAH2018‐1265 National Heart Foundation of Australia 7(1)(c) Business affairs Medicine‐ Supply Agreement between SALHN & Nat Heart Foundation‐ Lig SAH2017‐2194 Neami Limited Allied Health‐ Julie Astley Licence to Occupy GP Plus Aldinga ‐ SALHN and SAH2017‐1829 Housing and Accommodation Support Partnership (HASP) Program High S SAH2017‐6 Housing and Accommodation Support Partnership (HASP) Program Northe SAH2016‐1374 Intensive Home based Support Services Program (IHBSS) 2018 ‐ Country SAH2017‐2228‐2 Intensive Home based Support Services Program (IHBSS) 2018 ‐ Metro SAH2017‐2228‐3 Ngaanyatjarra Pitjantjatjara Yankunytjatjara Women's Council (Aboriginal Corporation) 2018‐2019 Ngangkara (Traditional Healer) Program SAH2018‐1600 Nganampa Health Council Inc 2018‐2019 Primary Health Services ‐ Nganampa SAH2018‐1688 NHC Rheumatic Heart Disease Activities SAH2018‐1399 School Immunisation Program 2015‐2023 SAH2014‐874‐34 North East Community House Incorporated Protocol 14V‐MC‐JAHN R1512 SAH2018‐1840 North Eastern Community Hospital Inc Phase 3 study to evaluate efficacy and safety of Baricitinib in patients with SAH2018‐798 Protocol I4V‐MC‐JAIY Phase 3 study to evaluate the efficacy of Baricitinib SAH2019‐195 Study comparing efficacy and safety of Mirikizumab to Secukinumab in pa SAH2018‐1264 Northern Area Community & Youth Services Inc 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐4 Nunkuwarrin Yunti of SA Inc 2015/16 Clean Needle Program Nunga Users HIV Intervention Team Proje SAH2015‐585 Aboriginal Primary Health Care Access Program (APHCAP) Funding ‐ Nunk SAH2016‐1352 Master Agreement: Nunkuwarrin Yunti & Central Adelaide Local Health N SAH2011‐362 Subcontracting Agreement ‐ Nunkuwarrin Yunti SAH2019‐120 NUNYARA ABORIGINAL HEALTH SERVICE INCORPORATED 2018‐2019 NUNYARA ABORIGINAL HEALTH SERVICE AFBP SAH2019‐159 Pika Wiya Health Service Aboriginal Corporation 2017‐2018 Roxby Downs Aboriginal Liaison Officer ‐ Pika Wiya SAH2018‐589 2018‐2019 Anungu Bibi Birth Program in Port Augusta SAH2018‐1904 2018‐2019 Primary Health Care Services ‐ Pika Wiya SAH2018‐1686 Port Lincoln Aboriginal Health Service Inc 2018‐2019 Aboriginal Liaison Officer & Mental Health Workers SAH2017‐1729 2018‐2019 Kinship Program ‐ PLAHS SAH2018‐1413 2018‐2019 Unique Centre of Learning ‐ PLAHS SAH2018‐1414 Relationships Australia (SA) Inc South Australian Community Support and Counselling Service for People w SAH2014‐923‐4 South Australian STI and Blood Borne Virus Program for People from Cultu SAH2014‐923‐5 Resthaven Inc 2017‐2019 Brokerage Agreement ‐ Resthaven SAH2017‐2002 2018‐2021 Transition Care Program ‐ Resthaven SAH2018‐274 River Doc's ED Complex Service Agreement ‐ A&E Services at Berri Hospital SAH2015‐387 Royal Australasian College of Surgeons The South Australian Audit of Peri‐Operative Mortality SAH2014‐1027 Royal Australian College of General Practitioners Accredited Activity Provider 2017‐2019 Modbury ‐ RACGP SAH2018‐58 Royal District Nursing Service of SA Limited CALHN Direct Observational Therapy SAH2018‐1236 Rehab & Aged Care ‐ Customer Agreement for the transition care program SAH2018‐806 Aged & Community Services SA & NT Inc 2016‐2020 Aged & Community Services Membership SAH2016‐1029 Aged Care & Housing Group Inc Customer Agreement CALHN TCP & Aged Care and Housing Incorporated SAH2018‐495 Transitional Care Programme (TCP) Customer Agreement 2018‐2021 ‐ Age SAH2018‐467 Alcohol and Drug Foundation Incorporated Crystal Methamphetamine Taskforce Sporting Clubs Initiative SAH2017‐1895 Alwyndor Aged Care ‐ City of Holdfast Bay Rehab & Aged Care ‐ Agreement for the provision of the Transition Care P SAH2018‐425 Anangu Ngangkari Tjutaku Aboriginal Corporation Ngangkari Services for NALHN SAH2018‐1018 Anglican Community Care Inc 2016‐2020 Accommodation Support Program ‐ Riverland SAH2016‐2053 Anglicare SA Ltd Allied Health‐ Agreement for the transition of care program between SALH SAH2018‐266 Customer Agreement CALHN TCP & Anglicare SA Ltd SAH2018‐498 Transitional Care Programme (TCP) Customer Agreement 2018‐2021 ‐ Ang SAH2018‐157 Australasian Society for HIV Medicine South Australian HIV, HBV and HCV s100 Prescriber Accreditation System SAH2015‐546 Australian Red Cross Blood Service 2016‐19 BloodSafe Service Support Program SAH2016‐2141 Medical Writer and Editor SAH2018‐933 Australian Red Cross Society Scarlet Alliance 7(1)(c) Business affairs Clean Needle Program Sex Worker Outreach Project SAH2015‐731 South Australian Targeted STI and BBV Prevention Program for Sex Worke SAH2014‐923‐7 Sexual Health Information Networking & Education SA Inc (SHINE SA) Sexual and reproductive health services provided at Adelaide metro priso SAH2016‐2125 Sexual Health Education and Workforce Development Program (SHINE SA SAH2013‐10834 South Australian Targeted HIV and STI Prevention Program SAH2014‐923‐8 South Australian Health & Medical Research Institute Limited Cardiometabolic health of preterm infants through nutritional interventio SAH2018‐812 Vitamin D in infant blood and breast milk R1503 SAH2018‐1534 South Australian Network of Drug & Alcohol Services Inc 2015‐2020 South Australian Network of Drug and Alcohol Services SAH2014‐840‐10 Southern Cross Care (SA & NT) Incorporated Care Awaiting Placement (CAP) Program ‐ Customer Agreement 2018 ‐ So SAH2018‐201 Customer Agreement CALHN TCP & Southern Cross Care (SA & NT) Incorp SAH2018‐511 Transitional Care Program (TCP) Customer Agreement 2018‐2021 ‐ Southe SAH2018‐200 St Vincent's Institute of Medical Research Inflammatory bowel disease and pregnancy ‐ patient education impact R1 SAH2017‐1477 The Australasian College for Emergency Medicine Specialist Training Placements and Support (STPS) Emergency Ultrasound SAH2018‐101 Specialist Training Program (STP) ‐ Emergency Medicine Education and Tra SAH2018‐1049 The Australian Council on Healthcare Standards 2017‐2019 Quality Program Membership ‐ South East SAH2017‐1975 Accreditation Membership Northgate 2018 ‐ ACHS SAH2018‐535 Accreditation Program for CHSA SAH2012‐357 Membership Agreement ‐ Accreditation ‐ ACHS SAH2015‐377 Quality Program Membership ‐ BHF SAH2015‐1822 Quality Program Membership ‐ EFFN East SAH2015‐1824 Quality Program Membership ‐ EFFN West SAH2015‐1825 Quality Program Membership ‐ RMC SAH2015‐1829 Quality Program Membership ‐ Y&N SAH2015‐1826 The Flinders University of South Australia 2016‐2019 Niranjan Bidargaddi, E Health Research Position SAH2016‐915 2018 Partnership for delivery of OT & Physio Clinical Education SAH2017‐2245 Collaborative Research Agreement Older Persons' Decision‐Making 2016‐ SAH2016‐900 Dietetics Clinical Placement LMH 2018 ‐ Flinders Uni SAH2018‐1048 Effects of methotrexate on blood pressure and arterial function R1440 SAH2017‐1195 Flinders University ARC Linkage Collaboration ‐ Promoting Engagement w SAH2018‐1842 Informations Services Divison Flinders University Service Level Agreement SAH2009‐340 Physiotherapy Clinical Placement 2018 ‐ Flinders Uni SAH2018‐554 Study to determine how magnesium levels correlate with blood glucose le SAH2017‐1596 The safety and efficacy of bee venom desensitization regime containing in SAH2018‐790 Toxoplasma seroprevalence in humans on Kangaroo Island and mainland SAH2018‐1388 The Health Roundtable Limited Health Roundtable Member Collaboration SAH2018‐208 The Returned & Services League of Australia (SA Branch) Inc Executive Officer for the Veterans Health Advisory Council SAH2016‐1157 To provide funding for the employment of an Executive Officer for the Vet SAH2016‐341 The Royal Australasian College of Physicians Funding & Administration Agreement ‐ Specialist Training Program ‐ Roya SAH2018‐1974 The Royal Australian & New Zealand College of Psychiatrists 2018 Specialist Training Program ‐ RANZCP SAH2018‐1313 Mental Health Agreement STP Funding between RANCZP and SALHN 125: SAH2018‐1449 The Trustee for the Salvation Army (SA) Property Trust 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐6 Master Agreement: CNAHS and Salvation Army (South Australia) Property SAH2009‐497 The University of Adelaide 2 year controlled trial to Reduce Diabetes risk R1483 SAH2018‐1142 2017‐2018 Vaccine Herd Immunity Study SAH2017‐214 2018 Clinical Placements ‐ University of Adelaide SAH2018‐754 2018 Collaboration Agreement ‐ Establish Regional Training Hub in Whyal SAH2018‐1385 2019 SA Meningococcal B Vaccine Herd Immunity Study SAH2019‐50 Acute hypoglycaemia and Gastric emptying dose response R1471 SAH2018‐579 Bitter taste as a mediator of food intake post prandial glycaemia Type 2 d SAH2017‐2123 Does Metformin improve vascular function in youth with type 1 diabetes SAH2016‐2025 Effect of topical and oral Corticosteroids on the Sinonasal Microbiome R14 SAH2018‐394 Effects of intragastric administration of L‐amino acids on gastric emptying SAH2017‐1880 Effects of a guar on gastric emptying and blood pressure responses to ora SAH2018‐1279 Effects of intragastric administration of L‐amino acids ‐ RAH Protocol 1406 SAH2016‐1036 Effects of intragastric administration of L‐amino acids on gastric emptying SAH2019‐57 Effects of intragastric administration of L‐amino acids on gastric emptying SAH2019‐56 Effects of intragastric administration of L‐amino acids on gastric emptying SAH2019‐54 Effects of intragastric administration on L‐amino acids on gastric emptying SAH2019‐55 Effects of L‐leucine or L‐valine on gastric emptying R1522 SAH2019‐49 Effects on intragastric administration of L‐amino acids on gastric emptying SAH2019‐53 Effetcs of L‐leucine or L‐valine on antropyloroduodenal motility R1448 SAH2017‐1879 7(1)(c) Business affairs Funding Agreement ‐ Clinical Academic Cardiology 2017‐2020 ‐ University SAH2018‐561 Funding Agreement (Academic) for Lynette Cusack between NAHLN & The SAH2019‐136 Funding Agreement Academic 2018 ‐ Lynnette Cusack ‐ University of Adel SAH2018‐21 Funding Agreement Associate Professor Medicine 2014‐2019 ‐ The Univer SAH2016‐585 Funding Agreement Dr John Miller 2017‐2021 ‐ University of Adelaide SAH2018‐27 Funding Agreement Professor in O&G LMH 2015‐2020 ‐ The University of SAH2015‐2151 Funding Senior Lecturer O&G Uni of Adelaide ‐ Alphonse Roex SAH2014‐522 Genetic and early life determinants of childhood obesity R1365 SAH2016‐1154 Hydrogel based delivery of cytotoxic gamma delta T cells R1457 SAH2018‐12 Immunisation Records Management System Development Project SAH2017‐1690 Mucus testing on patients undergoing endoscopic sinus surgery for CRS R SAH2018‐1849 Osmolality testing R1467 SAH2018‐528 R1377 study SAH2016‐1037 Role of endogenous glucagon like peptide‐1 GLP‐1 in patients with Type 2 SAH2017‐2122 Stroke Cultural Education Package SAH2018‐1026 The impact of pancreatic exocrine insufficeincy and replacement therapy SAH2017‐368 The impact of pancreatic exocrine insufficiency and pancreatic enzyme re SAH2017‐373 The potential of short acting GLP‐1 agonist exenatide as treatment for pos SAH2018‐925 Time restricted feeding for improving diabetes risk R1484 SAH2018‐1144 The University of Adelaide ‐ Research Grants Bile reflux post bariatric surgery R1508 SAH2018‐1692 The University of Wollongong Australian Rehabilitation Outcomes Centre Benchmarking Reports SAH2018‐1060 SA Pain Unit providing data to ePPOC SAH2018‐1240 Therapeutic Dog Services Incorporated Allied Health‐ Agreement between Therapeutic Dog Services and SALHN ( SAH2018‐360 Therapy Dogs James Nash & Ashton House ‐ Therapeutic Dog Services Inc SAH2017‐2034 Umoona Tjutagku Health Service 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐7 Uniting Communities Incorporated 2015‐2020 Specialist Drug and Alcohol Assessment, Treatment and Suppo SAH2014‐840‐8 Lifeline Uniting Communities 2018‐2022 SAH2019‐65 Uniting Country SA Ltd 2017‐2020 Accommodation Support Program ‐ Mid North SAH2017‐1360 2018‐2019 Early Years Parenting Centre SAH2018‐1161 UnitingSA Ltd 2017‐2020 Accommodation Support Program ‐ Whyalla SAH2017‐1366 Customer Agreement CALHN TCP & UnitingCare Wesley Port Adelaide Lim SAH2018‐501 University of Melbourne Review of YMHS SAH2018‐1963 University of South Australia 2017‐2018 Contractor Service Agreement ‐ UniSA SAH2017‐1819 2017‐2018 Practitioner for OT Placement Project ‐ University of SA SAH2017‐889 2018 Clinical Placements ‐ University of South Australia SAH2018‐755 Clinical Placement Rural & Remote Support Officer SAH2019‐20 Evaluation of the Mental Health Lived Experience Register SAH2018‐1620 Interim Arrangement Relating To Student Placements (The University of S SAH2010‐2074 Physio Clinical Placement 2018 ‐ Uni of SA SAH2018‐555 Practitioner for OT Placement Project 2018 ‐ Uni SA SAH2018‐1208 The impact of sleeping during the day on metabolism, performance and m SAH2018‐1052 The role of Nedd4‐2 in kidney function R1509 SAH2018‐1841 Wesley Social Enterprises Incorporated Fleet Vehicle Cleaning ‐ LMH/Modbury/PHC ‐ 2019 SAH2018‐1958 Fleet Vehicle Cleaning LMH/Modbury/PHC ‐ Wesley Social Enterprises SAH2017‐2037 YourLife Health & Learning Incorporated 2018 Clinical Placements ‐ YourLife Health SAH2018‐1252 TOTAL $ 373,220,222 $ 130,057,324 NGO suppliers data based on PCMS records for Agreements for current FY. Data collated on 1‐Mar‐19. NGO Spent Data for Current FY (Jul‐18 to Feb 19) ‐ Grants Supplier/Projects SAH Number PCMS Contract Value Oracle Spent data Aboriginal Elders & Community Care Services Inc 7(1)(c) Business affairs 2017‐2019 Trachoma Elimination Program ‐ Aboriginal Elders SAH2018‐572 Aboriginal Health Council of South Australia Ltd 2017‐2021 Trachoma Elimination Program ‐ Aboriginal Health Council SAH2018‐122 HIV Screening Program for Port Lincoln SAH2018‐1752 Peak Body for Aboriginal Community Controlled health Service Organisations SAH2016‐1198 Registered Organisation Training Services SAH2018‐1322 Adelaide Day Centre Adelaide Day Centre Homeless Program 2018‐19 SAH2018‐1021 ADELAIDE PRIMARY HEALTH NETWORK LIMITED Meningococcal B Childhood Catch Up Program Incentive SAH2018‐1900 Aged Rights Advocacy Services (SA) Inc ARAS Safeguards for Ageing Well Program 2018‐19 SAH2018‐1727 Elder Abuse Prevention Phone Line Support and Referral Service and Transition Project SAH2018‐1642 Retirement Village Residents Advocacy Program 2018‐19 SAH2018‐1722 ANFE Associazione Nazionale Famiglie degli Emigrati Inc (ANFE) Ageing Well in CALD Communit SAH2018‐1992 Associazione Nazionale Famiglie degli Emigrati Inc ANFE Ethnic Ageing Grant 2018‐2019 SAH2018‐1800 Anglicare SA Ltd Staying Attached Program 2013‐2019 SAH2013‐10610 Ardrossan Community Hospital Inc 2018‐2022 Grant Funding for Ardrossan Community Hospital SAH2018‐1656 Australian & New Zealand Intensive Care Society Adata Services ‐ Aust & NZ Intensive Care Society 2017‐20 SAH2017‐1373 Australian Association for Environmental Education SA Chapter Inc. Innovation in Ageing Challenge 2017/18 Australian Association of Environmental Educatio SAH2018‐921 Australian Orthopaedic Association AOANJRR Patient‐Reported Outcome Measures (PROMs) Pilot Project SAH2018‐1100 Baptist Care (SA) Inc Spiritual Care Grant SAH2018‐1352 Barni Yunggudja Aboriginal Corporation Point Pearce Barni Yunggudja Aboriginal Corporation SASPCG 2018/19 SAH2018‐1141 Beyond Blue Limited Beyondblue National Depression Initiative 2015‐2020 SAH2015‐1226 Brian Burdekin Clinic Health & Welfare Services Inc Brian Burdekin Clinic Health and Welfare Services 2018‐19 SAH2018‐1015 Business SA Healthy Workers Across Industry Approach ‐ Business SA SAH2018‐1251 Carers and Disability Link Incorporated 17/18PAG‐41 ‐ The Dementia Friendly Community Garden Project SAH2018‐241 Carer Support and Respite Services 2014‐18 SAH2014‐687 Carers Association of SA Inc Support Services for Relatives and Friends of the Mentally Ill 2018‐20 SAH2018‐1059 Catherine House Inc Accommodation Support Program (ASP) 2014‐2018 SAH2014‐585‐1 Permanent Supported Accommodation Program (PSAP) 2014‐2019 SAH2014‐585‐2 Catholic Family Services (Centacare) Individual Psychosocial Rehabilitation and Support Services (IPRSS) 2014 ‐ 2019 SAH2013‐12134‐1 Support Services for Panic Anxiety Obsessive Compulsive and Eating Disorders (PACE) 201 SAH2014‐702 Youth Suicide Intervention Service 2018‐2019 SAH2018‐1001 Ceduna Koonibba Aboriginal Health Service (Aboriginal Corporation) 2017‐2021 Trachoma Elimination Program ‐ Ceduna Koonibba SAH2018‐121 Chaplaincy Services SA Incorporated Spiritual Care Program SAH2018‐1217 Spiritual Care Program Jan‐June 2019 SAH2019‐31 Chinese Welfare Services of SA Inc Cervix Screening Program Partnership Grants 2018 ‐ Chinese Welfare Services SAH2018‐784 Clubhouse SA Inc Diamond House ‐ Day and Group Programs 2018‐19 SAH2018‐1017 Coordinating Italian Committee Inc Co‐ordinating Italian Committee Inc Ageing Well in CALD Communities Grant 2018‐2019 SAH2019‐15 Co‐ordinating Italian Committee Inc. Ethnic Ageing Grant 2018‐2019 SAH2018‐1802 Council on the Ageing SA Inc COTA SA Ageing Well Communities Program 2018‐19 SAH2018‐1843 COTA SA Every Generation Festival ZestFest 2018 SAH2018‐974 COTA SA South Australiaâ€™s Ageing Plan Peak Body Funding 2017‐2020 SAH2017‐2021 Regional Strength for Life Program Development Trial ‐ COTA SAH2018‐328 Strength For Life 2015‐2018 COTA SAH2015‐1049 Strength for Life 2018‐2022 COTA SAH2018‐1795 Dunjiba Community Council Inc 7(1)(c) Business affairs SA HEALTHY TOWNS CHALLENGE ‐ OODNADATTA COMMUNITY BIKE PROGRAM ‐ DUNJIB SAH2018‐1898 Eastwood Community Centre Inc 17/18PAG‐6 ‐ Better Health, Wellbeing and Resilience in Older People SAH2018‐262 Innovation in Ageing Challenge 2017‐18 Eastwood Community Centre Inc. Artbus Art Aro SAH2018‐975 Every Life Matters *** NEW *** Every Life Matters SPN ACTPLAN 2017‐2018 State Budget Suicide Preventio SAH2017‐2065 GP Partners Adelaide Statewide General Practitioner Obstetric Shared Care Program SAH2018‐1063 Statewide General Practitioner Palliative Shared Care Program 2018/19 SAH2018‐1069 Greek Orthodox Archdiocese of Australia Greek Welfare Centre SA Ageing Well in CALD Communities Grant 2018‐2019 ‐ Greek Orthodox Archdiocese of Aus SAH2018‐1960 Greek Orthodox Archdiocese of Australia Greek Welfare Centre SA Ethnic Ageing Grant 2 SAH2018‐1805 Greek Orthodox Community of South Australia Incorporated Greek Orthodox Community of South Australia Inc Ageing Well in CALD Communities Gra SAH2018‐1993 Greek Orthodox Community of South Australia Inc Ethnic Ageing Grant 2018‐2019 SAH2018‐1804 Grow (SA) Grow Program (Mutual Help Groups and Support Services) SAH2018‐1150 Health Consumers Alliance of South Australia Incorporated Health Consumer Alliance of SA Inc Core Services 2016 ‐ 2019 SAH2016‐890 Helping Hand Aged Care Inc Age Friendly SA Grants 2017 ‐ Helping Hand Aged Care Inc Adelaide's Age Friendly Walkin SAH2017‐874 Day and Group Programs 2018‐19 SAH2018‐1011 Individual Psychosocial Rehabilitation and Support Services (IPRSS) Older Persons Central SAH2013‐12134‐2 Kalparrin Community Inc 2016‐2019 Kalparrin Mobile Assistance SAH2016‐2080 Keith & District Hospital Inc 2016‐2019 Emergency Services for Public Patients ‐ Keith Hospital SAH2016‐2039 2016‐2019 Grant Funding ‐ Emergency Services Public Patients & On Call GP payments SAH2017‐118 McGrath Foundation Ltd McGrath Breast Care Nurse 2015‐18 ‐ Gawler SAH2016‐20 Mental Health Australia Ltd National Mental Health Consumer and Carer Forum (NMHCCF) 2018‐19 SAH2018‐927 Mental Health Coalition of South Australia Incorporated Mental Health Lived Experience Workforce Program 2018/19 SAH2018‐1066 Mental Health NGO Industry Development, Integration and Support 2018‐2020 SAH2018‐1064 Mental Health Promotion 2018‐19 SAH2018‐1072 Mental Illness Fellowship of South Australia Incorporated Day and Group Programs (Wayville Activities) and Therapeutic Group Programs SAH2018‐1016 Mutual Support, Self Help and Information Services SAH2018‐999 MIND Australia Individual Psychosocial Rehabilitation and Support Services (IPRSS) Central Adelaide Loca SAH2013‐12134‐3 Individual Psychosocial Rehabilitation and Support Services (IPRSS) Central and Southern SAH2013‐12134‐4 MOSH Mobile MOSH 1819SASPCG SAH2018‐952 MOSH Community Training SASPCG 2018/19 SAH2018‐960 Moving A Head Incorporated Chuckle and Knuckle & Move and Groove SAH2018‐630 Multicultural Communities Council of SA Inc Knowing Your Rights for CALD Communities SAH2016‐2192 Multicultural Communities Council of SA Ageing Well in CALD Communities Grant 2018‐2 SAH2019‐3 Neami Limited 18/19 Strategic Partnership Grant ‐ Neami National SAH2019‐179 Day and Group Programs 2018‐19 SAH2018‐1035 Individual Psychosocial Rehabilitation and Support Services (IPRSS) Central and Southern SAH2013‐12134‐6 Individual Psychosocial Rehabilitation and Support Services (IPRSS) Northern Adelaide Lo SAH2013‐12134‐5 Nganampa Health Council Inc 2017‐2021 Trachoma Elimination Program ‐ Nganampa SAH2018‐120 Aboriginal Environmental Health Worker Program ‐ July18‐June19 ‐ Nganampa SAH2018‐1865 Oak Valley (Maralinga) Inc 2018‐2019 Multipurpose Services at Oak Valley Maralinga SAH2018‐1601 Out of the Blue Suicide Prevention Network Out of the Blue SASPCG 2018/19 SAH2018‐1140 Overseas Chinese Association of SA Inc 2018‐19 ‐ Cervix Screening Strategic Partnership ‐ Overseas Chinese Assoication SAH2019‐123 Palliative Care South Australia Incorporated Palliative Care Council 2018‐20 SAH2018‐1068 Pangula Mannamurna Inc Live Long ‐ Live Strong Treasuring Life SASPCGS17/18 SAH2017‐1578 Treasuring Life ATSI SPN 1819SASPCG SAH2018‐944 Pika Wiya Health Service Aboriginal Corporation 2017‐2021 Trachoma Elimination Program ‐ Pika Wiya SAH2018‐119 Radio for the Third Age Incorporated 7(1)(c) Business affairs Radio for the Third Age 2018‐2019 SAH2018‐1889 Riverland Division of General Practice Inc FOCUS ONE SASPCG 2018/19 SAH2018‐936 Royal Australasian College of Medical Administrators Medicine‐ Grant Agreement Specialised Training Program between Royal Australian Colle SAH2018‐1025 Royal District Nursing Service of SA Limited Homeless Nursing Services 2018‐19 SAH2018‐1118 Royal Flying Doctor Service of Australia Central Operations Cervical Screening Clinic Extension Grant‐ Royal Flying Doctor Service SAH2019‐144 RSL Care South Australia Incorporated Executive Officer for the Veterans Health Advisory Council SAH2017‐2015 Seniors Information Service Inc 17/18PAG‐7 ‐ Healing with Traditional Remedies SAH2018‐233 Sexual Health Information Networking & Education SA Inc (SHINE SA) Writing Themselves In Project SAH2018‐1810 Silent Ripples Incorporated Silent Ripples SASPCG 2018/19 SAH2018‐961 South Australian Health & Medical Research Institute Limited Aboriginal Chronic Disease Consortium SAH2017‐222 Approaches to promoting the safety of older Aboriginal Peoples project SAH2017‐854 SAHMRI Operational Grant 2016‐2020 SAH2016‐1224 South Australian Cancer Research SAH2018‐291 Strathalbyn Children's Centre Age Friendly SA Grants 2017 ‐ Strathalbyn Childrenâ€™s Centre ‐ No more secret men's b SAH2017‐876 Survivors of Torture and Trauma Assistance and Rehabilitation Service Program for Survivors of Torture and Trauma 2018‐20 SAH2018‐1071 Talk Out Loud Ltd Talk Out Loud SPN 1819SASPCG SAH2018‐948 The Australian Centre for Social Innovation Inc Age Friendly SA Grants 2017 ‐ TACSI ‐ Mindset for Life Toolkit SAH2017‐877 Housing and Older People Innovation in Ageing Challenge 2017‐18 The Australian Centre SAH2017‐2287 Innovation in Ageing Challenge 2017‐18 TACSI Test Kitchen Tabelong SAH2018‐923 TACSI Positive Ageing Fellowship Program Grant 2018‐19 grant letter of offer SAH2018‐1995 The Australian Centre for Social Innovation Positive Ageing Fellowship Program Grant 201 SAH2018‐1994 THE CANCER COUNCIL NSW Bowel Cancer Screening in Younger Aboriginal People ‐ Towards Zero ‐ Cancer Council NS SAH2018‐1672 The Flinders University of South Australia 2016‐2019 Mount Gambier Junior Doctor Program SAH2016‐991 Mental Health ‐ Agreement Grant funding of RN2A05 with FUSA and SALHN SAH2017‐2199 Promoting Engagement with Life in Older Adults Project 2017‐18 Flinders Centre for Agei SAH2018‐306 Scoping Planning and Future Needs of Older Carers of Adults with Intellectual Disability G SAH2018‐307 The National Trust Of South Australia Aged Rights Advocacy Services (SA) Inc ARAS Safeguards for Ageing Well Program 2018‐19 SAH2018‐1727 Elder Abuse Prevention Phone Line Support and Referral Service and Transition Project SAH2018‐1642 Retirement Village Residents Advocacy Program 2018‐19 SAH2018‐1722 ANFE Associazione Nazionale Famiglie degli Emigrati Inc (ANFE) Ageing Well in CALD Communit SAH2018‐1992 Associazione Nazionale Famiglie degli Emigrati Inc ANFE Ethnic Ageing Grant 2018‐2019 SAH2018‐1800 Anglicare SA Ltd Staying Attached Program 2013‐2019 SAH2013‐10610 Ardrossan Community Hospital Inc 2018‐2022 Grant Funding for Ardrossan Community Hospital SAH2018‐1656 Australian & New Zealand Intensive Care Society Adata Services ‐ Aust & NZ Intensive Care Society 2017‐20 SAH2017‐1373 Australian Association for Environmental Education SA Chapter Inc. Innovation in Ageing Challenge 2017/18 Australian Association of Environmental Educatio SAH2018‐921 Australian Orthopaedic Association AOANJRR Patient‐Reported Outcome Measures (PROMs) Pilot Project SAH2018‐1100 Baptist Care (SA) Inc Spiritual Care Grant SAH2018‐1352 Barni Yunggudja Aboriginal Corporation Point Pearce Barni Yunggudja Aboriginal Corporation SASPCG 2018/19 SAH2018‐1141 Beyond Blue Limited Beyondblue National Depression Initiative 2015‐2020 SAH2015‐1226 Brian Burdekin Clinic Health & Welfare Services Inc Brian Burdekin Clinic Health and Welfare Services 2018‐19 SAH2018‐1015 Business SA UnitingSA Ltd 7(1)(c) Business affairs Avalon Support Project 2014‐2018 SAH2014‐585‐3 GP Access Program 2014‐2018 SAH2014‐582 Individual Psychosocial Rehabilitation and Support Services (IPRSS) ‐ Country North 2014‐ SAH2013‐12134‐1 Individual Psychosocial Rehabilitation and Support Services (IPRSS) ‐ Southern Adelaide L SAH2013‐12134‐1 Individual Psychosocial Rehabilitation and Support Services (IPRSS) Central Adelaide Loca SAH2013‐12134‐8 Individual Psychosocial Rehabilitation and Support Services (IPRSS) Northern Adelaide Lo SAH2013‐12134‐9 University of South Australia Activating Citizen Scientists SAH2018‐372 Chair of Mental Health (Practice and Research) 2018‐21 SAH2018‐1034 Grant Offer for iCAHE for UniSA SAH2017‐1270 Match Studio UniSA SASPCG 2018/19 SAH2018‐959 University of South Australia Exploring Citizen Science Project SAH2017‐1100 West Coast Youth & Community Support Inc Lincoln Alive Suicide Prevention Network Seed Grant SASPCG2017 SAH2017‐1563 TOTAL $ 130,048,894 $ 22,228,534NGO suppliers data based on PCMS records for Agreements for current FY. Data collated on 1‐Mar‐19. Policy 31 Policy Directive: compliance is mandatory Framework for the Management of SA Health Grants and Service Agreements with Non-Government Organisations Policy Directive Objective file number: DHA2013-02682 Document classification: PUBLIC I2-A1 Policy developed by: Procurement and Supply Chain Management Approved at Portfolio Executive on: 6 December 2013 Next review due: 31 October 2017 Summary The Framework for the Management of SA Health Grants and Service Agreements with Non-Government Organisations (NGOs) Policy Directive is to ensure: • all grant and service agreements with NGOs are aligned with programs that support the objectives of the Government of South Australia; • the efficient use and management of public funds in compliance with applicable Treasurer’s Instructions and the State Procurement Act 2004; • intended performance outcomes of grant and service agreements with NGOs are effectively monitored, managed and achieved; • effective management of NGO funding arrangements; and • decisions are made in line with relevant policies and legislation about awarding contracts for the delivery of services. Keywords Grants, Non-Government Organisations, NGOs, Service Agreements, Contracts, performance management, TI15, grant funding, contracted services, framework, policy directive Policy history Is this a new policy? N Does this policy amend or update an existing policy? Y Does this policy replace an existing policy? N Applies to All SA Health Portfolio Staff impact All Staff, Management, Admin PDS reference D0333 Version control and change history Version Date from Date to Amendment 1.0 01/12/2013 30/10/2015 Original version 1.1 31/10/2015 current Updates to terminology, document links and Finance clarifications © Department for Health and Ageing, Government of South Australia. All rights reserved. Framework for the Management of SA Health Grants and Service Agreements with Non-Government Organisations Policy Directive Contents 1. Purpose 3 2. Scope 3 3. Introduction 3 4. Funding and Planning 4 4.1. SA Health and the non-Government Sector 4 4.2. The Planning Cycle 4 4.3. Identification of Need and Alignment with Strategic Directions 5 4.4. Planning the Service Response and Health Response Strategy 6 4.5. Determine the Role of the non-Government Sector 6 4.6. Selection of a non-Government Service Provider 7 4.6.1 Grants 8 4.6.2 Contracted Services 8 4.7. Contracting with a non-Government Service Provider 8 4.8. Performance Management 9 4.9. Performance Evaluation 9 4.10. Strategy Evaluation 10 5. Grant and Service Agreement Management 11 5.1. Classification 11 5.2. Procurement and Contract Management System 13 5.3. Grant Documentation 13 5.4. Contracted Service Agreements 14 5.5. Variations to Service Agreements for Contracted Services 15 5.6. Approvals and Authorisations 15 5.7. Contract Execution 15 5.8. Payments 15 5.8.1 Criteria for Grant Payments 15 5.8.2 Grant Payments 15 5.9. Risk Management 16 6. Performance Management 17 7. Roles and Responsibilities 18 7.1. Program Management Units 18 7.2. Procurement and Supply Chain Management 19 7.3. NGO Contract Management 19 8. Records Management 20 9. SA Health NGO Liaison Group 21 10. Definitions 21 11. Related Documents and Resources 23 Appendix A. Strategy Implementation Plan template Page 2 of 28 I2-A1 1. Purpose The purpose of the Framework for the Management of SA Health Grants and Service Agreements with Non-Government Organisations (NGOs) Policy Directive is to ensure: > All grant and service agreements with NGOs are aligned with programs that support the objectives of the Government of South Australia, > The efficient use and management of public funds in compliance with applicable Treasurer’s Instructions and the State Procurement Act 2004, > Intended performance outcomes of grant and service agreements with NGOs are effectively monitored, managed and achieved, > Effective management of NGO funding arrangements, and > Decisions are made in line with relevant policies and legislation about awarding contracts for the delivery of services. 2. Scope Compliance with this framework is mandatory; it applies to all SA Health employees and contracted staff. 3. Introduction SA Health funding for the non-Government sector supports both indirect and direct service delivery inclusive of the work of peak and advisory bodies. A strong working relationship between SA Health and the non-Government sector, fostered through the department’s various funding programs is essential in achieving Government policy objectives and targets. The Stronger Together Agreement, launched in December 2009 provides for collaborative partnerships between the Government and the non-Government sector. It informs the development of policy, funding and contracting relationships, service development planning and guides the actions of the state Government and Non- Government Organisations (NGOs) of the health and community services sector. This Framework comprises three main parts: > Section 4. Funding and Planning (from the Department of Health (2007) Funding and Planning Framework for Non-Government Services), > Section 5. Grant and Service Agreement Management, and > Section 6. Performance Management. Page 3 of 28 I2-A1 4. Funding and Planning4.1 SA Health and the non-Government Sector The relationship between SA Health and the non-Government sector will be further enhanced by a better understanding of demand and the provision of services, the costs associated with particular services and the ways in which existing services might be reconfigured to achieve better outcomes. This will, in turn, facilitate the structuring of services to meet the specific needs of the community. Whilst the relationship between SA Health and the non-Government sector is interdependent and based on common objectives, the provision of funding to the sector must follow processes that are accountable, transparent and observe relevant Government and departmental requirements. The establishment of legally binding contracts is consistent with this and recognises the degree of separateness that must necessarily exist between the parties. 4.2 The Planning Cycle The use of the planning cycle is important to identify health service priorities aligned with Government strategic objectives for health. Whilst each stage consists of a more detailed and complex series of elements outlined below, the planning “cycle” is represented most simply as: Page 4 of 28 I2-A1 The following sections discuss these stages which may be outlined in a Strategy Implementation Plan (template at Appendix A) or other planning documentation prepared by Program Management Units (PMUs) to support the provision of services to be funded by SA Health and provided by an NGO. 4.3 Identification of Need and Alignment with Strategic Directions Current objectives and strategic directions for the Government of South Australia and/or SA Health are available in resources such as: > The Government of South Australia’s Seven Strategic Priorities developed to drive the work of government, > Sout h Australia ’s Stra teg ic Pla n (S AS P) includes goals and measurable targets that reflect priorities, > The SA Health Strategic Plan communicating objectives, broad strategies and performance measures for each strategic direction so the SA Health workforce, clients, stakeholders and community can clearly see the future direction of SA Health,> Delivering Transforming Health - Our Next Steps. Transforming Health is about the pursuit of quality, as we strive to deliver the best care, first time, every time, to all South Australians, > Sout h Australia ’s Hea lth Ca re Plan 2007-2016 developed by the Government of South Australia to meet future challenges in providing health care and outlines key areas for reform, and > SA Health business units also develop strategies and plans that include objectives and the following are some examples: > South Australian Alcohol and other Drug Strategy 2011-2016,> Sexually Transmissible Infections Action Plan 2012-2015,> Primary Prevention Plan 2011-2016,> South Australian Suicide Prevention Strategy 2012-2016, and> Sout h Australia ’s Me nta l Hea lt h a nd W ellbeing Po lic y 2010 -2015.> Additional resources containing information about SA Health’s current strategic directions and objectives are available on the SA Health web site at, http://www.sahealth.sa.gov.au.SA Health programs must operate under clearly defined and documented operational objectives that are available to potential service providers through program information. Page 5 of 28 I2-A1 PMUs will ensure proposed programs do not duplicate services already provided by SA Health or other agencies. The objectives stated in Service Agreements must be aligned with government strategic directions and clearly articulated so that SA Health and NGOs are informed about what is being funded and why. Operational objectives must include quantitative, qualitative and milestone information or be phrased in such a way that it is clear when these objectives have been achieved. Adequate information will then be available on which to base future decisions for continuing or concluding the program. The operational objectives of the program should also be stated in all documentation for performance monitoring and evaluation and whenever changes are made to the program or Service Agreement. 4.4 Planning the Service Response and Health Response Strategy This stage addresses planning of an appropriate model of response, informed by relevant data and research. The Business Case, Strategy Implementation Plan and/or other planning documentation will document the way in which the proposed response will address the identified need and achieve the objectives and targets of South Australia’s Strategic Plan and/or South Australia’s Health Care Plan 2007-2016. The Health Response Strategy responds in whole or in part to the health services gap that has been identified. It will include an examination of the options and opportunities to close those gaps. It will also include who will pay for services, for example will it be a user pays system or publically funded. 4.5 Determine the role of the non-Government Sector This stage may involve consultation with the non-Government sector and other relevant parties. Any issues of contention identified in the consultation process will be considered, together with the means by which they were resolved or reduced. Any outstanding issues will also be acknowledged, together with the rationale for the position adopted by the PMU with respect to them in proceeding with the Health Response Strategy. PMUs should consider whether the response to identified need can be efficiently and more effectively delivered through engagement with the NGO sector. In deciding whether to propose to utilise the NGO sector to provide specific services considerations should be given to whether a NGO will: > Have specific expertise and/or experience in relation to the proposed program(s), > Have established links with the client/target group and other community Page 6 of 28 I2-A1 groups and resources, > Have established infrastructure not readily available through government providers, and > Offer value for money. In addition, consideration should be given to; > The potential reluctance of the client group to engage with government providers, > Environmental factors such as geographic location and availability of service providers, and > Urgency of need and the ability of the NGO sector to respond quickly. The PMU needs to be confident an NGO can deliver the program and/or services sought. Factors to be considered include; > Previous performance and ongoing relationships, > Experience and resources, > Credibility of the NGO with the client/target groups, > Relevant accreditation, licences and certifications, > Financial information and audit considerations, > Reputation and quality of service, and > Governance and management structures. The PMU is also required to give consideration to the level of support that may be required by the NGO sector. 4.6 Selection of a non-Government Service Provider If a proposed service is to be provided by the non-Government sector, it will be necessary to determine the means by which individual service providers will be selected. Selection processes must be transparent and accountable, and comply with Government and departmental policies. Page 7 of 28 I2-A1 4.6.1 Grants Grants are not subject to the requirements of the State Procurement Act. Therefore procurement approvals for grants are not required. Grant agreements can be executed by the relevant delegate, and will require appropriate financial approval. Compliance with TI 15 is essential. Approvals must now be sought in accordance with the CE Directive on NGO Funding Arrangements of November 2013. 4.6.2 Contracted Services An acquisition plan is required, for all agreements of $22,000 and above, and must be approved by the relevant procurement delegate prior to commencing a procurement process. Similarly, prior to embarking upon these selection processes, the relevant approvals must be obtained to commit the funds and undertake the acquisition prior to commencing the procurement process. Advice upon the approvals required can be obtained from Procurement and Supply Chain Management (PSCM). Consideration is to be given to: > Number of potential service providers, > Capacity of the sector, > Urgency, and > Procurement options. 4.7 Contracting with a non-Government Service Provider The documentation used to formally engage a non-Government service provider must comply with Treasurer’s Instructions and government policies. Contracts may only be entered into by a legal entity as follows: > The Minister for Health, > The Minister for Mental Health and Substance Abuse, > The Minister for Ageing, > Central Adelaide Local Health Network Inc., > Country Health SA Local Health Network Inc., > Northern Adelaide Local Health Network Inc., > Southern Adelaide Local Health Network Inc., Page 8 of 28 I2-A1 > Women’s and Children’s Health Network Inc., and > SA Ambulance Service Inc. SA Health is not a legal entity, rather it is a collective brand name for the above entities. The Department for Health and Ageing is also not a legal entity, rather it is an administrative unit established under the Public Sector Act 2009. Departmental contracts must be in the name of the Minister for Health or the Minister for Mental Health and Substance Abuse or the Minister for Ageing (as relevant). Document(s) to be used by a PMU in contracting with a non- Government service providers are Master Agreements and Service Agreements. Examples of these documents can be obtained from the PSCM. For further advice on Master and Service agreement templates contact PSCM. Agreements with the non-Government service provider will specify the services and any related requirements in sufficient detail to enable each party to clearly understand what is expected of them. PMU’s should conduct discussions with NGO Contract Management on comprehensive service specifications and clinical service particulars that will inform the nature and context of the service KPIs and other relevant service particulars for inclusion in the Service Agreement. PMUs will lead the preparation of the Service Agreement and liaise with PSCM for the procurement stages prior to the establishment of a Service Agreement. 4.8 Performance Management The relevant PMUs will monitor Service Agreements to ensure the NGOs are achieving agreed requirements. It is important that feedback is given to the non-Government service provider regarding the value of the data and any indications of performance which might be drawn. Refer to section 6 Performance Management. 4.9 Performance Evaluation The PMU will evaluate the service provider’s effectiveness in achieving the outcome objectives of the service. The criteria for measuring performance, including when and how this will be done, must be established prior to the start of the program and it must be measurable. Performance evaluation will focus upon the achievement of outcomes rather than outputs. In addition to performance indicators, contracts with non-Government service providers will specify any evaluation requirements that are specific to the contract, including the data required to facilitate it. Page 9 of 28 I2-A1 4.10 Strategy Evaluation A number of non-Government service providers may be engaged, perhaps providing a diverse range of services, in order to achieve a desired outcome or target. The efficiency and effectiveness of services collectively delivered by non- Government service providers will be evaluated. This evaluation will, wherever possible, focus upon the achievement of outcomes rather than outputs. The program evaluation will relate directly to the indicators that will be used in evaluating the success of the Health Response Strategy in achieving the objective(s) and target(s) drawn from South Australia’s Strategic Plan and/or South Australia’s Health Care Plan 2007-2016. The Service Agreement, Strategy Implementation Plan, Business Case or other planning documentation will identify when a response will be evaluated. The Service Agreement and/or Strategy Implementation Plan will document and identify performance indicators and targets that have been determined to evaluate the degree to which the response has succeeded in achieving the intended outcome(s). The benefits of evaluation include: > Reflecting on progress of programs and ascertaining whether they are on the right track and whether there are opportunities for improvements to be made, > Influencing policy makers and funders by using evidence- based evaluation outcomes, > Strengthening accountability for the impact and outcome of programs, and > Enabling successful programs to be considered and applied in different environments and circumstances or to inform thinking for new programs. This completes the planning ‘cycle’ and informs the review of existing services and planning of new services. Page 10 of 28 I2-A1 5 Grant and Service Agreement Management 5.1 Classification The way in which government interacts with the non-Government sector has evolved over the last twenty years. The language of grant funding continues in many jurisdictions even though some funding arrangements have changed and the nature of the transactions are now different. To assist in clearly communicating the intent of its relationship with the NGO sector, government needs to be clear on what it is trying to achieve. The nature of the funding agreement can be considered to be: > Giving/Gifting– aligned with the concept of charity or more general support for a worthy cause. In this model, government typically does not define the expected outputs and allows the recipient to decide on the best use of funds. Core accountability mechanisms would be the grant application and subsequent acquittals. > Investing – aligned with the concept of building capacity by seeking a long-term outcome from the spending, such as a policy change or developments in an entity’s capacity. Core accountability mechanisms would be a grant application and subsequent acquittals. > Purchasing– aligned with the concept of procuring services. Here, government’s focus is on cost and quality of the service delivered. In this model, government typically defines the expected outputs and specifies this in a contract. Core accountability mechanisms would be the service agreement and subsequent detailed performance reporting. In transactions where SA Health has an obligation to provide certain services to members of the community, and chooses to provide those services by engaging a third party for the service delivery, SA Health receives approximately equal value from the transaction as it is able to extinguish its obligation for service delivery by entering into the transaction with the third party. This exchange of value exists irrespective of whether the transaction is with a for-profit or not-for-profit entity. In terms of the relationship outlined above, this would equate with a “purchasing” transaction and would not be within the definition of a grant under the Australian Accounting Standards or Treasurer’s Instruction 15 – Grant Funding (TI15) but rather are covered by the State Procurement Act 2004 (SA) in the same way as other procurement transactions undertaken by SA Health. For the purpose of NGO funding management in SA Health, transactions with NGOs are described as either grants or contracted services (refer Table 1. SA Health Classification of Grants and Contracted Services). > Grants, including non-recourse grants - this covers both the Page 11 of 28 I2-A1 “giving/gifting” and “investing” relationships outlined above. They include grants for specific program related outcomes to support an organisation to undertake activities or promotion on a non-reciprocal and time limited manner. > Contracted Services - this covers the “purchasing” relationship when the Minister (or delegate) has an obligation to provide a service or wants to engage with an external party to deliver services to SA Health to assist in achieving its goals and contracts to purchase the delivery of those services by a NGO. The contractual obligations apply whether the services are provided by a not for profit or for profit provider. Non-recourse grants may be given for a specified purpose or with specified objectives that may or may not have conditions attached. Failure to meet any or all of the conditions will not entitle SA Health entities to recover the grant. Non-recourse grants must be justified by the particular circumstances and in the public interest. Those exceeding $10,000 must be approved by the Treasurer prior to being issued. All other requirements of TI15 apply to Non-Recourse grants. One-off (single occurrence) grants assessed as low risk of $100,000 or less (plus GST (if any)) occur through the use the Letter of Offer of a Grant. Use of this Letter ensures the requirements of TI15 are met. Table1. Classification of Grants and Contracted Services Nature of SA Health Agreement type PCMS transaction classification requirement N Giving/gifting Grant $100,000 (or less)– Grant agreement G investing one-off (single details from O (Acct 80121 occurrence) and low accepted Letter of Grants) risk Offer of a Grant Letter of Offer loaded of a Grant Other – Master Master and Service and Service Agreements loaded Agreements Minimum requirements as per TI15 Shopping/purchasing Contracted Master <$22000 contract services Agreement/Service details and Agreement or information loaded (Acct 75481 Simple Services Heath Services) Agreement or >$22000 Complex Services procurement Agreement process entered and contract details loaded Page 12 of 28 I2-A1 5.2 Procurement and Contract Management System PMUs will use the Procurement Contract Management System (PCMS) to manage procurement processes for contracted services (with a value greater than $22,000) and to manage all agreements for both grants and contracted services, refer Table 1, as mandated by the SA Health Directive: Procurement and Contract Management System Policy. PSCM can provide training and support in the use of PCMS. 5.3 Grant Documentation Each SA Health program providing grant funding, including its objectives, target audience, proposed grant size, selection criteria, acquittal and monitoring processes and evaluation methodology requires the approval of the Chief Executive, SA Health. The level of funding for each program will be determined through the SA Health budgeting processes The design and monitoring processes for each grant must comply with the requirements of TI15 – Grant Funding. The PMU responsible for administering a grant must ensure that appropriate reporting requirements are in place with the NGO concerned to enable it to satisfy the Minister that the grant is used by the NGO effectively and efficiently and only for the purpose for which it was made. Unless otherwise specifically approved by the Chief Executive, SA Health, all grant agreements must include requirements for the NGO to: > Provide management accounts, annual reports, financial statements and any other information or documents relevant to the NGO’s operations to the PMU,> Prepare financial statements at the end of each financial year, or if a grant period is for less than one year, at the end of the grant period. The financial statements must be prepared in accordance with Australian Accounting Standards, signed by an appropriate senior office holder of the NGO and submitted to the PMU,> Prepare its financial statements in the nature of a General Purpose Financial Statement when grants in excess of $1 million (GST exclusive) over the term of the grant agreement are provided, > Provide regular progress reports on any project or program pertaining to the grant, including any change to the authorised scope of the project or program, > Provide timely advice to the PMU of any significant changes to the nature and/or scope of the activities conducted by the entity, > Comply with legislation, any constitution that governs the NGO’s operations and any conditions attaching to the grant,Page 13 of 28 I2-A1 > Allow any officer authorised by the Minister to enter the NGO’s premises to inspect the operations of the NGO including equipment, premises, accounting records, documents and information and interview employees of the NGO on matters pertaining to its operation, > Accept that the Minister may direct that the NGO’s financial accounts be audited and that the Minister may also specify the minimum qualifications to be held by a person appointed to conduct such an audit, and > Provide regular reporting, with appropriate evidence in support, as to the application of grant moneys by the entity. The following documentation for grants is to be used (Table 1) for: > One-off (single occurrence) grants of $100,000 (GST exclusive) or less and assessed as low risk use the under $100,000 Letter of Offer of a Grant, > One-off (single occurrence) grants of $100,000 (GST exclusive) or less and assessed as high risk use the Master and Service Agreements, > One off (single occurrence) grants greater than $100,000 (GST exclusive) use the Master and Service Agreements, and > all other grants (not one off) that are greater or less than $100,000 (GST exclusive) use the Master and Service Agreements. For all grants, regardless of value, as required by TI15, the PMU must recover any grant monies which are unexpended by the NGO at the end of the grant period, unless specific approval is given by the Chief Executive, SA Health (or delegate) for those monies to be retained by the NGO. Where the grant is subject to GST, the GST component on the unexpended amount must also be taken into consideration when being recovered. For further information, seek advice from Taxation Services. Contact NGO Contract Management for information on template documents relating to all grants. 5.4 Contracted Service Agreements An NGO engaged to provide contracted services will enter into a Master Agreement and a Service Agreement and/or any other approved SA Health contract document. Any variations to the approved templates must include consultation with the SA Health Legal and Governance Unit prior to seeking approval from the Crown Solicitor’s Office. NGO Contract Management should be engaged initially at the Identification of Health Need stage of the planning cycle to support PMU staff through the development of the program. PSCM should be involved for the subsequent procurement stages. PMUs will lead the preparation of Service Agreements and ensure compliance with all Government procurement related requirements for transactions with NGOs for the provision of services. PSCM will review Service Agreements for compliance with Treasurer’s Instructions and Government procurement policies. Page 14 of 28 I2-A1 5.5 Variations to Service Agreements for Contracted Services Any variations to Service Agreements for contracted services must follow the appropriate procurement principles and processes. A variation is a legally binding agreement and, once executed becomes part of the Service Agreement. Variations can only be made in accordance with the SA Health Contract Variation Policy. 5.6 Approvals and Authorisations The PMU must ensure the appropriate budget allocation is approved prior to making any commitments with an NGO to provide contracted services. Treasurer’s Instruction 8 (TI8) requires that any commitment involving expenditure or potential expenditure must have the appropriate level of financial authorisation. All transactions, including entering into a Service Agreement, payments and disbursements must be appropriately approved in line with delegations of authority. While Service Agreements will require approval at the appropriate level of authority at the time of execution, PMUs should ensure approval will be forthcoming at an earlier stage in the planning cycle. This will assist in the management of expectations and minimise the risk of parties incurring expenditure in anticipation of future commitments. It will also ensure that approvals are obtained in a timely manner and that the specific program covered by the Service Agreement fits within the overall Health Response Strategy. 5.7 Contract Execution Contracts must be executed by the Minister (or delegate). For delegations of authority refer to the SA Health Governance and Delegations System. 5.8 Payments 5.8.1 Criteria for Grant Payments Payments for grants and contracted services must not be made until after an appropriate agreement has been executed by both parties. Table 1 defines the appropriate agreements to be used for grants and for contracted services. Grant payments and payments for contracted services must be appropriately authorised using PCMS and made to NGOs, according to the conditions set out in the agreement. 5.8.2 Grant Payments The following additional requirements for grant payments must be met: > Grant payments must be recorded within PCMS for all SA Health entities to allow the information to be reported to the ATO, > For any individual grant payment greater than $100,000, Taxation services must be notified, and > For further information please contact Taxation Services: Page 15 of 28 I2-A1 email HealthTaxHelpdesk@sa.gov.au , or phone 8463 6776. All payments for contracted services are made in arears unless the requirements of TI11 are met. 5.9 Risk Management The SA Health Risk Management Framework provides a structured and transparent approach to managing risk and assists SA Health to meet statutory obligations to take precautions against risk. The Risk Management Framework outlines: > Risk management processes, including processes for communication of risks, > Processes for identifying, monitoring, controlling and reporting risks, > Parameters used when evaluating and classifying risks, > Roles and responsibilities of those responsible for identifying, monitoring, controlling and reporting risks, and > Processes for escalation when risks are unable to be mitigated to the level defined in the framework. For extreme, high and moderate risk contracts, PMUs must ensure a risk management approach is documented in a Risk Management Plan for a program’s contracted services to maximise benefits achieved by the successful delivery of outcomes while reducing the probability and/or consequences of risks associated with funded programs. The identification and assessment of key risks is the responsibility of PMUs in collaboration with individual NGOs. A Risk Management Plan, subject to regular update, must include consideration of key risks to both SA Health and relevant NGOs to ensure the effectiveness of the contracted services program and must include: > Identification of key business and financial risks (including emerging risks), > Assessment of the significance and prioritising risks according to the SA Health Risk Assessment Matrix, > Identification of processes required to minimise extreme, high and medium risks to acceptable levels, and > Appropriate review and reporting of risks. Page 16 of 28 I2-A1 Risk management must focus on maximising the value for money of expenditure through minimising adverse impacts by identifying and treating potential risks. The Risk Management Plan must be supported by performance management processes and PMUs must focus on continuous and timely identification and treatment of emerging risks. 6 Performance Management Performance management is the process of monitoring the delivery of the requirements specified in the contract. SA Health is committed to providing to and receiving feedback from NGOs on the monitoring of performance against the deliverables stated in Service Agreements to develop increased capacity to manage and evaluate performance in both parties. PMUs must ensure Service Agreements contain performance requirements/deliverables that are clear, meaningful and measurable. All NGOs that undertake contracted service activities for SA Health will take part in formal performance monitoring and evaluation managed by PMUs. However, the type of monitoring and evaluation will vary in accordance with the value, complexity, risk and type of service being provided. See Appendix B. Tiered Approach to Performance Management. Performance monitoring will support decisions that SA Health will make about continuing to provide funding to individual NGOs. PMUs will ensure that SA Health staff managing performance and evaluation of Service Agreements receive appropriate training, especially in developing and sustaining constructive relationships with NGOs and managing non-performance. Consistent practices regarding management of non-performance will be applied by all SA Health PMUs. NGOs must provide financial acquittals as specified in Service Agreements. PMUs are responsible for authorising payments to NGOs in accordance with the terms of the Service Agreement. PMUs will provide feedback to NGOs about the status of outcomes and ensure that performance issues are identified and communicated early. This will be a formal process and SA Health and the NGO will agree on the next steps. NGOs will be provided with documentation regarding any non-performance issues and participate in the development of a Performance Improvement Plan as required. A Performance Improvement Plan will include the nature of the issue/concern, strategies to address it, a timeframe for it to be addressed and the process for monitoring the required improvement. Disputes that arise in the implementation of performance monitoring will be dealt with using Page 17 of 28 I2-A1 the dispute-resolution process set out in the terms and conditions of contracts. Terms and conditions in relevant contracts will guide performance management. If significant performance issues are detected in a NGO’s governance, financial management, program outcomes or accountability processes and procedures, and are unable to be resolved then SA Health may decide to terminate a Service Agreement pursuant to the relevant clauses contained in the terms and conditions of the contract. Principles of performance management for NGO agreements include: > Transparency – clear agreed performance targets and responses to performance issues, > Proportionality – responses to performance issues are proportionate to the issue being addressed, > Accountability – clear roles and responsibilities for delivering services to agreed standards, supporting and implementing performance improvement, > Responsiveness- performance issues are identified early and responses are timely, and > Collaboration- working with all stakeholders to achieve shared outcomes. Service Agreements, for both grants and contracted services must be assessed against the SA Health Risk Assessment Matrix (refer SA Health Risk Management Framework). The level of risk will determine the level of performance management required. The level of risk may be identified before, during or after the procurement process or the establishment of the Service Agreement. Appendix B (Tiered Approach to Performance Management) outlines the minimum requirements for the performance management of Service Agreements that have a level of risk identified as low, moderate, high or extreme. Additional requirements may be included in service agreements. 7 Roles and Responsibilities 7.1 Program Management Units SA Health employees in PMUs are responsible for: > Implementation of the funding and planning cycle requirements as outlined in section 4, > Preparing and managing Service Agreements, > Identifying and managing risks relating to NGOs delivery of outcomes, Page 18 of 28 I2-A1 > Providing timely support for NGOs by communicating requirements and providing advice as necessary, > Managing Service Agreements through PCMS, > Managing the performance of all agreements, and > Creating and maintaining files in the official records management system. 7.2 Procurement and Supply Chain Management Procurement and Supply Chain Management is responsible for: > Setting the SA Health procurement policy position and compliance with legislative requirements, > Liaising with stakeholders and leading the tender process and tender evaluations for complex, high value and sensitive contracted service procurements with the NGO sector, > Custody of the Procurement Contract Management System including: > training, > reports, > maintenance, and > accessibility. > Providing timely and accurate advice about: > procurement processes, > procurement documentation, > legal requirements, and > Master and Service Agreements. 7.3 NGO Contract Management NGO Contract Management is responsible for all matters relating to grants including: > Setting the SA Health grants policy position and compliance with legislative requirements, > Liaising with stakeholders and leading the grants process with the NGO sector, Page 19 of 28 I2-A1 > Providing timely and accurate advice about: > grant processes, > grant documentation, > legal requirements, and > Master and Service Agreements and Letters of Offer of a Grant. 8 Records Management SA Health must ensure comprehensive records are kept, of all information pertaining to funding provided to NGOs in order to meet operational needs, accountability requirements and community expectations. The Australian Standard for records management, AS ISO 15489 describes records management as ‘information created, received and maintained as evidence and information by an agency or person, in pursuance of legal obligations or in the transaction of business.’ PMUs are responsible for the creation and maintenance of files in the SA Health official records management system for all information relating to the contracted services programs, delivery of outcomes and performance monitoring and evaluation. Files must be created for each Service Agreement for contracted services and it must be maintained on an ongoing basis so that, at any point in time, it is an accurate and complete record providing documentary evidence of all activities and decisions. Certain documents must be included on a file, such as those that include information about decisions that are made, responses to decisions, requests made or received, evidence of actions or compliance with legislation or standards, instructions, correspondence, events that happen, and those that contribute to knowledge about matters related to Service Agreements. Common types of documents include, but are not limited to, plans, minutes of meetings, letters, emails, facsimiles, policies, contracts, reports, procedures, spread sheets, presentations and evaluations etc. Copies of the following documents, as required under policies and Service Agreements, must be retained in the file: > File notes and emails that document any contact with NGOs relating to contract management, > Audited financial statements, > Insurance certificates current at the time of the tender, > Service Agreements, > Assessments/Evaluations of the status of outcomes/KPIs/deliverables, Page 20 of 28 I2-A1 > Performance Management Plans (if applicable), > Risk Management Plans (if applicable), > Performance Improvement Plans (if applicable), > Decisions to continue/terminate agreements, and > Financial acquittals and any assessments thereof. PMUs are also responsible for ensuring that files are only accessible to appropriate persons and that access and custody of files is managed through the official records management system. Further advice regarding records management can be sought from the SA Health Records Management Unit. Even though information relating to all aspects of Service Agreements is recorded in the official SA Health records management system, PMUs are also responsible for managing contracts and Service Agreements through the Procurement Contract Management System (PCMS) as outlined in the Directive: SA Health Procurement and Contract Management System Policy. This directive mandates the use of PCMS across SA Health. All documents associated with procurement processes (with a value greater than $22,000) and all forms of grants and agreements/contracts regardless of value, must be electronically stored in PCMS. 9 SA Health NGO Liaison Group The SA Health NGO Liaison Group membership is drawn from Procurement and Supply Chain Management and business units across SA Health managing grants and service agreements with NGOs. The NGO Liaison Group will support this framework as reflected in formal Terms of Reference. 10 Definitions Contracted Services means the services to be provided by a Non-Government Organisation under a Service Agreement with the Minister (or delegate) or LHN. Grant is money provided by government, including subsidies, to a NGO to fund or assist with the funding of a program or project. Non-Government Organisation (NGO) is a legally constituted entity that operates independently of government, including not for profit organisations and private organisations. Framework is the SA Health Framework for the Management of SA Health Grants and Service Agreements with Non-Government Organisations as set out in this policy directive. Program Management Unit is an administrative division, branch, agency or business unit of SA Health with responsibility for the implementation of a Health Response Page 21 of 28 I2-A1 Strategy that will involve the provision of funds to Non-Government Organisations. Health Response Strategy is any formally endorsed initiative to be introduced in order to achieve government health policy objectives in response to an identified health need in South Australia. A Health Response Strategy will often comprise a multi-faceted approach to the identified health need, consisting of a complementary range of programs or services that are, in themselves, sub-strategies. Identified Health Need is a health service deficit that is identified in relation to a particular health agenda, population group or program. Master Agreement is an umbrella agreement between the Minister for Health, or the Minister for Ageing or the Minister for Mental Health and Substance Abuse, a Local Health Network (LHN), or SA Ambulance Service (SAAS) and a NGO whereby the parties have agreed the terms and conditions which must be agreed and in place before an agreement is entered into. When asked to provide services, an NGO will be asked to sign a Master Agreement and a specific Service Agreement. Only one Master Agreement is signed between each of the Minister, LHN or SAAS for each NGO. The Master Agreement does not oblige the Minister, LHN or SAAS to engage the NGO to provide any services. NGO Contract Management is the business unit within System Performance and Service Delivery, Department for Health and Ageing Minister is the Minister for Health, or the Minister for Mental Health and Substance Abuse or the Minister for Ageing. PCMS (Procurement and Contract Management System) is the central database, administered by PSCM and mandated for use across SA Health for the management of all procurement processes with a value greater than $22,000 and to record all grants and agreements/contracts, regardless of value. Performance Improvement Plan for the management of improving the delivery of outcomes agreed in Service Agreements. This includes any document that notifies the service provider of the need to improve performance, for example, a letter, email or formal plan. PSCM (Procurement and Supply Chain Management), PSCM is the centralised SA Health unit providing procurement, contracting, contract management, supply chain management and fleet management services/advice within SA Health. SA Health is used for the entities this policy directive applies to being those organisations within the public health system including the: > Department for Health and Ageing on behalf of the Minister for Health / Minister for Ageing /Minister for Mental Health and Substance Abuse. > Central Adelaide Local Health Network Inc. > Southern Adelaide Local Health Network Inc. > Northern Adelaide Local Health Network Inc. Page 22 of 28 I2-A1 > Country Health SA Local Health Network Inc. > Women’s and Children’s Health Network Inc. > SA Ambulance Service Inc.SAHCP (South Australia’s Health Care Plan 2007-2016) is the ten year plan that was released in 2007 as the first step towards reforming SA’s public health care system. SASP (South Australia’s Strategic Plan) is a comprehensive document outlining targets that Government, community and business can work towards. Service Agreement is a legally binding agreement between SA Health and a NGO signed by the appropriately authorised persons, whereby the NGO agrees to undertake or perform a specific service. 11 Related Documents and Resources Stronger Together: an agreement between the State Government of South Australia and the Health and Community Services Sector (2009) [Adelaide]: Government of South Australia and South Australian Council of Social Service SA Health Framework for Active Partnership with Consumers and the Community SA Health Guide for Engaging with Consumers and the Community State Procurement Board Contract Management Guideline SA Health Risk Management Framework SA Health Risk Management Policy Directive: SA Health Procurement and Contract Management System Policy Australian Accounting Standards Board (2011) Accounting for Government Grants and Disclosure of Government Assistance (AASB 120) Office of Australian Accounting Standards Board, Melbourne Delivering Transforming Health - Our Next Steps Department of Treasury and Finance (2014) Tre asurer’s I nstructio n 8 F in ancia l Authorisations. Government of South Australia, Adelaide.Department of Treasury and Finance (2013) Tre asurer’s I nstructio n 1 5 Grant F un din g Government of South Australia, Adelaide. Department of the Premier and Cabinet [2011] So uth Australia ’ Strate gic Pla n . Government of South Australia, Adelaide. Financial Management and Accountability Act 1997 (Australia)Page 23 of 28 I2-A1 SA Health Strategic Plan (2008-2010) - Extended to June 2014 Sout h Australia ’s Hea lth Ca re Plan 200 7 -2016 State Procurement Act 2004. Page 24 of 28 I2-A1 Appendix A DEPARTMENT FOR HEALTH AND AGEING TEMPLATE STRATEGY IMPLEMENTATION PLAN for HEALTH SERVICES to be delivered by NON-GOVERNMENT ORGANISATIONS This template is intended to act as a guide in the preparation of Strategy Implementation Plans for the provision of health services to be funded by the Department for Health and Ageing and provided by non-Government organisations. Name of Program Management Unit: ……………………………………………. Name of Strategy Detailed in this Plan: ……………………………………………. 1. Overall Planning Context This section will identify the area(s) of South Australia’s Strategic Plan for which the Program Management Unit has responsibility, in relation to this Health Response Strategy, eg: Objective 2, Improving Wellbeing, Target T2.7 Psychological wellbeing: equal or lower than the Australian average for psychological distress by 2014 – or alternative example. 2. Identified Health Need This section will detail the Identified Health Need and the objective(s) of the Health Response Strategy in the context of South Australia’s Strategic Plan, eg: Example of Identified Health Need and objective(s) of Health Response Strategy relating to T2.7 - or alternative example. 3. Relevant Published Reports This section will identify any relevant published report or other investigation, - eg: the Social Inclusion Board’s report “Stepping Up” - and its particular relevance, eg: the recommendations being implemented through this Health Response Strategy. 4. Health Response Strategy This section will describe the Health Response Strategy to be undertaken in order to respond to the Identified Health Need. Example This section should include: Page 25 of 28 I2-A1 > timeframes > client group > geographic area to be served > the service model and a description of the services, with sufficient information to enable the later development of a detailed service specification which can be incorporated into a contract for the provision of the service(s) > intended outcomes and outputs (eg: number of clients to be served) > data requirements and any key performance indicators or targets > any special requirements (e.g.compliance with service standards)5. Funding This section will identify the level of funding available to implement the Health Response Strategy to the sub-strategy level of detail where this is known.6. Role of Non-Government Sector This section will describe the nature and extent of the proposed role of non- Government service providers in delivering the services, including their existing role in delivering like or complementary services if applicable.This section will document the consultation undertaken with the non-Government sector and other interested parties. Any issues of contention identified in the consultation process will be documented together with the means by which they were resolved or reduced. Any outstanding issues will also be acknowledged, together with the rationale for the position adopted by the Program Management Unit with respect to them in proceeding with the Health Response Strategy.7. Selection Process This section will identify the process that will be used to select non-Government service providers (e.g. Expression of Interest, Selective Tender) and the rationale for this.8. Form of Contract This section will identify the form of contract that will be used to formally engage non-Government service providers. A template of the contract will form an attachment to this Plan.9. Performance Management This section will identify the means by which the performance of non-Government service providers will be managed, i.e. the generic reporting requirements. Additional reporting requirements may be included in a particular contract with a non-Government service provider but these would not be identified in this Plan.10. Performance Evaluation – Service Provider This section will identify the means by which the efficiency and effectiveness of the services delivered by non-Government service providers will be evaluated, which may include Key Performance Indicators. Again, this will identify generic indicators, rather than any that might relate specifically to a particular contract. The generic indicators may include a comparative cost-benefit analysis with like services delivered by Government service providers.Page 26 of 28 I2-A1 11. Evaluation – Health Response Strategy This section will identify the means by which the efficiency and effectiveness of services collectively delivered by non-Government service providers will be evaluated, where a number of non-Government service providers is to be engaged, perhaps providing a diverse range of services. Evaluations will, wherever possible, focus upon the achievement of outcomes rather than outputs. This will contribute significantly to evidence based planning, for example, what are the most effective strategies and services in seeking to address the issue of overweight and obese populations? Page 27 of 28 I2-A1 Appendix B Tiered Approach to Performance Management Performance Level of Risk Responsibility Monitoring Activity Extreme High Moderate Low Financial monitoring/ Quarterly and at the end Quarterly and at the end Six monthly, and at the end Annually, or if less than one PMU Acquittal of the service agreement of the service agreement of the service agreement or year, at the end of the service or grant period or grant period grant period agreement or grant period Activity/service Quarterly Quarterly Six monthly Annual PMU monitoring Performance Review Quarterly Quarterly Annual Annual PMU (may identify a Performance Improvement Plan is required) Page 27 of 28 Performance Level of Risk Responsibility Monitoring Activity Extreme High Moderate Low Performance Immediate (within 5 days of As required (within 10 As required (within 30 As required (within 45 days of PMU, Contract Improvement Plan an extreme risk performance days of a high risk days of a moderate risk a low risk performance issue Manager (including internal issue being identified and performance issue being performance issue being being identified or prior to the escalation provisions/ prior to the next payment) identified and prior to the identified or prior to the next payment) review of risk next payment) next payment) management plan) Dispute Resolution/Notice In accordance with In accordance with In accordance with In accordance with Agreement PMU, Contract of Breach/ Notice of Agreement terms and Agreement terms and Agreement terms and terms and conditions) Manager, PSCM Termination conditions conditions conditions Retrieval of Unexpended At the end of the service At the end of the service At the end of the service At the end of the service PMU Funds agreement/grant period. agreement/grant period. agreement/grant period. agreement/grant period. Page 28 of 28 32Cranwell, Denise (DPC)From: King, Jody (DHS) Sent: Wednesday, 6 March 2019 10:44 AM To: Witthoeft, Aaron (OSAPC) Subject: RE: Follow up information https://dhs.sa.gov.au/services/community-services/results-based-accountability Jody King A/Manager, Procurement and Grants Finance and Business Services Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000 T: (08) 8124 4015 This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. From: King, Jody (DHS) Sent: Wednesday, 6 March 2019 10:37 AM To: Witthoeft, Aaron (OSAPC) Subject: RE: Follow up information Hi Aaron Current figures: 1. $375,291,541 (678 contracts – 98 not yet signed by organisation; we are waiting for them to be returned) 2. Spend on those contracts in 18/19 FY = $107,147,261Regards Jody Jody King A/Manager, Procurement and Grants Finance and Business Services Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000 T: (08) 8124 4015 This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Tuesday, 5 March 2019 2:14 PM To: King, Jody (DHS) <Jody.King@sa.gov.au> Subject: RE: Follow up information Hi Jody, 1 I’ve had a chat to the Chair of the Commission this morning and he would like to capture for the draft report: 1. Total value of contracts under management with NFPs (both procurements and grants); and 2. Spend on those contracts for FY18/19.Are you able to provide this to me by tomorrow please? In relation to 1. If the answer is “$374,952,844 across 582 contracts” as indicated below please advise. Happy to chat. Thanks. Aaron. From: King, Jody (DHS) Sent: Friday, 1 March 2019 12:14 PM To: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Subject: RE: Follow up information Hi Aaron -Sorry just realised figures I received included grants – figures for NFP services are 389 contracts with whole of life cost $356,952,943 -I am reluctant for the programs to be named as the Minister is currently being briefed and I am conscience that she may want changes. It is unlikely, but I don’t want her to feel that we are making statements about programs she is considering -if I get anything back from the contract managers I will let you knowRegards Jody From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Friday, 1 March 2019 9:05 AM To: King, Jody (DHS) <Jody.King@sa.gov.au> Subject: RE: Follow up information Hi Jody, Thanks for coming back to me. Sorry to be a pest but just a couple of further clarifications on what you have indicated – please see me comments below…Thanks A From: King, Jody (DHS) Sent: Friday, 1 March 2019 8:35 AM To: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Subject: Follow up information Hi Aaron Following on from our conversation yesterday:  Report on # contracts and value – $374,952,844 across 582 contracts. This excludes the grants to councils and for-profit organisations (which we do have a few) please confirm total number of contracts under management by DHS with NFP as service provider and $ is whole of life cost.  SACOSS PIP – it would appear that it may be an isolated case (we cant be sure) but Uniting Communities have the contract for the DV anti-poverty, extreme weather response brokerage service and 5 of the 69 contracts for homelessness. It would be good to have further information from other homelessness providers 2 if they have faced the same PIP. This is actually a contract management issue and not a procurement issue. It would also be good if we could understand from SAHA why this was important for them to include as part of PIP. This follow up will take a bit of time and unfortunately wont be done by today. no worries – if you can feed back some better particulars I would be happy to include it, time permitting.  Closing times – we are developing two high value and/or complex tender around support services which will have 8 weeks and 7 weeks. This is because of the need to develop tailored model for service delivery and either provide wrap-around service or refer and support clients to access services from another provider. We do advise our business areas to have the tenders open as long as possible but for many reasons this doesn’t happen – can you specify the service type and/or name of the proposed tender/contract please, and roughly when they will go to market?  Accreditation – we could look at how we tailor response documents to ensure organisations who hold a recognised accreditation don’t have detail their organisational information (quality, OHS etc). however, they may have to still provide some specific information if it relates to high risk service to clients. If you need anything else please let me know Regards Jody Jody King A/Director, Procurement and Grants Finance and Business Services Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000 T: (08) 8124 4015 This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. 3 33Cranwell, Denise (DPC)From: Horstmann, Roger (DTF) Sent: Tuesday, 19 March 2019 4:10 PM To: Thomson, Frances (OSAPC) Cc: Sims, Jessica (DTF) Subject: RE: NFP funding services agreement treasury linkHi Frances As per page 10 of the Market Approaches Guideline: “Public authorities must use the Standard NFP Funded Services Agreement for all low to medium risk, non‐complex service procurements with the NFP sector where up‐front block funding is provided to NFP organisations. Where payment is based on price schedules and is paid in arrears, the Standard Goods and Services Agreement must be used.” This requirement will be reflected in the ongoing Assurance Program (however, it is noted that as the contract template was recently introduced, it will have limited application given the review covers the previous two years’ transactions). Regards Roger Horstmann Manager, Procurement Policy & Governance Policy, Standards & Governance | Government Services Westpac House, Level 7, 91 King William Street ADELAIDE SA 5000 t 822 65748 | e roger.horstmann@sa.gov.au | w spb.sa.gov.au Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. From: Thomson, Frances (OSAPC) Sent: Tuesday, 19 March 2019 10:54 AM To: Sims, Jessica (DTF) <Jessica.Sims@sa.gov.au> Cc: Horstmann, Roger (DTF) <Roger.Horstmann@sa.gov.au> Subject: FW: NFP funding services agreement treasury link Hi Jess Thanks for looking into this. Can you please ensure that a written response (email is fine) is provided on this? As discussed, it is important that we ensure the Commissions’ draft report accurately reflects the facts – whether or not we can state that the use of the NFP funding agreement is ‘mandated’ or not. If it is mandated (as per the DTF website and supported by Cabinet decision?) then is it just a matter of updating the Board’s documents (user guide, Assurance Document 1)? If it is not mandated, then please indicate if so and why not (particularly as the goods and services funding agreement is mandated for use)? Thanks again Frances 1From: Thomson, Frances (OSAPC) Sent: Tuesday, 19 March 2019 10:11 AM To: Giannopoulos, Stefania (DTF) <Stefania.Giannopoulos@sa.gov.au> Subject: NFP funding services agreement treasury link Hi Stef As discussed – here is the link to the website that states that as of 1 Jan 2019 the standard funding services agreement for NFP must be used (where up front payment required). But the Board’s website – user guide – plus Assurance document 1 does not indicate that it is mandated to use this agreement (unlike the other funding services agreement for goods and services). If you could please find out for us asap that would be great – want to make sure that we use the right terminology in the interim report which we will be publishing in next few days (as to whether it is a ‘must’ requirement or is ‘suitable’ for use). Thanks! Frances Frances Thomson T: 08 8226 7134 Principal Inquiry Economist W: www.sapc.sa.gov.au frances.thomson@sa.gov.au Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. 2 34Cranwell, Denise (DPC)From: Witthoeft, Aaron (OSAPC) Sent: Tuesday, 2 April 2019 11:21 AM To: Evans, Peter (DCP) Subject: RE: Productivity Commission feedback - DCPHi Peter, I’ve had a chat with the inquiry team and we haven’t had any similar feedback from other agencies. From my perspective, on face value it may be a case of the policy having been designed to be flexible and accommodate administrative efficiency, but that same policy is being construed less broadly and closer to the transparency/prescriptive end of the spectrum from a compliance perspective. I don’t have enough information to form a better view. It would be open to DCP to liaise with KPMG and the State Procurement Board to determine whether the Board is taking a narrower construction of the policy through the KPMG compliance activity, or whether this is KPMG’s perspective. This issue is of interest to the Commission and we will consider it further. Thanks for raising it with me. Happy to chat. Thanks. Aaron. From: Evans, Peter (DCP) Sent: Friday, 22 March 2019 3:42 PM To: Witthoeft, Aaron (OSAPC) Subject: FW: Productivity Commission feedback Importance: High Hi Aaron I hope you are well and you were able to complete your draft report in the required timelines – I will certainly be keen to have a look at it when it is available. I am passing on the email below from our DCP procurement manager to see if the matter she has raised with me was brought up by any other government agencies as part of your review. It relates to potential procurement red tape. It was not something identified in our submission as it only emerged in the discussions as part of the current audit but relates to a change in practice that was implemented from 1 January this year. Was just keen to understand if it was raised by any other Departments as an area that may impact on procurement efficiency with the sector? Happy to discuss further if required or have Elizabeth our procurement manager explain the detail. Kind Regards Peter Evans Project Manager Contract Management Reform 1 Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3297 6(1) Personal affairs e peter.evans3@sa.gov.au w www.childprotection.sa.gov.au From: Chmielewski, Elizabeth (DCP) <Elizabeth.Chmielewski2@sa.gov.au> Sent: Friday, 22 March 2019 12:45 PM To: Evans, Peter (DCP) <Peter.Evans3@sa.gov.au> Cc: Browne, Jennifer (DCP) <Jennifer.Browne2@sa.gov.au> Subject: Productivity Commission feedback Hi Peter In relation to the discussion between you, Jenny and I, I provide the following potential feedback to the productivity commission regarding the preliminary findings of KMPG in relation to the management of direct negotiation procurement. Let me know if you want anything else. Thanks Elizabeth DCP has recently commenced a procurement assurance review and process with KPMG, as required by the State Procurement Board on a tri‐annual basis. One of the preliminary findings of this process has been to highlight the absence of Purchase Recommendations where a Direct Negotiation / single source procurement methodology is followed, with particular focus being placed on low value ( The KPMG findings suggest that the State Procurement Board require a Purchase Recommendation to be prepared for all procurements, regardless of the strategy being undertaken. While DCP appreciates the theoretical benefit of this approach, in practice and for low‐value procurements, this represents a marked increase in red tape with little benefit. For agencies such as DCP, where a de‐centralised procurement model is utilised for low value procurement, it is often the case that business units will proactively seek the required number of quotes and then seek procurement advice around necessary approvals or that a specific solution is required to meet a particular need for which there does not exist a competitive market. In such instance, it is generally deemed to be acceptable that the sourcing of a competitive number of quotes through a transparent process which can demonstrate value for money can be captured within a consolidated Acquisition Plan and/or Simple Procurement Report. The addition of a Purchase Recommendation, where an active evaluation process has either already been undertaken (and captured within the Acquisition Plan) or where a sole quote is obtained would not, in DCP’s professional opinion, provide greater levels of value for money. It is further proposed that a streamlined process for low value acquisitions would increase compliance rates and allow procurements to be completed in a more responsive and agile manner. Kind Regards Elizabeth Chmielewski Manager Procurement and Contracting Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3587 6(1) Personal affairs e elizabeth.chmielewski2@sa.gov.au w www.childprotection.sa.gov.au 2This email may contain confidential information, which also may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message, please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. Please consider the environment before printing my email. 3 35Inquiry: Government Procurement – Stage 1 Supplementary Information Request (NFPs) Department of Human Services The purpose of this document is to facilitate the obtaining of further information from public authorities who contract with NFPs in support of the Final Report of the South Australian Productivity Commission’s Inquiry into Government Procurement. Most of the Information Requests in Chapter 6 of the Draft Report seek information from public authorities on a specific view or proposal. All of those Information Requests are included in this document for comment. The Information Requests in this document are intended to build on information previously provided, and/or obtain a greater level of detail on the issues where required. Public authorities are encouraged to respond to Draft Recommendations and other Information Requests in the Draft Report where possible. Public authority responses are requested to be provided to the Commission by no later than Friday 12th April. Given the short timeframes a member of the Commission will arrange to meet with representatives from public authorities to discuss proposed responses as soon as practicable. That opportunity can be used to obtain a preliminary response and prioritise Information Requests for written response. For additional information or clarification please contact Aaron Witthoeft on 8226 7107 or aaron.witthoeft@sa.gov.au. Page 1 FOUO I1-A2 Information Request Questions General comments on Draft Report 2.2.3 Risk averse agency procurement culture: DHS referred to the following passage: “Acquisition planning and Innovation: Business does not understand why intellectual property must be owned by the State. Further, they consider it an unjustified constraint on businesses” and the associated quotes from business. DHS indicated that it understands IP ownership issues were dealt with as part of the new revised Standard Goods and Services Agreement which provides: 13.1 Nothing in this Agreement affects the ownership of Intellectual Property Rights created before the Commencement Date. 13.2 The Supplier grants to the Government Party and the Crown in right of the State of South Australia a perpetual, irrevocable, royalty free, fee free licence to use, copy, modify and adapt any Intellectual Property Rights in any reports or manuals required to be supplied under this Agreement. 3.1.4.3 Governance within public authorities (Procurement Grant Committee Membership): DHS indicated that they have proactively been attempting to ensure that as a Tier 1 agency they have the requisite membership on their Procurement Governance Committee in line with the SPB Procurement Authority and Governance Policy. Notwithstanding DHS has sought commercial advisory and OIA representatives these attempts have not been supported by OIA. [see also email from Caroline Lock: 20190404 PGC requirements and efforts to comply.msg Information request 4.1: DHS indicated that the ICN and information held by the Industry Advocate has not been useful for DHS in terms of seeking an understanding of market capability in relation to the NFP and other niche market sectors from which they primarily procure. Information request 4.7: DHS indicated their internal corporate reporting arrangements in relation to procurement contracts provides regular updates to their executive leadership group. This provides the department with a picture of contract status [CL to provide additional detail]. ECT: DHS uses their ECT reporting to report to the OIA on their engagement of Aboriginal enterprises. Any lifting of the threshold that mandates an ECT would impact on the department’s ability to report on their use of Aboriginal enterprises – DHS noted their using ECT reporting in this way is creative and not the primary purpose of ECT reporting, but noted any change to threshold would have this effect. Origin of the 3+3+3 year NFP contract arrangement: Caroline indicated via email on 5 April 2019 that she understood the origin of the 3+3+3 arrangements was the Modern Public Service Policy (attached). building_a_stronger_ sa-a_modern_public_s Page 2 FOUO I1-A2 Draft Recommendation 6.1 In order to strengthen the capability and capacity of public authorities to engage with the NFP sector, public authorities establish a Community of Practice of Procurement Professionals to:  encourage and share model practices and processes; and  provide a single forum for consistent engagement with the NFP sector; and  support ongoing and continuous improvement." Agency comment: This wouldn’t be duplicating any existing arrangement. It should have an appropriate level of authority and would be most productive as an internal government group that would then liaise collectively with the NFP sector. Information Request 6.2 Public authorities are implementing policies and approaches to support co-design and collaboration with the NFP sector. The NFP sector say more can be done. To what extent have public authorities adopted co-design and collaboration in practice when procuring with NFPs? What are the current limitations to further collaboration with the NFP sector? Agency comment: Many of the recent reforms have an operative date of either December 2019 or January 2019 – to early to form a view about impact. Some areas of the public sector have been resistive to these changes. To co-design effectively two things are required: 1. Time, and 2. Public sector must retain accountability and ownership. For example, DHS has borrowed from a WA model in relation to a financial support service design – we worked through the design process with the NFP sector, but DHS retained some of the required reporting arrangements. Commented [WA(1]: Obtain example. DHS has also gone through feedback processes with NFPs around system design – the focus was on developing common principles shared by public and NFP sector that underpin DHS service-related decision-making. Commented [WA(2]: Obtain example. DHS is open to co-design but would like to hear more specifically form the NFP sector about “what” and “how”. Information Request 6.3 Having heard the NFP sector's views on the benefits of a system-wide approach, to what extent do current public authority procurement practices: (a) consider collateral impacts non-government providers across the system; and/or (b) have a systemic client-centric or sector-wide approach?" Agency comment: Nil comment. Information Request 6.4 In response to the NFP sector's view that tender response times are too short given the complexity of services sought, what is the experience of public authorities with extended market response times? What impediments or considerations are there to moving towards longer market response periods? Agency comment: Page 3 FOUO I1-A2 DHS acknowledge that business units are not as agile and responsive as they could be. Their preparatory work can go on which squeezes the amount of time they have to go to the market and reduces tendering timeframes. The budget cycle can also affect tendering process timeframes as there have been examples where services are funded for the first time through the budget process, but the agency doesn’t undertake any preparatory work as there is no certainty about funds being available until the budget is released. There is then an expectation that a service is put into place quickly, which impacts upon tendering timeframes. Commented [WA(3]: Obtain example. Information Request 6.5 To understand better the options for reducing cost and time burdens on NFPs, the Commission seeks more information on the experience of public authorities in improving quality of tenders and minimising tendering burdens on NFPs. Agency comment: DHS has accepted organisational accreditation from NFP organisations in relation to some LSA tenders, meaning those NFPs were not required to provide certain tendering documents. DHS adopted the same approach for STAY tenders. [Jody to provide examples]. DHS could consider removing the requirement for the RFP Part D(i) to be submitted if tendering organisations are Australian Service Excellence Standards accredited. In relation to the example UCSA provided to the Commission regarding the STAY tender (refer Case Study 6.1 p. 217 of the Inquiry Draft Report), DHS’ intention was to assist smaller NFPs who are not proficient at responding to weighted criteria by breaking up those criteria into simple, brief questions. The intention was to make it easier for organisations who are less proficient at tender responses to respond effectively. This approach was based on DHS’ previous experience having received responses from smaller organisations that did not effectively respond to the criteria. It may be possible to provide less and wider-ranging criteria as the Commission has proposed, but to provide a breakdown of each criteria as an appendix to an RFP. DHS has also found that being more specific in weighted criteria indicates to the market that the department knows what it’s looking for by way of the service being tendered for. DHS accepted that proportionality can be an issue – it is not necessarily correct to assess criteria based on the funding available. Changes in this regard could make the tendering process easier and simpler for all parties. Commented [WA(4]: Seek more detail here – what changes and how could it be simpler but maintain Information Request 6.6 transparency and integrity of the process. The Commission would like to hear more from stakeholders on the implications for procurement process having regard to the mandated NFP contract extensions and how the existing procurement thresholds may impact upon the types of procurement process required. The Commission is particularly interested in examples that concurrently balance risk management with moving towards longer NFP contracts to provide the sector with funding certainty. Agency comment: Nil comment. Information Request 6.7 Page 4 FOUO I1-A2 The Commission would like to understand the impact (i.e. how many contracts could potentially be affected) of the late payment interest regime in the event the current statutory exclusion of NFPs is remedied Agency comment: Nil comment. Information Request 6.8 The Commission seeks views about the proposal from the NFP sector that NFPs be permitted to retain unexpended funds for purposes that increase the future capability of NFPs to deliver services. Agency comment: It would be reasonable to approve retention of unexpended funds where the intended expenditure of those funds is aligned with the delivery of services or specific service improvements relating to the types of services that NFP is already providing for government. DHS doesn’t support retention of unexpended funds for reasons that do not align with service delivery or arrangements that support service delivery. DHS PGU has visibility of unexpended funds centrally and can provide advice on how funds could be reallocated having regard to other service priorities. Information Request 6.9 The Commission seeks data on the time elapsing between contract award and contract execution for NFP contracts to inform its understanding of contract negotiations and the potential to shorten those times. Agency comment: Nil comment. Information Request 6.10 The Commission notes the difference between acquittal reporting and performance reporting and seeks further advice from all parties about how acquittals for NFP contracts can be simplified and streamlined without compromising the public interest. Agency comment: DHS is moving to a process of “acquitting against budget”. Community Services Directorate is also adopting a risk-based approach and considering reporting on 6 or 12 month intervals having regard to thresholds and risk. Commented [WA(5]: Obtain more detail regarding processes to be adopted, and when may be given effect Information Request 6.11 to. Having regard to the recent introduction of the Standard Services Agreement and Standard Grant Agreements for use with the NFP sector, the Commission seeks further information from all parties about whether:  those new documents will resolve the issues raised by the NFP sector; and  there are further opportunities to improve flexibility and reduce disproportionate reporting arrangements, including through risk-based approaches and prequalification. Agency comment: Nil comment. Page 5 FOUO I1-A2 Information Request 6.12 To support an appropriate methodology for establishing business costs and overheads, the Commission seeks information on the methodologies or practices public authorities are relying on to establish these costs in NFP service contracts. Are there alternatives to support fair and reasonable funding of these costs? Agency comment: Community Services Directorate use a maximum overhead rate of between 18 – 22% applicable subject to where the service is being delivered as follows: 18% metropolitan services, 20% state-wide services, and 22% regional services. This methodology was developed in close consultation with Uniting Country SA who shared information with DHS regarding their overheads and running costs. Based on those actual costs further consultation was undertaken with other NFPs. Based on that information DHS developed the 18 – 22% rates. Commented [WA(6]: Obtain more detail about when this occurred, the extent of consultation and whether Information Request 6.13 this is intended to be reviewed on a regular basis. The Commission seeks further information from public authorities based on their experience in:  their current capability to negotiate contracts for complex NFP services, and opportunities to improve this capability; and  the extent to which their policy and program areas work jointly with their procurement and contract management functions in the design, execution and management of complex NFP services; noting that these elements compliment and underpin the implementation of the Standard Service Agreement and Standard Grant Agreements. Agency comment: Nil comment. Page 6 FOUO I1-A2 36Cranwell, Denise (DPC)From: Lock, Caroline (DHS) Sent: Wednesday, 3 April 2019 2:40 PM To: Witthoeft, Aaron (OSAPC) Cc: King, Jody (DHS) Subject: Multiple Documents - "Email received from OIA on 7/9/18 re: Removal of requirement for IPP representation on some APUs" (A21015650), "RE: Email received from OIA on 3/9/19 re:External representative for Department of Human Services Strategic Procuremen... Attachments: FW: Removal of requirement for IPP representation on some APUs [DLM=For- Official-Use-Only]; RE: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) [DLM=For-Official-Use-Only]Hi Aaron, Just a minor clarification/correction in relation to Section 3.1.4.3 Governance within public authorities; on page 82 the membership requirements for Tier 1 agencies are stated, which include at least one external commercial advisory representative and the Industry Participation Advocate or a delegate. DHS currently has no‐one filling these 2 positions on its Procurement Governance Committee. Corin McCarthy advised me via email on 7/9/18 that OIA representation is no longer required and Ian Nightingale advised me 3/9/18 that he was not in a position at that time to nominate a commercial representative due to ongoing conversations he was having with the Premier and Minister for Industry and Skills. We have heard nothing further since this time. I have attached the relevant emails. Kind Regards, Caroline Caroline Lock A/Director Procurement and Grants | Finance & Business Services Department of Human Services T: (08)812 44097 |6(1) Personal affairs |E: caroline.lock@sa.gov.au www.dhs.sa.gov.au This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. 1 37Cranwell, Denise (DPC)From: 9(1)(a)(i) Opinion or advice Sent: Friday, 7 September 2018 3:19 PM To: Scalzi, John (Education); Lock, Caroline (DHS); Andrews, Andrea (Health); Johinke, Stephen (SAPOL) Subject: FW: Removal of requirement for IPP representation on some APUs [DLM=For- Official-Use-Only]Security Classification: For Official Use OnlyFor Official Use Only Hi, just to let you know that I’ve asked Mike Roberts to commence removal of the mandate and to provide some advice on how I should do so. In the meantime, it is my view that you can rely on this for planning your APU membership. Thanks 9(1)(a)(i)From: 9(1)(a)(i) Sent: Friday, 7 September 2018 3:15 PM To: Roberts, Michael (DTF) <Michael.Roberts@sa.gov.au> Cc: Horstmann, Roger (DTF) <Roger.Horstmann@sa.gov.au> Subject: Removal of requirement for IPP representation on some APUs [DLM=For‐Official‐Use‐Only] For Official Use Only Hi Mike I am keen for IPP representation to cease on the following Accredited Purchasing Units:  SA Health  SAPOL  Department of Human Services  Department of EducationThis representation is not required to effectively apply and promote the Industry Participation Policy. Removal of this requirement will require amendments in State Procurement Board Authority and Governance Policy. Can you let me know what I need to do, for SPB to consider this request. Whilst the requirement was set by the last government in Cabinet, it seems, as a new government, the SPB could realistically remove it on advice from myself of the need no longer being required. However, I am of the view it should continue only for DPTI (primarily for construction) and DTF/DPC (for the strategic contracts). Kind regards 9(1)(a)(i)Department for Industry and Skills 6(1) Personal affairs 1 GPO Box 320 Adelaide, South Australia 5001 Level 4, 11 Waymouth Street, Adelaide, 5000 2 38Cranwell, Denise (DPC)From: Lock, Caroline (DHS) Sent: Monday, 3 September 2018 10:44 AM To: Nightingale, Ian (DIS) Cc: Mort, Fiona (DHS); Loftus, Denise (DIS) Subject: RE: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) [DLM=For-Official-Use-Only]Hi Ian, Thanks for the update. We will wait to hear more. Kind Regards, Caroline From: Nightingale, Ian (DIS) Sent: Monday, 3 September 2018 10:38 AM To: Lock, Caroline (DHS) <Caroline.Lock@sa.gov.au>; Loftus, Denise (DIS) <Denise.Loftus@sa.gov.au> Cc: Mort, Fiona (DHS) <Fiona.Mort@sa.gov.au> Subject: RE: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) [DLM=For‐Official‐Use‐Only] For Official Use Only Hi Caroline, I am reluctant to recommend someone else until I know the outcome of discussions I have had with the Premier and Minister Pisoni about some suggestions I have made about improvements to this initiative. I recently met with Jason Schell, the State’s Chief Procurement Officer, and they are looking at incorporating my thoughts into a broader range of procurement reforms. Regards Ian Ian Nightingale Industry Advocate T 8226 8956 E ian.nightingale@sa.gov.au W https://www.industryadvocate.sa.gov.au/ A Level 13, 99 Gawler Place, Adelaide, 5000 Want to stay Informed? Register here to be on our mailing list or follow us on: 1 DISCLAIMER: The information in this e-mail may be confidential and/or legally privileged. It is intended solely for the addressee. Access to this e-mail by anyone else is unauthorised. If you are not the intended recipient, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. If you have received this email in error, please delete it from your system and notify the sender immediately. OIA does not represent, warrant or guarantee that the integrity of this communication has been maintained or that the communication is free of errors, virus or interference.From: Lock, Caroline (DHS) Sent: Monday, 3 September 2018 10:18 AM To: Nightingale, Ian (DIS) <Ian.Nightingale@sa.gov.au>; Loftus, Denise (DIS) <Denise.Loftus@sa.gov.au> Cc: Mort, Fiona (DHS) <Fiona.Mort@sa.gov.au> Subject: FW: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) Good Morning Ian and Denise, Are you able to provide one or two nominations for the external representative position on the Department of Human Services Strategic Procurement and Grants Committee? Dean Littlefield left the Committee in May 2018 and DHS has not had an external representative since that time. The Committee meets weekly on Mondays at the Riverside Building on North Terrace. I have attached the information I provided in May about the types of procurement activity undertaken by DHS – I am happy to provide further information if required. Kind Regards, Caroline Caroline Lock A/Director Procurement | Finance & Business Services Department of Human Services T: (08)812 44097 |6(1) Personal affairs |E: caroline.lock@sa.gov.au www.dhs.sa.gov.au This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. From: Lock, Caroline (DHS) Sent: Thursday, 3 May 2018 3:02 PM To: Nightingale, Ian (DSD) <Ian.Nightingale@sa.gov.au>; Loftus, Denise (DSD) <Denise.Loftus@sa.gov.au> Cc: Wallace, Sue (DHS) <Sue.Wallace@sa.gov.au> Subject: FW: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) Hi Ian and Denise, 2 Just following up on my request for nominations for an external representative for DHS’s Strategic Procurement and Grants Committee. As Dean Littlefield’s term on the Committee is coming to an end, please can you nominate some candidates to replace Dean. Kind Regards, Caroline Caroline Lock A/Director Procurement Finance and Business Services Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000 T: (08) 8124 4097 6(1) Personal affairs This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. From: Chandler, Nari (DSD) Sent: Thursday, 12 April 2018 1:49 PM To: Lock, Caroline (DHS) <Caroline.Lock@sa.gov.au> Cc: Wallace, Sue (DHS) <Sue.Wallace@sa.gov.au>; King, Jody (DHS) <Jody.King@sa.gov.au>; Nightingale, Ian (DSD) <Ian.Nightingale@sa.gov.au>; Loftus, Denise (DSD) <Denise.Loftus@sa.gov.au> Subject: RE: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) Hi Caroline, The Industry Advocate is best placed to recommend a replacement for Dean. Ian/Denise are you able to please provide Caroline with some suggestions. Kind Regards Nari Nari Chandler Executive Director Public Projects and Participation Department for Industry and Skills 6(1) Personal affairs E nari.chandler@sa.gov.au From: Lock, Caroline (DHS) Sent: Thursday, 12 April 2018 1:18 PM To: Chandler, Nari (DSD) <Nari.Chandler@sa.gov.au> Cc: Wallace, Sue (DHS) <Sue.Wallace@sa.gov.au>; King, Jody (DHS) <Jody.King@sa.gov.au> Subject: External representative for Department of Human Services Strategic Procurement and Grants Committee (SPGC) 3Hi Nari Dean Littlefield’s tenure on DHS’s Strategic Procurement and Grants Committee is coming to an end. Please can you nominate a representative to replace Dean. The Committee meets weekly on Mondays from 11.30 to 12.30pm at the Riverside Building on North Terrace. Papers are issued the Wednesday prior to each meeting. If possible, the Committee would be keen to have a representative with Not for Profit sector / community services experience. Kind Regards, Caroline Caroline Lock A/Director Procurement Finance and Business Services Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000 T: (08) 8124 4097 6(1) Personal affairs This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. 4 39Inquiry: Government Procurement – Stage 1 Supplementary Information Request (NFPs) SA Health The purpose of this document is to facilitate the obtaining of further information from public authorities who contract with NFPs in support of the Final Report of the South Australian Productivity Commission’s Inquiry into Government Procurement. Most of the Information Requests in Chapter 6 of the Draft Report seek information from public authorities on a specific view or proposal. All of those Information Requests are included in this document for comment. The Information Requests in this document are intended to build on information previously provided, and/or obtain a greater level of detail on the issues where required. Public authorities are encouraged to respond to Draft Recommendations and other Information Requests in the Draft Report where possible. Public authority responses are requested to be provided to the Commission by no later than Friday 12th April. Given the short timeframes a member of the Commission will arrange to meet with representatives from public authorities to discuss proposed responses as soon as practicable. That opportunity can be used to obtain a preliminary response and prioritise Information Requests for written response. For additional information or clarification please contact Aaron Witthoeft on 8226 7107 or aaron.witthoeft@sa.gov.au. Page 1 FOUO I1-A2 Information Request Questions *Highlighted yellow comments indicate AW’s notes from T/A on 12 April 2019 @ 2pm. These questions were focused on as Aaron indicated they are priority areas from his perspective – Julie may still comment on all requests – Aaron requested written response by 17 April. Draft Recommendation 6.1 In order to strengthen the capability and capacity of public authorities to engage with the NFP sector, public authorities establish a Community of Practice of Procurement Professionals to:  encourage and share model practices and processes; and  provide a single forum for consistent engagement with the NFP sector; and  support ongoing and continuous improvement." Agency comment: Information Request 6.2 Public authorities are implementing policies and approaches to support co-design and collaboration with the NFP sector. The NFP sector say more can be done. To what extent have public authorities adopted co-design and collaboration in practice when procuring with NFPs? What are the current limitations to further collaboration with the NFP sector? Agency comment: For SAH is in its infancy – in conjunction with hospitals are doing proof of concept pilot with some NFPs in co-designing and developing innovative service models. Bigger NFPs are more advanced at codesigning than SAH is e.g. Calvary community care – doing some work with them – advanced nationally in codesign and we can learn from them. Are a number of NFPs good at doing this. Information Request 6.3 Having heard the NFP sector's views on the benefits of a system-wide approach, to what extent do current public authority procurement practices: (a) consider collateral impacts non-government providers across the system; and/or (b) have a systemic client-centric or sector-wide approach?" Agency comment: Information Request 6.4 In response to the NFP sector's view that tender response times are too short given the complexity of services sought, what is the experience of public authorities with extended market response times? What impediments or considerations are there to moving towards longer market response periods? Agency comment: Agree with the sector. Our challenge is to meet the requirements of ministers – election commitments, tight timeframes to meet these – we need time to 1. Work with NFPs on what we need to procure and develop a clear enough spec to go to market and 2. Give Page 2 FOUO I1-A2 them enough time to respond constructively. Also need to challenge our internal culture to be more open to the sector – historically the public sector has been very closed. Information Request 6.5 To understand better the options for reducing cost and time burdens on NFPs, the Commission seeks more information on the experience of public authorities in improving quality of tenders and minimising tendering burdens on NFPs. Agency comment: Information Request 6.6 The Commission would like to hear more from stakeholders on the implications for procurement process having regard to the mandated NFP contract extensions and how the existing procurement thresholds may impact upon the types of procurement process required. The Commission is particularly interested in examples that concurrently balance risk management with moving towards longer NFP contracts to provide the sector with funding certainty. Agency comment: Over 12 months ago to market for clinical community services (getting out of or preventing going into hospital) went out for pane and 3+3+3 – those services critical to assist with Eds – got some NFPs and for profits responding – cabinet approved proceeding – coming into contract negs CE wanted to step back and consider what wanting from sector over next 3 years – went back to shortlisted candidates – indicated CEs new views – changed contract to 1+1+3. Other example: currently neg ab health council doing 3+3+3 – also codesigning what they can deliver for us – our expectations. Information Request 6.7 The Commission would like to understand the impact (i.e. how many contracts could potentially be affected) of the late payment interest regime in the event the current statutory exclusion of NFPs is remedied Agency comment: SAH NFP payments actioned through PCMS – can only talk to dept procurement (not LHNs) – a large percentage receive quarterly in advance – leading up to next quarter we ensure have correct reporting from service providers, contract managers work with organisations if they don’t – once reporting is correct payments are made – PCMS triggers payments to be made (3 days of the week – quicker than basware). Information Request 6.8 The Commission seeks views about the proposal from the NFP sector that NFPs be permitted to retain unexpended funds for purposes that increase the future capability of NFPs to deliver services. Agency comment: Advantages and disadvantages – some orgs significantly underspent and we meet and monitor but nothing changes – needs principles around it. Some thresholds based on what they’re doing. Our old agreements (contracts) enable application to request unexpended funds – we rarely say no but sometimes negotiate what they want to do. Page 3 FOUO I1-A2 Moving towards fee for service models – done some of these contracts now – gives orgs an opportunity to think about their price – if they make savings could retain funds…? Information Request 6.9 The Commission seeks data on the time elapsing between contract award and contract execution for NFP contracts to inform its understanding of contract negotiations and the potential to shorten those times. Agency comment: Orgs level of sophistication has an impact – we can struggle in invitation to supply with T&Cs without further negs occurring… instead of asking them to indicate T&Cs diff to supply with – my experience we work with legal team on compromise. Information Request 6.10 The Commission notes the difference between acquittal reporting and performance reporting and seeks further advice from all parties about how acquittals for NFP contracts can be simplified and streamlined without compromising the public interest. Agency comment: Information Request 6.11 Having regard to the recent introduction of the Standard Services Agreement and Standard Grant Agreements for use with the NFP sector, the Commission seeks further information from all parties about whether:  those new documents will resolve the issues raised by the NFP sector; and  there are further opportunities to improve flexibility and reduce disproportionate reporting arrangements, including through risk-based approaches and prequalification. Agency comment: Information Request 6.12 To support an appropriate methodology for establishing business costs and overheads, the Commission seeks information on the methodologies or practices public authorities are relying on to establish these costs in NFP service contracts. Are there alternatives to support fair and reasonable funding of these costs? Agency comment: On average no more than 15% - but depends what purchasing. Information Request 6.13 The Commission seeks further information from public authorities based on their experience in:  their current capability to negotiate contracts for complex NFP services, and opportunities to improve this capability; and  the extent to which their policy and program areas work jointly with their procurement and contract management functions in the design, execution and management of complex NFP services; noting that these elements compliment and underpin the implementation of the Standard Service Agreement and Standard Grant Agreements. Page 4 FOUO I1-A2 40Cranwell, Denise (DPC)From: Lock, Caroline (DHS) Sent: Thursday, 11 April 2019 9:15 AM To: Witthoeft, Aaron (OSAPC) Cc: King, Jody (DHS) Subject: SAPC Information Request 7.3 Social Procurement Attachments: 18MHA_0261 Social Procurement Briefing alias#2.pdf; DHS Social Procurement Action Plan - January 2019 copy#2.docxHi Aaron, I don’t think Chapter 7 is your area but please can you pass this information about social procurement to the relevant SAPC officer. I have attached a recent briefing to the Minister for Human Services which gives an overview of social procurement in DHS. As a side note, the Don Dunstan Foundation project mentioned in the briefing is yet to kick off. I have also attached our current Social Procurement Action Plan. I can also provide acquisition plans/purchase recommendations for individual procurement processes where social procurement objectives were included in a significant way, eg linen and laundry services and we would be happy to talk about some of our current procurement processes where we are trying new ways of achieving social outcomes, eg groceries and cleaning services Whilst the Housing Trust was still part of DHS the Procurement and Grants Unit was influential in establishing some contracts for them with really good social outcomes (APY Lands Maintenance, Horticultural Maintenance, Call Centre Services). We can’t speak on behalf of the Housing Trust these days, but it would be worth speaking to them about these contracts and other social procurement initiatives they have implemented. Kind Regards, Caroline Caroline Lock A/Director Procurement | Finance & Business Services Department of Human Services T: (08)812 44097 |6(1) Personal affairs|E: caroline.lock@sa.gov.au www.dhs.sa.gov.au This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. 1 4142DHS Social Procurement Action Plan July 2018 – June 2019 Social Procurement Action Plan / 2018-2019 Social Procurement “Social procurement is when organisations use their buying power to generate social value above and beyond the value of goods, services, or construction procured.”1 Social procurement happens when the Department intentionally chooses to purchase a social outcome when engaging with suppliers or buying goods. The procurement process becomes a vehicle to address social or economic objectives, or to maximise local or regional community benefits. Social procurement is using an appropriate procurement opportunity to generate targeted employment/training (or other such benefits) for a specific population group, such as people with a disability, the long-term unemployed, indigenous, culturally and linguistically diverse groups, children and youth, public housing tenants, or a regional, rural or disadvantaged metropolitan area.2 These specific population groups are referred to herein as the ‘target group’. Social procurement can be direct or indirect: Direct social procurement includes procuring goods and/or services from not for profit organisations (NFPs), social enterprises, Aboriginal Business Enterprises (ABEs), and Australian Disability Enterprises (ADEs). Indirect social procurement includes taking actions such as inserting social clauses in contracts, assessing tenderers’ social procurement credentials via ECT/tender responses, requiring suppliers/service providers to report on outcomes via contract reporting mechanisms (including Industry Participation Plans). Please note: Procurement of Social Services (i.e. community welfare services) is not social procurement. Social procurement requires the addition of social benefits over and above the procurement of the goods services or works, irrespective of the end use.3 1The State of Victoria 2018, Victoria’s Social Procurement Framework, Victorian Government, Victoria. 2 Social Procurement Australasia (2018). Social Procurement: The Business Case. [online] Available at: http://socialprocurementaustralasia.com [Accessed 25 Jul. 2018]. 3 Ibid. Social Procurement Action Plan / 2018-2019 Our Vision Our vision is to make social procurement our normal way of doing procurement, so that social procurement becomes widely accepted by internal stakeholders and our suppliers as a normal part of doing business with the Department of Human Services (DHS). Every procurement managed by the DHS Procurement and Grants Unit (PGU) should be assessed for its potential to incorporate social outcomes using the Social Value Positioning Model. DHS is committed to improving employment outcomes for the target group, which will provide significant benefits to workplaces, the economy, the community and individuals themselves. Overview PGU is responsible for managing the procurement of goods and services over $110,000 (GST inclusive) and the distribution of all grant funding for all agencies within DHS. The DHS Strategic Procurement and Grants Committee (SPGC) has delegation from the Principal Officer to approve all procurement and grant processes above $550,000 (GST inclusive) up to $15 million (GST inclusive). Procurement delegation below $550,000 (GST inclusive) rests with Business Units. The aim of this action plan is to serve as a framework to:  increase social outcomes for South Australian communities through procurement;  provide a consistent approach to social procurement across DHS; and  provide practical guidance to PGU and Business Unit staff on social procurement. Social Procurement Action Plan / 2018-2019 Social Procurement Action Plan 2018/2019 Participation and Collaboration Improve opportunities for participation and collaboration for the target group, in partnership with Government, Community Sector and Community. Outcome:  Achieve target of 0.5% of DHS procurement spend to be with ABEs  Increase social outcomes for South Australian communities through procurement Action Deliverable Timeline Responsibility 1. Investigate and utilise the opportunity to  Procurement strategy to include engagement of an ABE Completed Karen Lang incorporate social outcomes into the upcoming to provide at least part of DHS cleaning requirements ‘Cleaning Services’ procurement process. 2. Analyse the opportunity to incorporate social  Work with successful grocery supplier to engage Housing 30/04/2019 Stephanie outcomes into the upcoming ‘Groceries’ Trust tenants identified through Housing SA’s Kostevsek procurement process. participation broker scheme in their business 3. Work with the current DHS mandated stationery  Meet with Winc to analyse opportunities to purchase from Completed Sarah Scott supplier (Winc) to analyse opportunities to ABEs and/or ADEs via online catalogue leverage off their supply chain to increase social  Trial cleaning products from ABE at AYTC 30/06/2019 outcomes.  Develop Business Case 30/06/2019  Implement either hard or soft substitution of ABE and/or 30/06/2019 ADEs products 4. Review DHS forward procurement plan (FPP) to  Build on work already previously undertaken by Housing 31/12/2019 Caroline Lock identify opportunities to incorporate social SA and review/update FPP outcomes into upcoming procurement processes; and to increase participation and collaboration with NFPs, ADEs ABEs and other social enterprises. 5. Liaise with other government agencies and  Meet with Obela Foods to share learnings on social Completed Caroline Lock private sector organisations to ‘idea share’ procurement and discuss various social procurement  Meet with Wesley Social Enterprises to discuss Completed initiatives. social enterprise sector and opportunities for providing services to DHS Version: 15/1/19 Social Procurement Action Plan 2018/2019  Meet with KIK Enterprises to discuss social 30/04/2019 enterprise sector and opportunities for providing services to DHS Promote Change Embed continuous improvement and innovation in our organisational culture. Outcome:  Provide a consistent approach to social procurement across DHS;  Provide practical guidance to PGU and Business Unit staff on social procurement; and  To provide practical guidance to PGU and Business Unit staff on social procurement. Action Deliverable Timeline Responsibility 6. Develop and implement an Engagement and  Meet with key Directors to discuss benefits of social Completed Caroline Lock/Jody Awareness Strategy with BUs, SPGC, ELT and procurement and prepare them for future social King suppliers including dispelling common procurement opportunities misconceptions.  Present Social Procurement Action Plan to SPGC and 30/04/2019 ELT  Briefing to Minister on social procurement Completed 7. Update acquisition planning & tender documents  Develop ‘model clauses’ and paragraphs that can be 30/04/2019 Karen Lang to incorporate social procurement. inserted into acquisition plans and tender documents  Develop a bank of questions to be included in Part D 8. Update Procurement Instructions to provide  Relevant sections of Procurement Instructions to include 30/05/2019 Jody King guidance on how to incorporate social information and guidance on how to incorporate social procurement into appropriate procurement procurement, with reference to ‘model clauses’ and processes paragraphs 9. Update intranet to provide information on social  Update intranet pages, “Procurement Framework Home”, 30/04/2019 Jody King / James procurement and guidance on how to “Procurement Processes”, “Below $33,000” and “Between Craddock incorporate it into procurement practices 33,000 and $110,000” Version: 15/1/19 Social Procurement Action Plan 2018/2019 10. Work with Dept. for Industry and Skills to  Develop template similar to Horticultural Maintenance so 30/04/2019 Jody King develop ECT/IPP template for DHS that social procurement outcomes can be considered as procurements that records social procurement part of local employment outcomes commitments Governance and Reporting Action Deliverable Timeline Responsibility 11. Review and update Social Procurement  Table updated Guideline with SPGC and ELT 31/05/2019 Caroline Lock Guideline. 12. Develop reporting template to report to  No. of SAHA tenants 30/06/2019 Caroline Lock / SPGC/ELT on social procurement outcomes.  No. Aboriginal staff Jody King  No. of staff with disability 13. Report to OIA/SPGC on % of ABE spend.  NB Report to OIA not required until September 2019. In 30/06/2019 Caroline Lock / the meantime, report to SPGC James Craddock 14. Publish/ update FPP with info about social  Publish updated FPP on SA Tenders & Contracts, DHS 30/06/2019 Jody King / procurement objectives. website and intranet, and provide a copy to SPGC and Caroline Lock ELT for consideration. Version: 15/1/19 Key Stakeholders  DHS Procurement and Grants Unit Staff  DHS Business Units  Strategic Procurement and Grants Committee (SPGC)  SA Housing Authority  Office for Industry Advocate Related Documents  SPGC Terms of Reference  DHS Sustainable and Social Procurement Guideline  Office for Industry Advocate 2018/19 spend target of 0.5% with ABEs  SPB Sustainable Procurement Guideline  Social Traders Social Procurement Materials  Disability Access and Inclusion Act 2018 (SA)  Industry Participation Policy Contact Details Name: Caroline Lock Position: Director, Procurement Phone: (08) 8124 4097 / 0428 104 661 Email: Caroline.Lock@sa.gov.au Version: 15/1/19 43Cranwell, Denise (DPC)From: Lock, Caroline (DHS) Sent: Thursday, 11 April 2019 10:14 AM To: Witthoeft, Aaron (OSAPC) Cc: King, Jody (DHS) Subject: RE: Procurement Inquiry - "Legislated Funds"Hi Aaron, Both types of funding sources I mentioned that are provided for under legislation, arise out of the Gaming Machines Act 1992 (page 65): https://www.legislation.sa.gov.au/LZ/C/A/GAMING%20MACHINES%20ACT%201992/CURRENT/1992.49.AUTH.PDF Section 73B covers the Charitable and Social Welfare Fund which is a funding source for Grants SA and Section 73BA covers the Gamblers Rehabilitation Fund which is a funding source for the DHS Office for Problem Gambling’s Gambling Help Services. Let me know if you need further detail. Kind Regards, Caroline Caroline Lock A/Director Procurement and Grants | Finance & Business Services Department of Human Services T: (08)812 44097 |6(1) Personal affairs |E: caroline.lock@sa.gov.au www.dhs.sa.gov.au This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. From: Witthoeft, Aaron (OSAPC) Sent: Wednesday, 3 April 2019 12:20 PM To: Lock, Caroline (DHS) ; King, Jody (DHS) Subject: Procurement Inquiry ‐ "Legislated Funds" Hi Caroline and Jody, During our discussion this morning you mentioned that DHS provides funding to NFPs that is provided under legislation that specifies the type of expenditure those funds can be used for. Would you mind sending me a couple of brief dot points/references so I can look into this further? Will have an impact on the unexpended funds issue… Thanks. Aaron Witthoeft T: 08 8226 7107 Principal Inquiry Economist W: www.sapc.sa.gov.au aaron.witthoeft@sa.gov.au 1Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. 2 44Cranwell, Denise (DPC)From: Lock, Caroline (DHS) Sent: Thursday, 11 April 2019 11:01 AM To: Witthoeft, Aaron (OSAPC) Cc: King, Jody (DHS) Subject: Timely execution of Agreements with the NFP sector Attachments: Audit Report - Grants Management Review alias.pdfHi Aaron, When we met, you mentioned that it would be useful to have evidence that the issue of non‐timely execution or agreements with the NFP sector had been identified and that DHS has put in place measures to improve this over time. I mentioned that this had been an area of focus over the years for Internal Audit and AGD reviews. As evidence for DHS’s improvement in this area, I have attached the most recent Internal Audit report I can find that discusses this issue. It’s from late 2013. I can’t find any more recent audit reports that have highlighted non‐timely execution as an issue (even though we have been audited at least annually by Internal Audit and AGD) so I believe this is no longer a significant issue in DHS. If you would like any pre‐2013 audit reports, please let me know. Kind Regards, Caroline Caroline Lock A/Director Procurement | Finance & Business Services Department of Human Services T: (08)812 44097 |6(1) Personal affairs |E: caroline.lock@sa.gov.au www.dhs.sa.gov.au This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. 1 4546Cranwell, Denise (DPC)From: Evans, Peter (DCP) Sent: Monday, 15 April 2019 8:50 AM To: Witthoeft, Aaron (OSAPC) Cc: Comeadow, Kristal (DCP); Browne, Jennifer (DCP) Subject: RE: Government procurement inquiry - SAPC supplementary information request (NFPs) Attachments: SAPC NFP Agency Information Request - DCP Final.pdfImportance: HighHi Aaron Please find attached our response to the request for supplementary information for the SAPC Government procurement inquiry. The attached response has been endorsed by the DCP Chief Executive. Please do not hesitate to contact Kristal or myself if you have any questions about the response Kind Regards Peter Evans Project Manager Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3297 6(1) Personal affairs e peter.evans3@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) Sent: Friday, 12 April 2019 3:57 PM To: Evans, Peter (DCP) ; Comeadow, Kristal (DCP) Subject: RE: Government procurement inquiry ‐ SAPC supplementary information request (NFPs) No worries Peter, thanks for the update. Have a good weekend. Aaron. From: Evans, Peter (DCP) Sent: Friday, 12 April 2019 3:31 PM To: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au>; Comeadow, Kristal (DCP) <Kristal.Comeadow2@sa.gov.au> Subject: RE: Government procurement inquiry ‐ SAPC supplementary information request (NFPs) Hi Aaron Just wanted to let you know we have completed a response to the supplementary information request. 1 Unfortunately 6(1) Personal affairs so I am trying to reach out to her via email and text to see if I can get her approval to release the document to you – she has seen a near final draft. If I can’t get to her today it will be with you at worst on Monday. I will keep trying but wanted to contact you to let you know what was happening. Kind Regards Peter Evans Project Manager Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3297 6(1) Personal affairs e peter.evans3@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Tuesday, 2 April 2019 10:21 AM To: Comeadow, Kristal (DCP) <Kristal.Comeadow2@sa.gov.au>; Evans, Peter (DCP) <Peter.Evans3@sa.gov.au> Subject: Government procurement inquiry ‐ SAPC supplementary information request (NFPs) Hi Kristal, Thanks for the chat this morning regarding the Commission’s draft report. I would also like to specifically thank you, Pete and the team for your participation in the Commission’s inquiry into government procurement to date. As discussed, the released its Draft Report on 26 March 2019. Chapter 6 of the Draft Report is dedicated to procurement and grant issues involving the NFP sector. You can find the Draft Report and other information regarding the inquiry here: https://www.sapc.sa.gov.au/inquiries/inquiries/government-procurement-inquiry-stage-1/draft-report. Most of the information requirements in relation to chapter 6 (NFPs) seek specific feedback from public authorities on a proposal or an issue about contracting or providing grants to NFPs. We would be most grateful if you could please consider the attached request and then contact me to make a time during which we can walk through the document to capture preliminary responses and discuss the prioritisation of any written response from your agency. If you could please indicate a time to discuss no later than Thursday 4 April at 3pm I would be most grateful. I look forward to further discussion. Aaron Witthoeft T: 08 8226 7107 Principal Inquiry Economist W: www.sapc.sa.gov.au aaron.witthoeft@sa.gov.au Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. 2 47Inquiry: Government Procurement – Stage 1 Supplementary Information Request (NFPs) The purpose of this document is to facilitate the obtaining of further information from public authorities who contract with NFPs in support of the Final Report of the South Australian Productivity Commission’s Inquiry into Government Procurement. Most of the Information Requests in Chapter 6 of the Draft Report seek information from public authorities on a specific view or proposal. All of those Information Requests are included in this document for comment. The Information Requests in this document are intended to build on information previously provided, and/or obtain a greater level of detail on the issues where required. Public authorities are encouraged to respond to Draft Recommendations and other Information Requests in the Draft Report where possible. Public authority responses are requested to be provided to the Commission by no later than Friday 12th April. Given the short timeframes a member of the Commission will arrange to meet with representatives from public authorities to discuss proposed responses as soon as practicable. That opportunity can be used to obtain a preliminary response and prioritise Information Requests for written response. For additional information or clarification please contact Aaron Witthoeft on 8226 7107 or aaron.witthoeft@sa.gov.au. Page 1 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Information Request Questions Draft Recommendation 6.1 (page 227) In order to strengthen the capability and capacity of public authorities to engage with the NFP sector, public authorities establish a Community of Practice of Procurement Professionals to:  encourage and share model practices and processes; and  provide a single forum for consistent engagement with the NFP sector; and  support ongoing and continuous improvement." Agency comment: A Community of Practice of Procurement Professionals would provide the opportunity to bring uniformity, leverage opportunities and successes of other government agencies, and implement consolidated and streamlined approaches to the Not for Profit (NFP) sector. A formal forum of this nature would require resources to manage, coordinate and ensure ongoing effectiveness of: - Terms of Reference and Governance structures that support shared learnings with other government agencies, whole of sector approach for consultation, validation, negotiation and practice implementation - Ownership by a single Government Agency with the capacity to coordinate and host such activities - Change and engagement platforms, mechanisms and strategies to share learnings, standardise practices, seek feedback and communicate to the Not for Profit sector Information Request 6.2 (page 212) Public authorities are implementing policies and approaches to support co-design and collaboration with the NFP sector. The NFP sector say more can be done. To what extent have public authorities adopted co-design and collaboration in practice when procuring with NFPs? What are the current limitations to further collaboration with the NFP sector? Agency comment: Extract from draft report: DCP stated that it is taking steps to improve meeting the needs of children and young people through collaboration, co-design and capability development in the child protection sector, including: - Reviewing service models as part of the 2019/2020 Procurement Program; - Strengthening or improving co-design opportunities and sector engagement; and - Reviewing and analysing demographic data of children in care to identify current and future service needs DCP gave an example of how it is reflecting consumer involvement in their services. The department recognises Aboriginal Community Controlled Organisations (ACCO) are often best placed to provide Aboriginal services to Aboriginal people. DCP has introduced a competitive dialogue model (as opposed to traditional tender), selective tendering for Aboriginal services, commitment to exceeding government Aboriginal spend targets and raising awareness of existing Aboriginal economic participation through procurement. Page 2 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Addition in response to information request: To ensure probity and compliance, government agencies are limited in terms of the amount of co-design that can occur during the procurement process. The below graphic highlights the three key stages of contracted service delivery and the relationships that can realistically occur within each phase based on legislative requirement and contractual obligations. Across the 3 phases, the roles and relationships of the service provider and DCP will alter to reflect the activities and mandated requirements applicable. Starting from a co-design partner relationship within the commissioning stage of developing service models, and then shifting to a buyer / customer relationship when the department commences the procurement of those required services and executes a contracted arrangement for service delivery. There is not a universal understanding across the sector as to when stakeholders shift roles throughout the phases of commissioning, procurement and contract management. This may result in a disconnect in the traditional supplier and customer (buyer) relationship being realised after the contract has been executed and service delivery quality is being monitored against agreed contractual agreement performance indicators, terms and conditions; and/or unrealistic expectations of co-design opportunities being made available within the procurement process, that are limited in order to ensure compliance with probity requirements. The establishment of cross government commissioning and co-design models for human services would significantly improve the capability of government agencies to partner more effectively with NFPs, and clarify roles and responsibilities of all parties throughout the 3 phases described above. Page 3 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Information Request 6.3 Having heard the NFP sector's views on the benefits of a system-wide approach, to what extent do current public authority procurement practices: (a) consider collateral impacts non-government providers across the system; and/or (b) have a systemic client-centric or sector-wide approach?" Agency comment: Extract from draft report: DCP advised the Commission it is increasing its engagement with NFPs that can offer services in support of child protection. Its 2019-20 procurement program will improve the use of technology and engagement mechanisms to communicate upcoming tenders, support information sharing and encourage feedback. DCP indicated it can now undertake tender briefings by web conference, supporting improved access to information. Further, DCP’s inaugural industry day on 24 September 2018 engaged current and potential future service providers on its extensive reforms, including procurement and contract management, highlighting its level of sector engagement and support-specific resources Addition in response to information request: Child protection services are specialised and specific services that require a client-centric approach to ensure safe quality care that best meets the needs of children and young people under guardianship of the Chief Executive, and as such are governed by their own legislation, The Children and Young People (Safety) Act 2017. Where possible, DCP works to collaborate with other government agencies where intersection of human services exist. DCP also works on ensuring that cross government practices and requirements, such as the NFP Funding Policy are broken down and communicated to service providers in the context of child protection. For example to support the introduction of the standardised Not for Profit (NFP) Funded agreement template, DCP held a sector briefing on Thursday 21 March 2019 to present information on transitioning to the NFP funded agreement. Information Request 6.4 In response to the NFP sector's view that tender response times are too short given the complexity of services sought, what is the experience of public authorities with extended market response times? What impediments or considerations are there to moving towards longer market response periods? Agency comment: Extract from draft report: DCP notes that although the department has not been active in the market in the last year, it has observed the 30-day minimum tender call period in line with the State Procurement Board International Obligations Policy. DCP also drew the Commission’s attention to a current tender (Agency Child and Youth Worker Temporary Staff Services) which demonstrates the department’s approach to extended tender process timeframes. Figure 6.1: Agency Child and Youth Worker Temporary Staff Services Tender Timeline Page 4 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Source: Tender briefing presented by DCP in 19 February 2019 via web conference; also available on the SA Tender and Contracts website, Tender Code DCP044802. Addition in response to information request: DCP is open to extending call periods for more complex tendering processes. The 2019/2020 Procurement Program is looking to realign strategic contract bundles of like services to allow for: - Targeted review and commissioning of models of care - Smoothing procurement workload to manageable volumes from current state where >80% of DCP contracts are due to expire in 2019. This approach will allow for more proactive procurement planning that can allow for increased lead times in: - Communicating DCP’s Forward Procurement Plan (inclusive of proposed tenders) - Scheduling pre tender and tender briefings - Tender call period - Providing co-design opportunities as part of commissioning service models before the tender process commences Information Request 6.5 To understand better the options for reducing cost and time burdens on NFPs, the Commission seeks more information on the experience of public authorities in improving quality of tenders and minimising tendering burdens on NFPs. Agency comment: Extract from draft report: CARA was also concerned about inconsistent process, noting that “there are inconsistent processes and formats for both procurement and acquittals across various government agencies for the same service types”. (CARA submission). There is some evidence of agencies responding to these concerns. DCP is taking a client-centric approach to their procurement reforms. Addition in response to information request: The Office of the Industry Advocate has proposed an initiative that would enable a proportion of tender response information to be pre-populated, reducing data requirements on the organisation submitting an offer via the SA Tenders and Contracts website. DCP is supportive of this approach, but believe that broader consultation needs to occur before conceptual design and implementation of a system can commence. The questions included in the tender are tailored on a project basis and try to focus on key questions aligned to evaluation criteria. DCP are open to feedback as to how the tender process can be improved, the SA Tenders and contracting website also offers a survey link that is Page 5 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive included as part of tender close processes. The survey seeks feedback on the participant’s experience of the tender, DCP utilise the feedback results in the planning of any future tender processes, however, DCP users generally have a low uptake of this survey feature. Information Request 6.6 The Commission would like to hear more from stakeholders on the implications for procurement process having regard to the mandated NFP contract extensions and how the existing procurement thresholds may impact upon the types of procurement process required. The Commission is particularly interested in examples that concurrently balance risk management with moving towards longer NFP contracts to provide the sector with funding certainty. Agency comment: Extract from draft report: DCP indicated that its Contract Management Framework provides flexibility about using performance and administrative-related aspects of the contract management process depending on the value (high/low) and risk (routine/strategic) of each procurement. While observing the SPB’s requirements, “this value/risk approach to contract management (for example) that strategic contracts which are high risk and high value require a lot more rigour, and experienced resources, to manage than a routine contract.” Addition in response to information request: With the introduction of the Contract Management Framework and Contract Performance Management Framework, DCP is confident that it can balance any associated risk of moving towards longer NFP contracts. However, the effectiveness of moving towards longer NFP contracts would be dependent on market maturity to deliver the different types of services required by DCP. The bigger risk for DCP is in relation to the 6 months notice period prescribed within Department of the Premier and Cabinet Circular 044 – South Australian Funding Policy for the Not for Profit Sector. This is especially problematic in the event of Memorandum of Agreement (MOA) with another organisation that is contracting directly with NFPs. For example DCP has a MOA with Department of Human Services on a 1year base+1extention option +1 extension option, this notice period means that within 6 months of the contract commencing, NFPs need to be notified of DHS’ intention, which means earlier advice to be provided by DCP to DHS. Information Request 6.7 The Commission would like to understand the impact (i.e. how many contracts could potentially be affected) of the late payment interest regime in the event the current statutory exclusion of NFPs is remedied Agency comment: Addition in response to information request: The Department typically utilises two types of contractual agreements in the procurement of Out of Home Care services: - Block funded arrangements contracted under a Not for Profit Agreement - Fee for service arrangements contracted under a Goods and Services Agreement The nature of the arrangement will determine the agreement to be used and the invoicing method that would be applied. The differences between the two are highlighted below: Page 6 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Procurement Characteristics Invoicing method Proportion of DCP type NFP contracts Fee for service Invoices are assessed and Invoices are created 8% approved once the service has and produced by the been provided, no financial service provider acquittals required. Block funded Provides the service provider Payments are 92% with funding quarterly in scheduled as per the advance to establish and contract and maintain adequate funding to Receipted Created cover the cost of service Tax Invoice (RCTI) provision. produced by DCP to Requires more extensive trigger payment. quarterly reporting in order to ensure reconciliation of public money provided, against money spent and services provided. As part of the 2019-2020 Procurement Program, DCP will be offering family based service providers the option to change from a block funded to a fee for service agreement if they wish. This will ensure that the payment arrangement that best suits the NFP organisational and operational needs is made available. Information Request 6.8 The Commission seeks views about the proposal from the NFP sector that NFPs be permitted to retain unexpended funds for purposes that increase the future capability of NFPs to deliver services. Agency comment: Extract from draft report: In SACOSS’s view, these recouping arrangements may create a perverse incentive for NFPs to ensure that all funding is spent in a given year, which is not supportive of efficient, value-for- money outcomes. It suggests unexpended funds only be recouped “…where services are not being delivered and/or outcomes not being achieved and where that money was not being spent on the services as per the contract.” SACOSS propose that “…accounting for and potential repayment of unexpended funds only be done at the completion of a contract term (i.e. not annually), and that the standard NFP contracts be altered accordingly.” CARA considers returning unexpended funds reduces incentives to innovate and create greater vale and efficiency, suggesting instead that unexpended funds be permitted to be invested into assistive technology.” The Commission notes while such arrangements would have an obvious benefit to the NFPs, they clearly conflict with the general requirement that governments manage their finances responsibly and achieve value for money in procurement. The Commission does not accept the sector’s premise at this point but seeks further information. Addition in response to information request: Page 7 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive To enable dynamic and flexible funding options to meet the individual and client-centric needs of the children and young people in care and coming into care, it is vital that funding is expended in the areas that meet those needs. Anecdotally there are a number of reasons as to why funds may remain unexpended in a block funded arrangement, some examples include: - The service provider has been able to provide the services more efficiently than originally planned due to changes in environment, technology or complexity needs of the child or young person - The nature of the service requirements has changed due to the needs of the child or young person, for example due to behavioural issues the service provider may request vacant placements in a residential facility to be capped (remain vacant) so the child can be more adequately supported. This means that a number of funded placements go unfilled, but still need to be paid for with another service provider in order to meet demand - The children entering the child protection system have different needs and requirements than what the service provider can deliver, so alternative placement options will need to be sought Recouping unexpended funds ensures that DCP is appropriately managing financial and service delivery risks associated with meeting a demand driven, reactive and often unpredictable human services environment, requiring immediate response. It also ensures that unexpended funds can be reinvested into areas of demand that best support the needs of children and young people. Information Request 6.9 The Commission seeks data on the time elapsing between contract award and contract execution for NFP contracts to inform its understanding of contract negotiations and the potential to shorten those times. Agency comment: Addition in response to information request: From 1 January 2018 to 31 December 2018, DCP completed 14 procurement projects*. *This reflects all procurement projects (not just with NFPs), in excess of $33,000 and exclusive of those where procurement method did not require purchase recommendation (i.e. direct negotiation). Across these projects, on average it took 39 calendar days from contract award to contract execution. For 65% of these projects time elapsed between contract award and contract execution occurring within 36 calendar days. For the 2 NFP related projects completed, the time taken from contract award to contract execution was above average time to complete (52 and 62 calendar days). Both these agreements arose from competitive tender processes and necessitated elongated contractual negotiations, increasing the average time for contract execution. The introduction of a Contract Management and Licensing System (CMLS) in the second half of 2019 by DCP, is expected to be able to improve these timeframes with automated workflows and digital execution of contracts, between DCP and the service provider. Page 8 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Information Request 6.10 The Commission notes the difference between acquittal reporting and performance reporting and seeks further advice from all parties about how acquittals for NFP contracts can be simplified and streamlined without compromising the public interest. Agency comment: Extract from draft report: DCP highlighted that different reporting arrangements are used having regard to the applicable funding model. As block funded arrangements are paid in advance acquittal reporting is required. That is, there is an obligation on the department to ensure that the money has been spent as was intended in line with the applicable contract. Fee for service arrangements are more akin to general goods and services contracting where payments are made to suppliers on provision of a properly rendered invoice once the service has been delivered. The Commission is not persuaded that the NFP sector’s complaints acknowledge the need to improve financial reporting by some NFPs. Addition in response to information request: This level of scrutiny is in place to ensure accurate and reliable financial reporting is in place and available to identify anomalies and areas for opportunity that can improve service outcomes and value for money procurement. As part of the introduction of the Contract Management and Licensing System expected in 2019, an online portal will be made available to service providers to submit their acquittals. This approach is expected to assist streamlining and simplifying the reporting process. Acquittal reporting is also an important tool to benchmark cost of service delivery across like service types. Acquittal data can be utilised to understand how different NFPs fund and construct services, which can be used to recognise best practice and share ideas with NFPs that may need assistance to improve their financial viability. Information Request 6.11 Having regard to the recent introduction of the Standard Services Agreement and Standard Grant Agreements for use with the NFP sector, the Commission seeks further information from all parties about whether:  those new documents will resolve the issues raised by the NFP sector; and  there are further opportunities to improve flexibility and reduce disproportionate reporting arrangements, including through risk-based approaches and prequalification. Agency comment: Extract from draft report: SACOSS submitted that many of these terms are not part of the Standard Services Agreement, noting “…there remains the general possibility of government departments interfering with how NFPs do their work by the requirements under the clause 4.4(d) [of the Standard Not-For-Profit Sector Funded Services Agreement] which requires services be delivered “in accordance with any policies and government directions” UCSA gave the example of the three Supported Residential Care contracts they have with DCP that covers five houses. UCSA noted reporting is required for each house. They suggested they could better achieve “…economies of scale that would allow more flexible and better care for Page 9 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive young people” by managing this service through one contract with applicable contract provisions to reflect house-specific issues (e.g. minimum or maximum number of residents in each house). At face value this suggestion appears to have some merit. The Commission is interested in further views from stakeholders. Addition in response to information request: The introduction of the Standard Not for Profit (NFP) Funded Services Agreement will provide a level of standardisation and clarity that is currently not present in DCP’s existing contractual agreements. Following a contract audit of existing service contracts, DCP identified: - Inconsistency between contracts of like services - Ambiguity and vagueness in terms of what had been contracted and how the efficacy of delivery should be measured The new NFP Funded Services Agreement that will be implemented as part of the 2019/2020 Procurement Program will mean: - 1 agreement, no more master deed AND service agreement - Shorter in length (i.e. less pages) - All contracts will have the same look, feel and standardised content - Like elements will be grouped in relevant sections rather than spread throughout the contract A representation of the change from old to new is illustrated in the below diagram. Page 10 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive To ensure safe and consistent quality care is provided to the child and young people under guardianship, DCP requires internal and external services to deliver to the same standard. This ensures that children and young people receive the same level of care regardless of the provider delivering care to meet their needs. This also ensures that consistent therapeutic models of care, standards and legislation are adhered to and underpin service delivery. To improve flexibility, clarity of roles and responsibilities and ensure up to date standards of care are the driver for service delivery, DCP is streamlining how service specifications and service provision requirements are reflected in Service Agreements. In the past each individual contract would have this information contained within the agreement, that would require a variation to reflect changes in practices. In some instances, the contract would not be updated and would reflect different content for similar services requirements, consequently creating outdated and/or inconsistent service delivery expectations and reporting outcomes. DCP aims to simplify the agreement, by providing a hyperlink to service specifications and service provision requirements that will be publically available within the dedicated Service Provider area of DCP’s website. This new level of transparency across the sector, will enable more robust and open conversations about service specifications and service provision requirements for Out of Home Care services. Subsequently, enabling focused co-design opportunities based on readily available and up to date information that is universally applied across DCP contracted services. Standardising agreements will also provide the opportunity to look at more flexible contracting arrangements and simplified reporting. This will include looking at opportunities as part of DCP’s 2019/2020 procurement program to consider alternate contract structures and arrangements, like those suggested by UCSA in their response, to provide improved flexibility and reduced administration in delivering the required contracted services. Where possible, DCP is seeking to automate reporting requirements through the design of the Contract Management and Licensing System and service provider portal. The system has been designed to reflect the fields and attributes of the Standard Service Agreements. The proposed online portal design is investigating opportunities to pre-populate performance related information that will assist service providers work within an exception based reporting model. Information Request 6.12 To support an appropriate methodology for establishing business costs and overheads, the Commission seeks information on the methodologies or practices public authorities are relying on to establish these costs in NFP service contracts. Are there alternatives to support fair and reasonable funding of these costs? Agency comment: Extract from draft report: There were contrasting views from the NFP sector and public authorities on the issue of recognising business running costs and overheads as part of NFP funding arrangements. The NFP sector conveyed that these costs are effectively not included or insufficiently funded. The experience of public authorities included NFPs acquitting administrative costs double that provided for in the applicable contract and confirmed the ongoing requirement for authorities to be vigilant in not wasting public resources. In resolving this dilemma, other options that provide for an efficient level of funding for administrative costs while imposing an efficient level of oversight are worth investigating. In the Page 11 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive public sector, for example, efficiency dividends are one method for setting an incentive finding administrative efficiencies. Addition in response to information request: DCP is conscious of administrative costs associated with delivery of services. DCP aims to increase the financial viability of its service providers to ensure that these administrative costs are considered. One recent example of this is the pricing formula adopted for the Agency Child and Youth Worker Temporary Staff Services Contract (currently under tender). This provides service providers with the opportunity to reflect their direct employee payment costs along with any service provider overheads required to deliver the services. See below extract from tender briefing presented 19 February 2019. Information Request 6.13 The Commission seeks further information from public authorities based on their experience in:  their current capability to negotiate contracts for complex NFP services, and opportunities to improve this capability; and  the extent to which their policy and program areas work jointly with their procurement and contract management functions in the design, execution and management of complex NFP services; noting that these elements compliment and underpin the implementation of the Standard Service Agreement and Standard Grant Agreements. Extract from draft report: Page 12 FOUO I1-A2 Draft – Commercial in Confidence - Sensitive Public authorities provided useful examples of where contract reporting not only enables them to meet obligations in relation to accounting for the expenditure of public monies, but informs service analysis and has led to improved outcomes. Concerns expressed by the NFP sector about the extent of reporting required should be considered from this perspective. It is too early to tell the extent to which the recent introduction of the Standard Services Agreement and Standard Grant Agreements will lead to improvements in the process and contract negotiations. Indications from some public authorities that they are taking increasingly holistic and consultative approaches to evaluating their services and service requirements is encouraging and is expected to positively impact on future market approaches and tender processes. Addition in response to information request: DCP has recently commenced a procurement assurance review and process, as required by the Statement Procurement Board on a tri-annual basis. One of the preliminary findings of this process has been to highlight the absence of Purchase Recommendations where a direct negotiation / single source procurement methodology is followed, with particular focus being placed on low value (<$550,000) direct negotiation procurements. The findings suggest that the State Procurement board require a Purchase Recommendation to be prepared for all procurements, regardless of the strategy being undertaken. While DCP appreciates the theoretical benefit of this approach, in practice and for low value procurements, this represents a marked increase in red tape with little benefits For agencies such as DCP, where a decentralised procurement model is utilised for low value procurement, it is often the case that business units will proactively seek the required number of quotes and then through a transparent process which can demonstrate value for money can be captured within a consolidated Acquisition Plan and/or Simple Procurement Report. The addition of a Purchase Recommendation, where an active evaluation process has either already been undertaken (and captured within the Acquisition Plan) or where a sole quote is obtained would not provide greater levels of value for money. It is believed that a streamlined process for low value acquisitions would increase compliance rates and allow procurements to be completed in a more responsive and agile manner. Page 13 FOUO I1-A2 48Cranwell, Denise (DPC)From: King, Jody (DHS) Sent: Tuesday, 16 April 2019 9:23 AM To: Witthoeft, Aaron (OSAPC) Cc: Lock, Caroline (DHS) Subject: DHS additional information Attachments: 20190403 DHS response_Stage 1 Final Report NFP Agency Information Request - DHS response.docxHi Aaron Sorry for the delay, please find attached some additional information from DHS. We had been waiting on examples from Pat but have yet not received anything, so we have attached our information and will send through anything else we receive Regards Jody Jody King A/Manager, Procurement and Grants Finance and Business Services Department of Human Services Level 4, 45 Grenfell Street, Adelaide SA 5000 T: (08) 8124 4015 This email may contain confidential information, which may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this email. If this email is received in error, please inform the sender by return email and delete the original. If there are doubts about the validity of this message please contact the sender by telephone. It is the recipient's responsibility to check the email and any attached files for viruses. 1 49Inquiry: Government Procurement – Stage 1 Supplementary Information Request (NFPs) Department of Human Services The purpose of this document is to facilitate the obtaining of further information from public authorities who contract with NFPs in support of the Final Report of the South Australian Productivity Commission’s Inquiry into Government Procurement. Most of the Information Requests in Chapter 6 of the Draft Report seek information from public authorities on a specific view or proposal. All of those Information Requests are included in this document for comment. The Information Requests in this document are intended to build on information previously provided, and/or obtain a greater level of detail on the issues where required. Public authorities are encouraged to respond to Draft Recommendations and other Information Requests in the Draft Report where possible. Public authority responses are requested to be provided to the Commission by no later than Friday 12th April. Given the short timeframes a member of the Commission will arrange to meet with representatives from public authorities to discuss proposed responses as soon as practicable. That opportunity can be used to obtain a preliminary response and prioritise Information Requests for written response. For additional information or clarification please contact Aaron Witthoeft on 8226 7107 or aaron.witthoeft@sa.gov.au. Page 1 FOUO I1-A2 Information Request Questions General comments on Draft Report 2.2.3 Risk averse agency procurement culture: DHS referred to the following passage: “Acquisition planning and Innovation: Business does not understand why intellectual property must be owned by the State. Further, they consider it an unjustified constraint on businesses” and the associated quotes from business. DHS indicated that it understands IP ownership issues were dealt with as part of the new revised Standard Goods and Services Agreement which provides: 13.1 Nothing in this Agreement affects the ownership of Intellectual Property Rights created before the Commencement Date. 13.2 The Supplier grants to the Government Party and the Crown in right of the State of South Australia a perpetual, irrevocable, royalty free, fee free licence to use, copy, modify and adapt any Intellectual Property Rights in any reports or manuals required to be supplied under this Agreement. 3.1.4.3 Governance within public authorities (Strategic Procurement and Grants Committee (SPGC) mMembership): DHS indicated that they have proactively been attempting to ensure that as a Tier 1 agency they have the requisite membership on their Procurement Governance Committee (SPGC) in line with the SPB Procurement Authority and Governance Policy. Notwithstanding DHS has sought commercial advisory and OIA representatives these attempts have not been supported by OIA. [see also email from Caroline Lock: 20190404 PGC requirements and efforts to comply.msg Information request 4.1: DHS indicated that the ICN and information held by the Industry Advocate has not been useful for DHS in terms of seeking an understanding of market capability in relation to the NFP and other niche market sectors from which they primarily procure. Information request 4.7: DHS indicated their internal corporate reporting arrangements in relation to procurement contracts provides regular updates to their executive leadership group. This provides the department with a picture of contract status [CL to provide additional detail]. Taken from our CM Reporting Requirements: Appendix 3 Contract Management Reporting Requirements Contract Contract Contract Contract Industry Participation Duration / Value Management Closure Management Plan Reporting Report Report Plan < 12 <$550k CCR Months >$550k CCR CMP Annual for regional contracts >$1.1m and metropolitan contracts >$4m > 12 <$550k 12 Monthly CCR Months Page 2 FOUO I1-A2 >$550k 6 Monthly CCR CMP Annual for regional contracts >$1.1m and metropolitan contracts >$4m Contracts with value exceeding $550k (total value including extensions), reports must go to Strategic Procurement and Grants Committee. ECT: DHS understands that the ECT form will be updated in the next couple of months by DIS to include a field on whether a business is an ABE or not. DHSuses plans to use this feature of thetheir ECT reporting to report to the OIA on their engagement of Aboriginal enterprises. Any lifting of the threshold that mandates an ECT would impact on the department’s ability to report on their use of Aboriginal enterprises – DHS noted their using ECT reporting in this way is creative and not the primary purpose of ECT reporting, but noted any change to threshold would have this effect. Origin of the 3+3+3 year NFP contract arrangement: Caroline indicated via email on 5 April 2019 that she understood the origin of the 3+3+3 arrangements was the Modern Public Service Policy (attached). building_a_stronger_ sa-a_modern_public_s Page 3 FOUO I1-A2 Draft Recommendation 6.1 In order to strengthen the capability and capacity of public authorities to engage with the NFP sector, public authorities establish a Community of Practice of Procurement Professionals to:  encourage and share model practices and processes; and  provide a single forum for consistent engagement with the NFP sector; and  support ongoing and continuous improvement." Agency comment: This wouldn’t be duplicating any existing arrangement. It should have an appropriate level of authority and would be most productive as an internal government group that would then liaise collectively with the NFP sector. DHS would be open to providing a lead role if this was seen as a useful initiativeappropriate Information Request 6.2 Public authorities are implementing policies and approaches to support co-design and collaboration with the NFP sector. The NFP sector say more can be done. To what extent have public authorities adopted co-design and collaboration in practice when procuring with NFPs? What are the current limitations to further collaboration with the NFP sector? Agency comment: Many of the recent reforms have an operative date of either December 2019 or January 2019 – to early to form a view about impact. Some areas of the public sector have been resistive to these changes. To co-design effectively two things are required: 1. Time, and 2. Public sector must retain accountability and ownership. For example, DHS has borrowed from a WA model Commented [LC(1]: Is Pat comfortable with this in relation to a financial support service design – we worked through the design process wording ie DHS retaining accountability and design? with the NFP sector, but DHS retained some of the required reporting arrangements. Commented [WA(2]: Obtain example. DHS has also gone through feedback processes with NFPs around system design – the Commented [KJ(3]: For Community Services focus was on developing common principles shared by public and NFP sector that underpin DHS service-related decision-making. Commented [WA(4]: Obtain example. DHS is open to co-design but would like to hear more specifically form the NFP sector Commented [KJ(5]: For Community Services about “what” and “how”. Information Request 6.3 Having heard the NFP sector's views on the benefits of a system-wide approach, to what extent do current public authority procurement practices: (a) consider collateral impacts non-government providers across the system; and/or (b) have a systemic client-centric or sector-wide approach?" Agency comment: Nil comment. Information Request 6.4 In response to the NFP sector's view that tender response times are too short given the complexity of services sought, what is the experience of public authorities with extended market response times? What impediments or considerations are there to moving towards longer market response periods? Page 4 FOUO I1-A2 Agency comment: DHS acknowledge that some business units are not as agile and responsive as they could be. Their preparatory work can go on which squeezes the amount of time they have to go to the market and reduces tendering timeframes. The budget cycle can also affect tendering process timeframes as there have been examples where services are funded for the first time through the budget process, but the agency doesn’t undertake any preparatory work as there is no certainty about funds being available until the budget is released. There is then an expectation that a service is put into place quickly, which impacts upon tendering timeframes. Commented [WA(6]: Obtain example. Information Request 6.5 Commented [KJ(7]: I am not sure if this is something that PGU can provide a specific example on To understand better the options for reducing cost and time burdens on NFPs, the Commission seeks more information on the experience of public authorities in improving quality of tenders and minimising tendering burdens on NFPs. Agency comment: DHS has accepted organisational accreditation from NFP organisations in relation to some LSA tenders, meaning those NFPs were not required to provide certain tendering documents. DHS adopted the same approach for STAY tenders. [Jody to provide Commented [KJ(8]: I don’t think this was the same for examples]. DHS could consider removing the requirement for the RFP Part D(i) to be STAY tender. In STAY you could apply to deliver submitted if tendering organisations are Australian Service Excellence Standards services to multiple regions, but only to had provide generic information once. accredited. Commented [KJ(9]: Example: for attendant care In relation to the example UCSA provided to the Commission regarding the STAY tender services, organisations that were industry accredited do (refer Case Study 6.1 p. 217 of the Inquiry Draft Report), DHS’ intention was to assist not have to provide detailed information on general smaller NFPs who are not proficient at responding to weighted criteria by breaking up organisational policies/procedures. those criteria into simple, brief questions. The intention was to make it easier for The same would be considered for NFPs that are organisations who are less proficient at tender responses to respond effectively. This accredited under ASES (or equivalent). Information approach was based on DHS’ previous experience having received responses from such as quality, WHS, recruitment, training, screening smaller organisations that did not effectively respond to the criteria. It may be possible could be removed. to provide less and wider-ranging criteria as the Commission has proposed, but to An organisation would then only respond on how they will deliver the service required by government. Any provide a breakdown of each criteria as an appendix to an RFP. processes/practices would need to be specific only to DHS has also found that being more specific in weighted criteria indicates to the market delivery of the program/service. that the department knows what it’s looking for by way of the service being tendered for. DHS accepted that proportionality can be an issue – it is not necessarily correct to assess criteria based on the funding available. Changes in this regard could make the tendering process easier and simpler for all parties. Commented [WA(10]: Seek more detail here – what changes and how could it be simpler but maintain Information Request 6.6 transparency and integrity of the process. The Commission would like to hear more from stakeholders on the implications for procurement process having regard to the mandated NFP contract extensions and how the existing procurement thresholds may impact upon the types of procurement process required. The Commission is particularly interested in examples that concurrently balance risk management with moving towards longer NFP contracts to provide the sector with funding certainty. Agency comment: Nil comment. Information Request 6.7 Page 5 FOUO I1-A2 The Commission would like to understand the impact (i.e. how many contracts could potentially be affected) of the late payment interest regime in the event the current statutory exclusion of NFPs is remedied Agency comment: Nil comment. Commented [KJ(11]: This would impact all NFP and grant arrangements – DHS has over 650 at the moment Information Request 6.8 The Commission seeks views about the proposal from the NFP sector that NFPs be permitted to retain unexpended funds for purposes that increase the future capability of NFPs to deliver services. Agency comment: It would be reasonable to approve retention of unexpended funds where the intended expenditure of those funds is aligned with the delivery of services or specific service improvements relating to the types of services that NFP is already providing for government. Commented [LC(12]: I don’t want to state this position DHS doesn’t support retention of unexpended funds for reasons that do not align with on behalf of DHS. I would prefer to say that DHS currently approves retention of unexpended funds service delivery or arrangements that support service delivery. where the intended expenditure of those funds is DHS PGU has visibility of unexpended funds centrally and can provide advice on how aligned with delivery of services or specific service improvements relating to the types of services that NFP funds could be reallocated having regard to other service priorities. is already providing to government. Information Request 6.9 Commented [KJ(13]: Time is impacted by posting agreements to regional or remote service providers. The Commission seeks data on the time elapsing between contract award and contract execution for NFP contracts to inform its understanding of contract negotiations and the The use of electronic signatures will help with providers potential to shorten those times. receiving and executing their contracts quickly. Agency comment: Within the Department, the requirement for briefings from CE to the Minister for execution over $1.5m (for Nil comment. which DHS has hundreds of impacted contracts), can Information Request 6.10 take up to 2months for execution by the Department once they are received from the supplier. The Commission notes the difference between acquittal reporting and performance reporting The use of electronic signatures could assist with and seeks further advice from all parties about how acquittals for NFP contracts can be internal executions. Not all contracts take a long time to execute. simplified and streamlined without compromising the public interest. Agency comment: Unable to provide an average time without reviewing 3 or 4 different documents for each contract. DHS has a DHS is moving to a process of “acquitting against budget”. Community Services couple hundred contracts with NFPs. Generally we allow Directorate is also adopting a risk-based approach and considering reporting on 6 or 12 2 weeks for internal approval of memo to CE office, and then 3-4 in the Minister’s office. Then the contracts month intervals having regard to thresholds and risk. need to come back to PGU for sending onto the Information Request 6.11 organisation Commented [WA(14]: Obtain more detail regarding Having regard to the recent introduction of the Standard Services Agreement and Standard processes to be adopted, and when may be given effect Grant Agreements for use with the NFP sector, the Commission seeks further information from to. all parties about whether: Commented [KJ(15]: DHS requires both financial  those new documents will resolve the issues raised by the NFP sector; and reporting (acquittal) and performance reporting as part  there are further opportunities to improve flexibility and reduce disproportionate of good CM. DHS is reviewing acquittal process, and is looking to move to a standard process where acquittal reporting arrangements, including through risk-based approaches and prequalification. is aligned to contracted budget. This should make it Agency comment: easier for organisation, as they will know in advance what is expected and is aligned to their proposed Nil comment. budget lines Page 6 FOUO I1-A2 Information Request 6.12 To support an appropriate methodology for establishing business costs and overheads, the Commission seeks information on the methodologies or practices public authorities are relying on to establish these costs in NFP service contracts. Are there alternatives to support fair and reasonable funding of these costs? Agency comment: Community Services Directorate use a maximum overhead rate of between 18 – 22% applicable subject to where the service is being delivered as follows: 18% metropolitan services, 20% state-wide services, and 22% regional services. This methodology was developed in close consultation with Uniting Country SA who shared information with DHS regarding their overheads and running costs. Based on those actual costs further consultation was undertaken with other NFPs. Based on that information DHS developed the 18 – 22% rates. Commented [WA(16]: Obtain more detail about when this occurred, the extent of consultation and whether Information Request 6.13 this is intended to be reviewed on a regular basis. The Commission seeks further information from public authorities based on their experience in: Commented [KJ(17]: For Community Services  their current capability to negotiate contracts for complex NFP services, and opportunities to improve this capability; and  the extent to which their policy and program areas work jointly with their procurement and contract management functions in the design, execution and management of complex NFP services; noting that these elements compliment and underpin the implementation of the Standard Service Agreement and Standard Grant Agreements. Agency comment: Nil comment. Page 7 FOUO I1-A2 Office of the SA Productivity Commission 50 NFP Roundtable - Minutes Meeting NFP Roundtable Time & Date 1:00pm – 3:00pm, 16 April 2019 Location OSAPC, L16, Wakefield House Charlie Paterson (RFDS), Steve Cameron (RFDS), Todd Williams (CARA), Ross Womersly (SACOSS), Greg Ogle (SACOSS), Graham Brown (BCSA), Liz Malcolm Attendees (UCSA) (T/A), Caroline Lock (DHS), Pat Maher (DHS), Peter Evans (DCP), Elizabeth Chmielewski (DCP), Julie Williams (SA Health), Matthew Butlin (MB), Aaron Witthoeft (AW) Ref. General comments 9(1)(a)(i) - The Draft Report is being developed into the Final Report – due 17 May – the reason for roundtable and bringing both sides of the table together is how can the current draft recommendations be improved and of use to government in a better form than is presently the case. These discussions will benefit from understanding – form those providing services and those responsible for adhering to procurement requirements – what is a more efficient way of doing things. The Commission has no specific interest to a specific outcome other than providing the best advice to government. Recommendations are intended to be precise enough to be used for cabinet decision. In that spirit I welcome you to today. 9(1)(a)(i) – I ask that you set aside any advocacy role for today – we are trying to be creative about what might usefully be done – that’s why have both sides here. We will reserve some time to ask what we’ve missed, that is important. 9(1)(a)(i) – does anybody have any broad impressions to share about the inquiry so far? 9(1)(a)(i) IR6.1 – from SAH perspective talking codesign and collaboration – is also about the relationships we develop with NFPs – how do we talk with each other in open and honest manner. If I have good relationship with a provider, open and transparent re contract management, I can actually get them to share their thoughts on what’s working. In the PS we have pockets that may co- design, but they still have the “I’m in charge and I’m giving you the money” hat on – need to break down that culture. [recommendation] 9(1)(a)(i) – what sort of comment could the Commission make in this regard, to encourage or facilitate this change? 9(1)(a)(i) – about giving staff the permission to be open and transparent with the sector – a small thing my team does – regular contract management meetings, address what’s working and what isn’t, whereas my experience in other areas is these discussions aren’t being had. 9(1)(a)(i) – the ways of working, partly skills and staff… 9(1)(a)(i) – to get to that point you need a good proficiency in contract management which enables the freedom to work in those ways. Is about skills and capability in contract management. For Official Use Only – I1 – A1 1 Office of the SA Productivity Commission NFP Roundtable - Minutes 9(1)(a)(i) – contract management is a weak point for the PS – varying levels are applied across govt – you see the “best mate” scenario but sometimes the other end of the spectrum too – collaborative approach (with boundaries) works well. At SAH have not observed an appropriate level of contract management capability. 9(1)(a)(i) – to make process more relational about when contracting with NFPs – govt contracts for difficult human services – often requires best judgement assessments so the more relational the better the process – e.g. panel arrangements should enable more open discussions… people are in the human services sector because they want to help people. 9(1)(a)(i) – yes that may be but PS employees are obliged to spend public money wisely. 9(1)(a)(i) – capability an issue not confined to contract management – succession planning issues too – how do we recruit and retain? Evaluation of reforms and further proposals to support tendering for complex human services DR6.1 [nil comments] 9(1)(a)(i) DR6.2 – this is about a health check on how things are tracking. 9(1)(a)(i) – would like to see this a little more prescriptive, to involve the sector, starting point is an audit of what the contracts are, are they in the new format and of the correct duration. Recognise there will be a lead time. Second half of 2019 the right time to do review. 9(1)(a)(i) – invite you to offer any specific proposals. 9(1)(a)(i) – invited CL and EC, JW to provide suggestions [request] 9(1)(a)(i) DR6.3/ – limited capacity of agencies to consolidate quality accreditations. Have heard in VIC and CTH everyone wants their own accreditation process and can be costly. DR6.4/ 9(1)(a)(i) – can Commission tease out more gems of what good procurement process involves? IR6.4 9(1)(a)(i) – forward program of procurement, we are finding hard to reconcile SPB data reconciled against actual program – digging more deeply (Frances); feedback – is an across the board issue, not just NFPs. 9(1)(a)(i) – all the points already mentioned in DR valid but could include lead time of announcement to briefing, can happen really fast or slowly or not at all – looking for predictability – govt advises wants to buy particular service – opportunity for consultation and to form consortia, not always enough time to respect the nature of work required by the sector. Get heads up about tender coming but then long time before going to market. Currently unpredictable and elastic. [recommendation] 9(1)(a)(i) – understand the issues but what changes would make a difference? Responsibility of NFPs to have considered what’s coming so can deal with it when arrives. More compelling that there are authorising timelines for NFPs that may depend on NFP Board meetings for decision making. For Official Use Only – I1 – A1 2 Office of the SA Productivity Commission NFP Roundtable - Minutes 9(1)(a)(i) – improvements would be clarity on timeframe or if likely to be variation to the program of timings. Often timeframes currently just drift. 9(1)(a)(i) – would a two-step approach as human services akin to traditional innovation in G&S – is their more here. 9(1)(a)(i) – 3 stage process: 1. Pre-reg and getting into the game, 2. Govt flags what it’s interested in doing and discusses with preferred providers (market sounding), 3. Run the procurement process. market sounding valuable for both sides – govt asking how can put something out to market in the most effective way e.g. bundle up or break it into pieces. [recommendation] 9(1)(a)(i) – out to market 18 months ago re clinical nursing services for people at home – established a panel (of 4). ED numbers increasing, a problem. CE pulled the 4 providers together, discussed why people coming to ED, asked them to respond with project to address problem – came back within 4 weeks with proof of concepts e.g. work out why frequent representations occurring. Orgs worked with hospital staff to refine. Orgs were astounded that DCE met with them. All 4 orgs were commissioned for 4 month proofs of concepts. [case study] 9(1)(a)(i) – concern about IP being pillaged? 9(1)(a)(i) – the amount of time that elapses in a 3 stage process can go beyond a financial year – can give rise to complications as money needs to be returned to DTF, not with every project but if only 12 months of funding. I think 2 step processes are good and don’t take longer than 1 step (which can lose its way). 9(1)(a)(i) – so if recommendation goes beyond “giving consideration” what does that look like? 9(1)(a)(i) – need to give consideration to types of services being procured – if larger scale need to consider approach and lead times – for us can be 18 months for aircraft. Don’t want to lock into 2 stage approach. 9(1)(a)(i) – 2 stage approach means we need to work out what we want and that should involve engaging the market place. [recommendation] 9(1)(a)(i) – will inform govt and shape tender docs – sometimes the requirements are unclear about what is seeking to be achieved. 9(1)(a)(i) – so what does procurement officer need to do – when do they work out it’s a 2 stage process for complex service or a standard acquisition? 9(1)(a)(i) – 2 stage available now. Is really about PS agency being clear about what they want to commission from the sector and get market input – could be much earlier than procurement process. a discussion between business units and procurement specialist. DCP trying to bring a lot of that forward i.e. the codesign element. Connect strategic planning with procurement cycle. 9(1)(a)(i) – is a significant issue elsewhere in the bureaucracy – is an organisational matter. Is it agency experience there is close or loose relationship between business unit and central 6.13 procurement function. For Official Use Only – I1 – A1 3 Office of the SA Productivity Commission NFP Roundtable - Minutes 9(1)(a)(i) – varies within our agency. We’ve met with one unit about a 2022 procurement – they’re engaging early and planning now. We also have the “we need a contract in 2 weeks” examples too. Sometimes funding availability is an issue. 9(1)(a)(i) – rare to see procurement lead at the exec table – not viewed the same as a CFO or COO. 9(1)(a)(i) – SA Water example of where this happens. 9(1)(a)(i) – for SAH as a huge organisation, from a procurement team perspective largely focused on G&S and consumables, not focused on complex purchasing of human services. 9(1)(a)(i) – we haven’t observed any closeness between business unit and procurement function. A level of disconnect. 9(1)(a)(i) – yes, procurement functions do the contract then leave business unit to manage it. Once the procurement is done. 9(1)(a)(i) – may be a recommendation to CEs about role of connection organisationally between business units and procurement… [recommendation] 9(1)(a)(i) – sliding scales here re level of complexity – matrix – value of contract and complexity of contract are the two axes eg high value and high complexity requires flexibility to deal with complexity: high risk and high value… attributes include expertise requirements of both contracting agency and contractee, risk factors, extent of consultation, autonomy factor, complexity factor – picking the procurement methodology of what trying to achieve. 9(1)(a)(i) – covered by SPB guidance – can require educating provider and what they need to achieve an outcome. Query whether agencies have picked up SPB guidance and operationalised it. 9(1)(a)(i) – I think its about do the job and compliance. 9(1)(a)(i) – have approached Board with complex procurements – SPB don’t have more expertise than we have. Advice based on logic rather than how applied in practice. NFP policies haven’t been challenged, in its infancy. 9(1)(a)(i) – see how its worked after a year? 9(1)(a)(i) – evaluation to include PC Circular but also Board policies that operationalise it e.g. contract management policies. [recommendation] 9(1)(a)(i) – Commission observed level of complexity in SPB guidance. Welcome any specific views being forwarded in this regard – next couple of weeks. 9(1)(a)(i) – on accreditation, examples from VIC, NDIS quality safeguards/evaluation not consistent across states – PS agencies are not accepting the national framework. LSA here, TSA in VIC… 9(1)(a)(i) – noted will have stage 2 in this inquiry which will pick up prescribed authority – ask TW to share some specific examples. We understand NSW and VIC have addressed some of these issues [request] 9(1)(a)(i) – pre-registration – should be a role for peak bodies… For Official Use Only – I1 – A1 4 Office of the SA Productivity Commission NFP Roundtable - Minutes 9(1)(a)(i) – by all means; at this point is a discussion to be pushing on things that will make a difference. IR6.1 [nil comments] Codesign, collaboration and capability – current impediments and where to improve 9(1)(a)(i) IR6.2 – have heard 2 views on this already: depends on relevance to the service being sought… 9(1)(a)(i) – JW touched on this, CHSA came to us with an ongoing contract, we sat down together, related to intro of “Gail’s Law” – clinicians never work alone, became a double nurse model. A true codesign that we formulated a solution, identified existing shared assets and savings over state and commonwealth assets. We take a partnership approach to everything – is about the outcome. Codesign by direct negotiation important to us. [case study] 9(1)(a)(i) – so there’s no impediment other than agency preparedness to engage in that way. 9(1)(a)(i) – there are opportunities where single provider always going to get the job due to location etc. 9(1)(a)(i) – yes but alternative scenario – DV – lots of complex service providers out there. Accept single provider may apply to RFDS operations, but what about where alternative provider doesn’t get opportunity to work with agency and develop a service collaboratively... Now under SPB and single-source procurement arrangements need to demonstrate was necessary to have a direct negotiation, criteria used to demonstrate this; and if over $0.5m requires CE approval. 9(1)(a)(i) – are the criteria clear and be used effectively? 9(1)(a)(i) – yes clear, more focused on G&S procurement…such sensitivity around fairness to all as a basic premise that when we include NFPs there are more situations to have direct negotiations, NFP special case. 9(1)(a)(i) – yes and NFPs bring value-adds not always recognised at outset… 9(1)(a)(i) – is a reason for …tweak the existing framework. 9(1)(a)(i) - want to be precise about what we think needs to be addressed. 9(1)(a)(i) – think onus is on us…we need 3+3+3 for those big e.g. aircraft purchasing, to support these processes. We can work harder to identify shared services and knock ons… 9(1)(a)(i) – proposition is not uncommon - there’s obvious circumstances where a sole provider scenario is applicable - the criteria for identifying those circumstances could be clearer and acknowledged in terms of governance and policy arrangements. [recommendation] 9(1)(a)(i) – not only because of value-adds or single provider, may be there is a desirability to keep with a provider because of standing in particular community … 9(1)(a)(i) – acknowledge operate in challenging enviros… whats wanted all round is better outcomes for clients and as simple as can be, subject to PS requirements that must be observed For Official Use Only – I1 – A1 5 Office of the SA Productivity Commission NFP Roundtable - Minutes New Services Agreements 9(1)(a)(i) IR6.6 – intrigued on possibility of falling within industry advocate requirements the 3+3+3 contracts. Ian of the view ECT and IPP doesn’t apply to NFP procurement… 9(1)(a)(i) – grants or NFP procurement…? 9(1)(a)(i) – NFP is captured by IPP… 9(1)(a)(i) – we have been liaising with Ian’s office… 9(1)(a)(i) – it does apply – discussing with OIA last Friday. Query why needs to apply as we tap into largely local providers in any case. IPP not doing anything effective. 9(1)(a)(i) – yes, is redundant. 9(1)(a)(i) – can we get some specific advice from you on this please – some chapter and verse. 9(1)(a)(i) – just cognisant of further variations of NFP and other procurement processes. 9(1)(a)(i) – having a predominantly local market place crosses over for profit and not for profit. 9(1)(a)(i) – invite credible and robust responses from you [request] 9(1)(a)(i) – IPP applied to our recent procurement… 9(1)(a)(i)before you please any specific issues? 9(1)(a)(i) – can I raise p. 232 re 3+3+3 referred to re potential to lock out NFPs from competing – need to distinguish competition from outcomes sought… 9(1)(a)(i) – govt dealing with synthesis of VFM and delivering good outcomes for clients… competition is generally a useful discipline on cost – that’s what this is about. 9(1)(a)(i) – its not 9 years though - after each 3 years agencies are presumably considering whether service still required etc. competition not necessarily leading to best outcome. 9(1)(a)(i) – about ensuring what’s being purchased is fit for purpose. 9(1)(a)(i) – it does imply contract management function, which has been problematic. Also implies world changes and want services to evolve when need to. Lock out concept includes either lose competitive (financial) edge or competitive (service) evolution. Suspect agencies go first to ensuring the financial edge is being maintained… 9(1)(a)(i) – 3+ is a useful structure because enables services providers to plan for 9 years – for most human services 3 years not long enough to address entrenched social disadvantage – striking balance of 3 check points over 9 years balances accountability with certainty. 9(1)(a)(i) – maturity of market and agency important – no point committing to 9 years if agency not sure if that direction committed to for 9 years, or not a market there for it – address through discussions with market. 9(1)(a)(i) – conversely, if you’re clear from outset you don’t want to stick with what you’re purchasing in the long run can deal with contractually – build relationship with provider but indicate at For Official Use Only – I1 – A1 6 Office of the SA Productivity Commission NFP Roundtable - Minutes outset may be changes over time in what required. Work collab over 9 years to ensure mutual outcomes. 9(1)(a)(i) – opp commission here seeing is about successfully integrating a strategic business unit approach with smart procurement – clearer definition of what is being sought in terms of service and more efficient. [recommendation] 9(1)(a)(i) IR6.10/ – heard a lot from agencies as competency levels of NFPs… invite you to consider this part of the DR and provide some feedback. [request] IR6.13 9(1)(a)(i) – connection re procurement function and business units – better understanding between the two would help i.e. we’ve experienced business unit… have 6 contracts to acquit… is DHS disability area – could’ve resolved acquittal issue by varying one contract – happened in last 12 months. [case study] 9(1)(a)(i) – can you please provide some examples [request] 9(1)(a)(i) – if isn’t fit for purpose and doesn’t do the job it doesn’t start… ive seen in mining in remote areas businesses become quasi providers of govt services. 9(1)(a)(i) – expect that financial edge to be taken account of in terms of 3+ reviews. 9(1)(a)(i) IR6.11 – this a precursor to the evaluation reco – invite specific suggestions [request] Funding and late payments issues 9(1)(a)(i) DR6.5 – treasurer when I briefed him understood the issue here. 9(1)(a)(i) IR6.7 – trying to get handle on frequency of problem – is it systemic. 9(1)(a)(i) – still a query about when taxable service is invoiced – may add a month to the process and impact on late payment interest actions. 9(1)(a)(i) – RCTI is used by SAH, we use PMS so as soon as RCTI is generated is action for payment immediately. Those they don’t have RCTIs are largely fee for service – is reliant on staff setting up the system and doing it in a timely manner. [case study] 9(1)(a)(i) – invite more from the group for specific examples [request] 9(1)(a)(i) – could provide protection for RCTI – could put equivalent clause into contracts to ensure payment made on time. This a safeguard against process. is actually really just about agencies being organised and paying on time. [recommendation] Unexpended funds and sector reinvestment 9(1)(a)(i) IR6.8 - Have heard compelling views from both sides, haven’t landed it, could go into contract itself? Understand analogy with commercial orgs retaining unspent funds, but public monies have specific accountability. 9(1)(a)(i) – trying to get to zero each year can be a challenge… For Official Use Only – I1 – A1 7 Office of the SA Productivity Commission NFP Roundtable - Minutes 9(1)(a)(i) – raises issue of account of public monies but also performance indicators that come into play… 9(1)(a)(i) – can we explore what incentives would drive efficiency improvements, then what sort of sharing of those dividends be helpful. See sense in an incentive framework giving rise to a surplus… [recommendation] 9(1)(a)(i) – in a commercial contract is a matter for provider to deliver services to quality expected – if they do it cheaper through efficiencies then there is no recovery by govt. 9(1)(a)(i) – that’s a mechanism – principle ought be an incentive to improve performance… Business costs and overheads 9(1)(a)(i) IR6.12 – thought NFPs making a fair argument, not sure the best way trough this. When business price their service has a portion of overheads, especially re remote locations etc. also pointed out to commission where NFPs didn’t account for overheads very well and financial accounting unsophisticated and agency worked through with service provider to resolve the issue. 9(1)(a)(i) – def is sharing of overheads across multiple services – we need to a better job of accounting for this – if contracted in isolation cost is X, but if over multiple contracts… deal with during contract negotiations. Get an understanding about real cost. 9(1)(a)(i) – Pat M did some methodological work to establish process for overheads tested with multiple services providers with a span of % across metro and non-metro areas. [case study] 9(1)(a)(i) in SAH everybody has a different view, no consistency. In my area we say generally 15% but considered on case-by-case basis and what service is being provided. No standard or direction on what should be – is a gap for us. 9(1)(a)(i) – when and why is it relevant? If trying to find out unit cost for a service, but everything else which is we want 50 of these things and do a competitive tender why does it matter? 9(1)(a)(i) – we still asking for a type of service with a specified budget – need to be more sophisticated approach… 9(1)(a)(i) – is relevant because competition is against a fixed budget… 9(1)(a)(i) – last 2 years have been tendering fee for service so overheads not an issue. 9(1)(a)(i) – heard this issue mainly about regions and where services cobbled together. 9(1)(a)(i) – this has attracted lots of attention and govt agencies assumption is service providers skimming $s through overheads, but in agency looking for low cost services issue gets distorted. 9(1)(a)(i) – where were seeing some NFPs have higher levels of overheads – do peaks assist service providers to have more efficient overheads? A sector development role here? 9(1)(a)(i) – depends on what the issue was? Diff orgs account for things in different ways – could be travel costs in the regions… For Official Use Only – I1 – A1 8 Office of the SA Productivity Commission NFP Roundtable - Minutes 9(1)(a)(i) – a lot of NFPs have not been financially good at identifying our overheads – are discrepancies between orgs of what overheads are – not a strength in the NFP sector. 9(1)(a)(i) – may be acumen may be definitional/clarity. 9(1)(a)(i) – opportunity for public sector agencies to clarify the issue. 9(1)(a)(i) - We need to finish final report about 10 May. Welcome info to supplement this discussion. I see NFP chapter being largely dealt with in stage 1 of procurement report – not much expected to fall outside of current stage 1 scope. For Official Use Only – I1 – A1 9 51Cranwell, Denise (DPC)From: Williams, Julie (Health) Sent: Wednesday, 17 April 2019 5:22 PM To: Witthoeft, Aaron (OSAPC) Cc: McKinnon, Michele (Health) Subject: :Government procurement inquiry - SAPC supplementary information request (NFPs) Attachments: 20190401 SAPC Government Procurement Inquiry - Stage 1 Final Report NFP ....pdfGood Afternoon Aaron Thank you for the opportunity to attend the Office of the SAPC Government Procurement Inquiry NFP Roundtable yesterday. I have attached my response in relation to the questions which includes some of my responses to you over the phone and at the Roundtable yesterday. Please let me know if you would like any further information. Kind Regards Julie Williams Manager, NGO Performance Management Quality, Information and Performance SA Health Government of South Australia Phone: 08 8226 6281 | 6(1) Personal affairs | Email: julie.williams@sa.gov.au www.sahealth.sa.gov.au This e-mail may contain confidential information, which also may be legally privileged. Only the intended recipient(s) may access, use, distribute or copy this e-mail. If this e-mail is received in error, please inform the sender by return e- mail and delete the original. If there are doubts about the validity of this message, please contact the sender by telephone. It is the recipient’s responsibility to check the e-mail and any attached files for viruses. 1 52Inquiry: Government Procurement – Stage 1 Supplementary Information Request (NFPs) The purpose of this document is to facilitate the obtaining of further information from public authorities who contract with NFPs in support of the Final Report of the South Australian Productivity Commission’s Inquiry into Government Procurement. Most of the Information Requests in Chapter 6 of the Draft Report seek information from public authorities on a specific view or proposal. All of those Information Requests are included in this document for comment. The Information Requests in this document are intended to build on information previously provided, and/or obtain a greater level of detail on the issues where required. Public authorities are encouraged to respond to Draft Recommendations and other Information Requests in the Draft Report where possible. Public authority responses are requested to be provided to the Commission by no later than Friday 12th April. Given the short timeframes a member of the Commission will arrange to meet with representatives from public authorities to discuss proposed responses as soon as practicable. That opportunity can be used to obtain a preliminary response and prioritise Information Requests for written response. For additional information or clarification please contact Aaron Witthoeft on 8226 7107 or aaron.witthoeft@sa.gov.au. Page 1 FOUO I1-A2 Information Request Questions Draft Recommendation 6.1 In order to strengthen the capability and capacity of public authorities to engage with the NFP sector, public authorities establish a Community of Practice of Procurement Professionals to:  encourage and share model practices and processes; and  provide a single forum for consistent engagement with the NFP sector; and  support ongoing and continuous improvement." Agency comment: The establishment of a Community of Practice of Procurement Professionals is supported recognising that there is a need to strengthen the capability and capacity of the public sector to engage in a meaningful way with the NFP sector. Consideration should be given to mandating that our procurement professionals working in this space should be required to become a member of such a body. Information Request 6.2 Public authorities are implementing policies and approaches to support co-design and collaboration with the NFP sector. The NFP sector say more can be done. To what extent have public authorities adopted co-design and collaboration in practice when procuring with NFPs? What are the current limitations to further collaboration with the NFP sector? Agency comment: The Department for Health and Wellbeing has recently worked with the NFP sector in addressing the issue of managing high demand in the public hospital system, particularly in presentations to the Emergency Departments. The DCE, SA Health met with the 4 x providers who have previously been engaged through a competitive process to provide community care services and outlined the ‘problem’ that SA Health was facing. The providers came back with some proposals which they outlined to the SA Health team and as a consequence the Local Health Networks worked with the providers in co-designing the model of care. There are four Proof of Concept projects that four providers have worked with the public hospitals in co-designing that are already providing good evidence that the approach does reduce the demand on the public system. Information Request 6.3 Having heard the NFP sector's views on the benefits of a system-wide approach, to what extent do current public authority procurement practices: (a) consider collateral impacts non-government providers across the system; and/or (b) have a systemic client-centric or sector-wide approach?" Agency comment: The Department for Health and Wellbeing has been working towards an improved way of embedding a systemic client-centric approach within procurement processes. Consumer Page 2 FOUO I1-A2 representatives have been engaged in the drafting of the service model and the procurement documentation to ensure that there is a significant focus on a consumer centred approach. Another example relates to consumer engagement. Tender Respondents are asked to outline organisational structures and governance that ensures consumers are able to participate in the design and evaluation of health services. Tender Respondents are also asked to demonstrate how they are committed to partnership with consumers and how this is reflected in organisational policies and procedures. Information Request 6.4 In response to the NFP sector's view that tender response times are too short given the complexity of services sought, what is the experience of public authorities with extended market response times? What impediments or considerations are there to moving towards longer market response periods? Agency comment: It is acknowledged, that SA Health has historically not always provided the NFP sector with a reasonable time in which to respond to tenders. Increasing the longer market response periods is supported. A framework or guideline that sets out reasonable timelines for all agencies to follow would be helpful and which is based on a tier approach could be considered. It is considered that this is a culture change process for SA Health to implement and requires commitment from the procurement team, business units, finance team etc. Due to the changing demand in the system, increasing client needs and the media attention it is difficult not to be swept up in the need to progress quickly and missing the opportunity to be considered and thorough in the process. Information Request 6.5 To understand better the options for reducing cost and time burdens on NFPs, the Commission seeks more information on the experience of public authorities in improving quality of tenders and minimising tendering burdens on NFPs. Agency comment: To date, the Department for Health and Wellbeing has not focussed on this issue on a system wide approach. It is acknowledged, however, that there are some areas who have undertaken some internal work on considering the formulation of tender response documents and the questions that the NFP sector is asked to respond against. For example, asking questions that directly align to recognised standards is helpful e.g. the National Safety and Quality Service Standards. The guidelines that support these standards provides assistance to organisations on being able to provide evidence that demonstrates they meet the standards. Information Request 6.6 The Commission would like to hear more from stakeholders on the implications for procurement process having regard to the mandated NFP contract extensions and how the existing procurement thresholds may impact upon the types of procurement process required. The Commission is particularly interested in examples that concurrently balance risk management with moving towards longer NFP contracts to provide the sector with funding certainty. Page 3 FOUO I1-A2 Agency comment: Information Request 6.7 The Commission would like to understand the impact (i.e. how many contracts could potentially be affected) of the late payment interest regime in the event the current statutory exclusion of NFPs is remedied Agency comment: Currently the Department for Health and Wellbeing pay NFPs through RCTIs and invoices. It is estimated that approximately 55% of the payments are actioned via RCTIs and 45% of payments are actioned on receipt of invoices. Information Request 6.8 The Commission seeks views about the proposal from the NFP sector that NFPs be permitted to retain unexpended funds for purposes that increase the future capability of NFPs to deliver services. Agency comment: SA Health is moving towards fee for service models rather than block funding/quarterly payments etc. Fee for service models enable service providers to consider all costs for the provision of a service and to negotiate their best price. To date this has been successful, with providers being comfortable with this approach as it enables them to manage their financial position and risks more closely. Financial expenditure, budget management etc is monitored through Contract Management meetings. This ongoing dialogue ensures that both parties are across either under expenditure or over expenditure and these meetings are forums that encourage honest and open discussions including about whether additional funding is required or whether funding should be redirected to other services within the current agreement. Information Request 6.9 The Commission seeks data on the time elapsing between contract award and contract execution for NFP contracts to inform its understanding of contract negotiations and the potential to shorten those times. Agency comment: I am not able to comment on this issue as we don’t collect this data but the Procurement Supply Chain Management team might be able to provide the information. Information Request 6.10 The Commission notes the difference between acquittal reporting and performance reporting and seeks further advice from all parties about how acquittals for NFP contracts can be simplified and streamlined without compromising the public interest. Agency comment: It is acknowledged that each Contract Manager has a different view on what they require from NFPs in terms of financial acquittals. A standard approach would be beneficial. This could occur through either a standard template or through a guideline that provides agencies with the factors to consider when seeking acquittals from NFPs noting that not one size will fit all. Page 4 FOUO I1-A2 Information Request 6.11 Having regard to the recent introduction of the Standard Services Agreement and Standard Grant Agreements for use with the NFP sector, the Commission seeks further information from all parties about whether:  those new documents will resolve the issues raised by the NFP sector; and  there are further opportunities to improve flexibility and reduce disproportionate reporting arrangements, including through risk-based approaches and prequalification. Agency comment: To date, there have been no instances of NFPs wishing to negotiate the terms and conditions of the standard agreements. It is agreed, however, that there are further opportunities to consider prequalification. The Department for Health and Wellbeing has procured services from organisations that have prequalified which has been a successful approach. This also is an incentive for NFPs and one that has been embraced by a number of NFPs who are very keen to keep working with us. Information Request 6.12 To support an appropriate methodology for establishing business costs and overheads, the Commission seeks information on the methodologies or practices public authorities are relying on to establish these costs in NFP service contracts. Are there alternatives to support fair and reasonable funding of these costs? Agency comment: It is acknowledged that the Department for Health and Wellbeing does not have a consistent approach when negotiating business costs and overheads. The fee for service model has worked well as NFPs put up a price that they are confident meets their business and overheads costs. Whilst value for money is a very important component of evaluating tender responses, it is not the only factor. Ensuring that NFPs have the right governance, leadership, service capability, patient safety and quality systems is just as important. Information Request 6.13 The Commission seeks further information from public authorities based on their experience in:  their current capability to negotiate contracts for complex NFP services, and opportunities to improve this capability; and  the extent to which their policy and program areas work jointly with their procurement and contract management functions in the design, execution and management of complex NFP services; Agency comment: The capability to negotiate contracts for complex NFP services is difficult to determine but anecdotally it would seem reasonable to say that there is only a limited number of staff who have undertaken training or staff development in the negotiating of contracts especially in the more complex service contracts. Any opportunity to improve this capability would be beneficial. Working jointly across the policy and program areas, procurement area and the contract management functions is largely dependent upon individual staff having good relationships Page 5 FOUO I1-A2 with their peers in order to ‘truly’ engage with each other and to work collectively in the design, execution and management of complex NFP services. There have, however, been some excellent examples where a joint approach has worked very well and continues to work. Page 6 FOUO I1-A2 53Cranwell, Denise (DPC)From: Wheeler, Dianne (OSAPC) on behalf of Butlin, Matthew (OSAPC) Sent: Thursday, 18 April 2019 10:36 AM To: MacDonald, Gerard (OSAPC); Witthoeft, Aaron (OSAPC); Bryder, Paul (OSAPC) Subject: FW: IPP Changes - Version 4 - Fwd to GM, AW & PB Attachments: Simple Procurement Policy v6.2 January 2018.pdfGentlemen For appropriate action. Tks Di From: Nightingale, Ian (DIS) Sent: Wednesday, 17 April 2019 5:19 PM To: Butlin, Matthew (OSAPC) Cc: Dowsett, Phillip (DIS) Subject: RE: IPP Changes ‐ Version 4 ‐ Fwd to GM, AW & PB Matthew I have gone back and looked at this and what happened when the decision was made by SPB that many of the grants to NFPs were procurement contracts it triggered a change in the SPB Simple Procurement Policy (attached) to include SAIPP requirements ‐ it’s in the shaded box at the top of page 10. One simple solution might be while SPB are making changes to all the procurement documentation because of the MoG changes we could ask them to change this section and anything in the SPB acquisition planning policy/ acquisition plans templates that only requires NFP contracts answer a simple question which would be ‘is the business based in the State and are the employees residents of SA?’ I am fairly relaxed about this so if the business and service offering is based in SA all the agency would need to do is reflect this in their acquisition plan (which we will see now for contracts over $4mill) and if the business and support services are coming from outside the State an ECT or IP Plan is required. The SPB Acquisition Planning Policy could be changed to reflect this. Happy to discuss further Ian Ian Nightingale Industry Advocate T 8226 8956 E ian.nightingale@sa.gov.au W https://industryadvocate.sa.gov.au/ A Level 13, 99 Gawler Place, Adelaide, 5000 1Want to stay Informed? Register here to be on our mailing list or follow us on: DISCLAIMER: The information in this e-mail may be confidential and/or legally privileged. It is intended solely for the addressee. Access to this e-mail by anyone else is unauthorised. If you are not the intended recipient, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. If you have received this email in error, please delete it from your system and notify the sender immediately. OIA does not represent, warrant or guarantee that the integrity of this communication has been maintained or that the communication is free of errors, virus or interference.From: Butlin, Matthew (OSAPC) Sent: Wednesday, 17 April 2019 2:17 PM To: Nightingale, Ian (DIS) <Ian.Nightingale@sa.gov.au> Subject: Re: IPP Changes ‐ Version 4 [DLM=For‐Official‐Use‐Only] Thanks Ian. Much appreciated. Will get you further details on the nfp matter. Cheers Matt Sent from my iPhone On 17 Apr 2019, at 2:03 pm, Nightingale, Ian (DIS) <Ian.Nightingale@sa.gov.au> wrote: For Official Use Only Matthew, I have attached a revised table following the MoG changes. The communication I sent to Heads of Procurement addressed the issue of DIS backing out of this space completely and requiring my office to pick up the functions identified in the State Procurement Board documentation. There has been similar discussion with SA Water, DPTI and Renewal SA and they are happy to incorporate these changes into their procurement processes too. Regards Ian 2 54 www.spb.sa.gov.au Simple Procurement Policy Version 6.2 Date Issued January 2018 Review Date July 2019 Principal Contact State Procurement Board Telephone 8226 5001 Contents 1. Purpose ...... 3 2. General Principles ...... 3 3. Policy Statement ...... 3 4. Policy Scope ...... 3 5. Better Customer Charter for Business ...... 4 6. Definitions ...... 4 7. Procurements up to and including $33,000 ...... 5 8. Simple Procurement Process (>$33,000 and up to and including $550,000) ...... 5 9. Simple Procurement Process Requirements ...... 10 10. Limiting the Number of Suppliers ...... 12 11. Use of Established Government Facilities ...... 13 12. Further Information ...... 13 13. Related Policies and Guidelines ...... 13 14. Templates ...... 14 Simple Procurement Policy Page 2 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 1. Purpose This policy outlines the State Procurement Board’s (Board) mandated requirements and advises on the procurement of simple goods and services. This policy includes information on the:  simple procurement process  specific requirements for determining the number and type of quotes sought  use of the standard documentation and templates. 2. General Principles The object of the State Procurement Act 2004 (Act) is to advance government priorities and objectives by a system of procurement for public authorities directed towards: a) obtaining value in the expenditure of public money b) providing for ethical and fair treatment of participants c) ensuring probity, accountability and transparency in procurement operations. In applying these principles to simple procurements, public authorities are to ensure that the process and level of effort is commensurate with the nature and value of the procurement, recognising that unnecessary process creates cost and resource burden. All expressions defined in the Act have the same meaning in this policy. The South Australian Funding Policy for the Not-For-Profit Sector identifies 30 best practice principles for government and NFP funding relationships across eight categories:  Robust planning and design  Collaboration and partnership  Proportionality  An outcomes orientation  Achieving value with relevant money  Governance and accountability  Probity and transparency  Community development principles. These best practice principles have been incorporated into this policy where relevant. 3. Policy Statement Public authorities are required to undertake an efficient, timely and cost effective process while ensuring appropriate levels of diligence and accountability in accordance with the mandated requirements outlined in this policy. 4. Policy Scope This policy applies to all public authorities as defined in the Act. This policy applies to procurements up to and including $550,000 (including construction works up to and including $165,0001) and excludes procurements above $550,000 that are undertaken 1 The State Procurement Board is only responsible for construction projects up to this value. Refer section 5 of the State Procurement Regulations 2005 for further information. Simple Procurement Policy Page 3 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 in accordance with the Acquisition Planning Policy. There are additional specific requirements when undertaking procurements with the not-for- profit sector. These requirements apply for procurements where not-for-profit organisations form the primary supplier base. These requirements are identified in this policy through the use of a shaded text box. This policy does not apply to grants as defined in Treasurer’s Instructions. All dollar values are GST inclusive. 5. Better Customer Charter for Business The Better Customer Charter for Business released in July 2016 outlines the South Australian Government’s commitment to being the best public service customer to suppliers and sets out what current and potential suppliers can expect from the government when they bid for procurement opportunities. The Better Customer Charter for Business requires that:  suppliers be treated fairly, equally and with respect  documents utilised during the simple procurement process use clear, simple and easy to understand language  consistent information is provided to all suppliers  feedback from the supplier community be used to identify opportunities for improvement  barriers to good procurement practice are removed. Other specific elements of the charter have been incorporated into this policy. 6. Definitions The Simple Acquisition Plan outlines the simple procurement process to be undertaken and is used to seek approval from the delegate before approaching the market. The Simple Purchase Recommendation outlines the evaluation process undertaken and is used to seek approval from the delegate once the preferred supplier has been chosen. The Simple Procurement Report combines elements of the Simple Acquisition Plan and Simple Purchase Recommendation and outlines the evaluation process undertaken. The Simple Procurement Report is also used to seek approval from the delegate once the preferred supplier has been chosen but does not require obtaining approval before approaching the market. The Request for Quote is used to invite suppliers to bid on goods and services and outlines the purchaser’s requirements, applicable terms and conditions, the proposed contract and a response form. A not-for-profit organisation is an organisation that is operating for its purpose and not for the profit or gain (either direct or indirect) of its individual members. NFP organisations fall within two broad categories:  charities, and Simple Procurement Policy Page 4 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019  other NFP organisations that are not charities, for example: most sporting and recreational clubs, community service organisations, professional and business associations and social organisations. Charities must register with the Australian Charities and Not-for-profits Commission (ACNC). (Refer https://www.ato.gov.au/Non-profit/Getting-started/Starting-an-NFP/) 7. Procurements up to and including $33,000 Public authorities are to:  seek a minimum of one quote in accordance with local public authority procurement procedures  consider opportunities for small, start-up and Aboriginal businesses operating in South Australia with a view to involving South Australian business  minimise the effort associated with very low value purchases  comply with local public authority procurement procedures  reduce the effort associated with high transaction, high volume purchases by adopting strategies including the use of across government contracts, period contracts, standing orders and the use of purchasing cards. A simple acquisition plan is not required. 8. Simple Procurement Process (>$33,000 and up to and including $550,000) The simple procurement process follows a three stage process: Simple Acquisition Simple Supplier Simple Contract Planning Selection ManagementSimple Acquisition Planning Simple acquisition planning consists of:  defining the requirement (e.g. quantity, quality, delivery, timing)  consideration of the business need and public value  assessing other strategies such as utilising existing period contract arrangements  identifying how to approach the market  undertaking a risk assessment to consider and address relevant risks  obtaining financial authorisation  determining the selection/evaluation process  developing a written specification to suppliers where appropriate  determining a time and location for the submission of quotes. Commercial Focus: Procurements are to be undertaken efficiently and effectively in accordance with good commercial practice. Splitting a procurement into smaller dollar value elements to avoid approval thresholds or other policy requirements is not permitted. Simple Procurement Policy Page 5 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 Stakeholder Engagement with the Not-For-Profit (NFP) Sector Public authorities and the NFP sector need to work together, wherever possible, when planning and developing procurement strategies to identify the community outcome, or the desired impact or change being sought, and to ensure outcomes are based on community need. Market Research for the Not-For-Profit (NFP) Sector When developing procurement strategies, the following community development principles need to be considered:  consideration of the desired impact or change being sought within the community  assessing procurements on their impact on improving social, cultural and/or economic outcomes for South Australia  reflecting a community development approach which builds resilience in the community and the capacity to respond to change and crisis and empowers individuals in the process of development and service delivery. The service requirements then need to be specified in relevant documentation such as the Simple Acquisition Plan or Simple Procurement Report. Record Keeping: Records supporting the purchase need to be maintained and appropriate documentation completed to seek relevant approvals, commensurate with the nature and complexity of the transaction. Risk Management: Project risks for simple procurements greater than $33,000 must be documented in accordance with the requirements outlined in the Board’s Risk Management Guideline. Contractual Documents: For low or medium risk procurements, the Standard Goods and Services Agreement is to be used, as far as practicable, for simple procurements greater than $33,000. For high risk or non-standard procurements, the Standard Goods and Services Agreement may not be appropriate. Advice may be required from the public authority’s procurement staff on the format of the contract to be utilised. For low risk procurements up to $220,000, the Standard Purchase Order may be utilised. For low risk minor construction projects up to $165,000, the Minor Works Agreement may be utilised. Further information on contracting options is available in the Market Approach and Contract Documents Guideline. Contracting Options with the Not-For-Profit (NFP) Sector When developing a specific procurement strategy for contracting with the NFP sector, a fee- for-service arrangement is to be used wherever possible. There may be some situations when contracting with a NFP organisation where it may be more suitable to provide up-front block funding. Simple Procurement Policy Page 6 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 Determining the Contract Period: Not-For-Profit Sector In order to provide greater certainty and improve sustainable service delivery, public authorities must establish contractual agreements of three years plus three years plus three years (3+3+3) for all NFP procurements longer than two years where appropriate (i.e. where risk is low and there are no linked funding arrangements with the Commonwealth Government). The appropriateness of long-term contracts needs to be assessed on a case-by-case basis and needs to represent value for money, and be balanced against the potential for new suppliers, whilst also considering the potential to encourage innovation in service delivery and new service models. In agreeing to award a 3+3+3 contract, reviews need to be undertaken prior to each extension term. Liability: Public Authorities are required to undertake a risk assessment for all procurements to determine the appropriate risk treatment to be applied. Low to medium risk procurements that use the Standard Goods and Services Agreement or Minor Works Agreement are to include a default liability limit selected at between one and five times the total value of the contract, as determined by the risk of the procurement (Global Liability Cap). A minimum of one times the value of the contract is applicable for procurements at the low end of the risk range, with the upper limit of five times the value of the contract for procurements at the higher end of the medium risk range. For standing offer contracts (e.g. panel contracts), the total contract value is the aggregate value of all purchase orders that have been issued at the time that a claim is made. The Global Liability Cap applies to all loss, both direct and indirect (consequential) and there are no heads of liability that are uncapped. Agency chief executives are authorised to approve cap limits outside this range. Example risks to be considered in arriving at a limit include:  personal injury including sickness and death  loss of or damage to tangible property  infringement of intellectual property rights  any liability to a third party arising from any negligent or wrongful act or omission of the supplier, its employees, agents or subcontractors, or arising from any breach of the Supplier’s contractual obligations to the public authority  an intentional tort  a breach of trust  fraud or dishonesty. The selected default liability limit is to be reflected in the market approach and contract documents issued. Suppliers are not required to provide indemnities. Where a Consultant is being contracted and is a member of an occupational association that has Simple Procurement Policy Page 7 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 a scheme for limiting the occupational liability of members approved under the Professional Standards Act 2004 (SA), then under the Standard Goods and Services Agreement the Consultant may choose either to have its liability to the Principal for any loss or causes of action arising in relation to the provision of Services limited in the manner provided by the scheme or to have its liability limited under the Global Liability Cap. For simple procurements up to $220,000 that use the Standard Purchase Order, the Supplier’s liability is limited to an amount equal to the value of the goods and/or services purchased under the Standard Purchase Order. Where the Standard Goods and Services Agreement or Minor Works Agreement is not appropriate, for example, for ICT, multi-agency or high risk procurements, the Crown Solicitor’s Office is to be consulted to develop a bespoke contract with appropriate liability provisions. Principal Officers are responsible for approving contract provisions that allocate and manage liability under these types of contracts that are consistent with the public authority’s risk assessment. Responsibility for accepting any limitation or exclusion of liability rests with the public authority, and ultimately the Principal Officer. Insurance: There are three key types of insurance cover for the supply of goods and services:  Public Liability  Product Liability  Professional Indemnity The type(s) of insurance required will depend on what is being procured as outlined in more detail below. The State is not required to be named on the Supplier’s insurance policy and the Supplier is not required to provide a copy of the insurance certificate (including subsequent renewals). Public Liability Insurance  covers the Supplier against legal liability for personal injury or property damage arising as a consequence of the Supplier’s duty of care to third parties  is required for all goods and services procurements  is to be set at a minimum level of $1,000,000 for low to medium risk goods and services procurements. Product Liability Insurance  covers the Supplier against the legal liability for personal injury or property damage arising as a consequence of the supply of a defective product (products include goods sold, supplied, repaired etc)  is required where the Supplier supplies products under a contract and the required level of cover under the contract is equivalent to the amount of cover held by the Supplier  is often included as an addition to Public Liability or can be issued as a separate policy. Professional Indemnity Insurance  covers the Supplier against legal liability which may arise out of an act, omission or breach of professional duty in the course of the Supplier’s business such as the provision of negligent advice  is only required where professional advice or services are being supplied (for example, auditing, economic analysis or accounting services, and consultancies).Where professional services are being contracted, the Consultant must effect and maintain Professional Simple Procurement Policy Page 8 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 Indemnity insurance during the Agreement at the minimum level of cover required in the ordinary course of the Consultant’s business and such cover must continue for three years after the expiry of the Agreement. Where the procurement risk is deemed high, please contact the Underwriting Insurance Section of SAICORP for advice about appropriate levels of insurance to be held by the supplier. Adjusting Approval Templates: When utilising the Simple Acquisition Plan, Simple Purchase Recommendation and Simple Procurement Report template, extra details under the relevant template heading can be added as long as these do not contradict other Board policies and guidelines or other aspects of the template. Additional information can also be added in the template section entitled Public Authority Additional Requirements. Public authorities can brand the templates to suit their own internal requirements. Approvals: Where the procurement value exceeds the procurement authority of the public authority, the Simple Acquisition Plan must be submitted to the Board for approval, except when using Across-Government or Lead Agency contracts as discussed in the Panel Contract Guideline. Simple Supplier Selection Simple supplier selection consists of:  seeking quotes from suppliers  evaluating quotes received against evaluation criteria  clarifying and negotiating the quote as appropriate  obtaining approval to engage the successful supplier/s  executing a contract  debriefing unsuccessful suppliers. Managing Conflicts of Interest: Any actual, potential or perceived conflict of interest that has the potential to unfairly affect or influence the proper outcome of a decision or process, must be identified and managed in accordance with the Code of Ethics for the South Australian Public Sector. Meeting Time-frames: Public authorities are to undertake procurements within the time-frames specified to suppliers and keep suppliers informed of the progress of their quote. Request for Quote: A Request for Quote (RFQ) template is to be used, as far as practicable, for simple procurements greater than $33,000. The RFQ is to be tailored to the procurement with only the minimum information necessary to fairly evaluate quotes sought. All information received from suppliers is to be treated as confidential. Simple Evaluation Plan: A Simple Evaluation Plan can be used, where required, especially for more complicated and multifaceted simple procurements. Evaluation Criteria for Not-for-Profit (NFP)_Sector Procurements Procurements involving the purchases from the NFP sector may require specific evaluation criteria. In particular the following evaluation criteria may be appropriate:  service delivery model (suitability of methodology to achieve required outcomes) Simple Procurement Policy Page 9 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019  organisational experience (demonstrated experience to provide services)  time-frames (demonstrated ability to meet timeframes in relation to the services)  qualifications and recruitment of staff  organisational capacity and quality management system  level of stakeholder engagement  engagement with Aboriginal and Torres Strait Islanders or other culturally and linguistically diverse groups  Industry Participation Policy  transition management Debriefing Unsuccessful Suppliers: Unsuccessful suppliers must be offered the opportunity to receive feedback on their quote. Simple Contract Management Simple contract management consists of:  ensuring roles and responsibilities for managing the contract have been identified and understood by the relevant parties  ensuring the contract is effectively implemented and that the supplier delivers the requirements of the contract  addressing any issues that arise  processing invoices for payment within 30 days of the supplier’s invoice being received by a public authority unless stipulated otherwise in a contract. Relationship Management – Not-For-Profit (NFP) Sector Positive working relationships need to be maintained through effective collaboration that supports the needs and interests of NFP organisations and funding recipients. Public authorities need to openly communicate with contracted NFP organisations and work collaboratively, respectfully and flexibly to achieve agreed outcomes. Contract Register: Public authorities must maintain a contract register to record contracts valued at greater than $33,000 as set out in the Contract Register Policy. Contract Renewals for the Not-For-Profit Sector Where there is funding certainty, a minimum of six months’ notice must be provided to not- for-profit organisations regarding whether long term contracts are to be renewed. 9. Simple Procurement Process Requirements Threshold and Up to and Greater than $33,000 Greater than $220,000 Requirement including and up to and including and up to and including $33,000. $220,000. $550,000. Quotes to be A minimum of A minimum of three written A minimum of five written sought one quote must quotes must be sought, with quotes must be sought, with be sought. at least one quote from a at least one quote from a South Australian supplier (or a South Australian supplier (or a supplier based in the region in supplier based in the region in the case of regional the case of regional Simple Procurement Policy Page 10 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 Threshold and Up to and Greater than $33,000 Greater than $220,000 Requirement including and up to and including and up to and including $33,000. $220,000. $550,000. procurement) where possible. procurement) where possible. Approval Comply with A Simple Acquisition Plan A Simple Acquisition Plan Documentation local public template and subsequent template and subsequent authority Simple Purchase Simple Purchase procurement Recommendation template or Recommendation template procedures. Simple Procurement Report must be used and approved An acquisition template must be used and by the appropriate delegate. plan is not approved by the appropriate A Simple Procurement Report required. delegate. template cannot be used in lieu of the separate documents. Request for Comply with The Request for Quote template is to be used, as far as Quote local public practicable. authority procurement procedures. Risk Comply with Project risks must be documented and a risk assessment Management local public undertaken to determine the default liability cap. authority procurement procedures. Purchase The Standard Purchase Order can be utilised for Not applicable. Order low risk procurements. Contracts Comply with For low to medium risk For low to medium risk local public procurements, the Standard contracts, the Standard Goods authority Goods and Services Agreement and Services Agreement is to procurement is to be used, as far as be used, as far as practicable. procedures. practicable. For minor works construction projects valued up to $165,000 (GST inclusive), the Minor Works Agreement may be used. Industry Under the Industry Participation Policy, all procurements will consider opportunities Participation for small, start-up and Aboriginal businesses operating in South Australia with a Policy view to involving South Australian business in the opportunity through provision of a quote. Public authorities may also focus on a particular region if a contract is to be performed in or near that area for the express benefit of that area. Industry Public authorities can procure goods and services Where there are opportunities, Participation directly from eligible businesses that provide a the industry participation Policy - value-for-money quote. weighting can be increased Aboriginal above the minimum of 15% Economic and accompanied by tailored measures for Aboriginal Participation participation that are directly relevant to raising economic participation for Aboriginal businesses and employees. Economic No specific A metropolitan or regional A metropolitan or regional Economic Contribution Test Economic Contribution Test Simple Procurement Policy Page 11 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 Threshold and Up to and Greater than $33,000 Greater than $220,000 Requirement including and up to and including and up to and including $33,000. $220,000. $550,000. Contribution requirements. (ECT) must be completed. No (ECT) must be completed with Test weighting is given to the ECT, a weighted evaluation but is used to differentiate bids methodology adopted, with a that represent good value and minimum weighting for the that meet the needs of ECT of 15 percent applied as a Government. component of the overall evaluation criteria. 10. Limiting the Number of Suppliers The number of quotes sought can be restricted to less than the required number if there are legitimate reasons for limiting the number of suppliers. Reasons include:  only a limited number of suppliers with the capability, experience and suitability to meet the public authority’s needs and no alternative or substitute exists  the need for compatibility with existing equipment or services  obligations under warranty or other contractual arrangements that require the use of goods or services from a particular supplier  an absence of competition due to technical reasons (e.g. exclusive licence, proprietary information or protection of patents)  there is significant public risk or threats to life and property  the cost of changeover is prohibitive  the item is an original work of an artistic/cultural nature (e.g. works of art or artists engaged for a performance)  a response to an urgent government policy decision  an unsolicited proposal with very advantageous conditions and appropriate approval  the requirement can be met by an eligible Aboriginal business in accordance with he Part 4.5 of the South Australian Industry Participation Policy – Procedural Guidelines. Reasons for Limiting the Number of Suppliers: Not-For-Profit Sector Collective impact involves a collaborative approach between government, the business sector, the not-for-profit sector and clients to address significant social problems. Where a collective impact approach is operational in any given (geographic or issue-based) area which addresses the purpose for which the funding has been made available, a contract can be negotiated with appropriate not-for-profit organisations if such negotiation is beneficial to the community. In sensitive policy areas such as domestic violence support or foster care, there may be requirements to contract specific not-for-profit organisations with appropriate experience, skills or organisational alignment to the objectives to be achieved from the procurement. In these cases, directly negotiating with the not-for-profit organisations may be appropriate. Limiting the number of suppliers in the community services sector may be appropriate where no supplier exists with the necessary skills and there is a need to develop competitive suppliers, or the requirements being sought are so specialised that there is one or limited suppliers with the necessary skills and experience. In some instances, to ensure service continuity, public authorities may need to retain an existing supplier without openly approaching the market. In these situations, public authorities must assess and document in writing that the supplier is:  meeting a continuing need Simple Procurement Policy Page 12 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019  meeting the agreed service specifications, quality standards and contractual requirements  operating efficiently and effectively  actively engaged in continuously improving services to provide the best possible service to the community. The justification for limiting the number of suppliers must be outlined in the relevant Simple Acquisition Plan or Simple Procurement Report and approved by the appropriate delegate who needs to ensure that limiting the number of suppliers is not due to avoiding competition and that the integrity of the procurement process is maintained. Public authorities must have in place controls to ensure the number of limited supplier procurements are minimised. This may include additional approval or review requirements, for example, through the central procurement unit, or the use of a restricted number of delegates. 11. Use of Established Government Facilities Established government facilities are defined as government owned and managed agencies, organisations, entities or statutory authorities that are able to provide goods or services to other areas of government. Examples include the provision of training services from TAFE SA, professional and technical services from Rural Solutions SA, the sale of plants from State Flora, and general printing and publishing services from Government Publishing SA. Where public authorities are satisfied that value for money can be achieved, they are encouraged to source goods and services from an established government facility. Public authorities are required to develop and maintain appropriate documentation when sourcing goods or services from an established government facility without undertaking a competitive process. However, if a public authority chooses not to utilise an established government facility by seeking to approach the market for a suitable alternative, they are required to develop an appropriate market strategy in line with procurement policies and processes. 12. Further Information State Procurement Board Secretariat Phone: (08) 8226 5001 Email: stateprocurementboard@sa.gov.au www.spb.sa.gov.au 13. Related Policies and Guidelines SPB Risk Management Guideline SPB Acquisition Planning Policy SPB Supplier Selection Policy SPB Contract Management Policy SPB Market Approach and Contracts Documents Guideline SPB Probity and Ethical Procurement Guideline SPB Board Procurement Reporting Policy SPB Contract Register Policy South Australian Industry Participation Policy Simple Procurement Policy Page 13 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 South Australian Industry Participation Policy – Procedural Guidelines DPC Circular PCO33 Industry Participation Policy DPC Public Value Framework: Public Value: Putting citizens at the centre of policy, service design and delivery Better Customer Charter for Business SAICORP Government Contracts: A Guide to Insurance Issues DPC Circular PC044 South Australian Funding Policy for the Not-For-Profit Sector 14. Templates Simple Acquisition Plan Simple Purchase Recommendation Simple Procurement Report Simple Evaluation Plan Request for Quote Standard Goods and Services Agreement Standard Purchase Order Terms & Conditions Minor Works Agreement Simple Procurement Policy Page 14 of 14 Issue Date: January 2018 Version 6.2 PUBLIC – I2 - A1 Review Date: July 2019 55Cranwell, Denise (DPC)From: Comeadow, Kristal (DCP) Sent: Friday, 3 May 2019 3:43 PM To: Witthoeft, Aaron (OSAPC) Cc: Evans, Peter (DCP); Chmielewski, Elizabeth (DCP); Odgers, Deborah (DCP) Subject: RE: SAPC Procurement Inquiry - SACOSS further submission - OOHC growth placements - DCP comment Attachments: DCP Productivity Commissioner supplementary response.pdfHi Aaron, Thanks for the feedback, please find attached DCP’s Supplementary response to supersede the previously supplied draft response (nil amendments made to the draft). Should you require any additional information please feel free to contact Peter or myself. Have a great weekend! Kind Regards Kristal Comeadow Senior Project Officer Stakeholder Engagement Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3240 e Kristal.comeadow2@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) Sent: Friday, 3 May 2019 2:22 PM To: Comeadow, Kristal (DCP) Cc: Evans, Peter (DCP) ; Chmielewski, Elizabeth (DCP) Subject: RE: SAPC Procurement Inquiry ‐ SACOSS further submission ‐ OOHC growth placements ‐ DCP comment Hi Kristal – thanks for the heads up. I was specifically seeking DCP’s response to SACOSS’ views regarding OOHC growth placements and late payments, but thank you for the fulsome wider response. I am under significant time pressures to complete this chapter but will endeavour to consider DCP’s responses to those issues other than the growth places. DCP’s responses in relation to this inquiry have been very well prepared and consequently have been a significant and insightful contribution to the inquiry. Many thanks. Aaron. From: Comeadow, Kristal (DCP) Sent: Friday, 3 May 2019 2:13 PM To: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Cc: Evans, Peter (DCP) <Peter.Evans3@sa.gov.au>; Chmielewski, Elizabeth (DCP) <Elizabeth.Chmielewski2@sa.gov.au> Subject: FW: SAPC Procurement Inquiry ‐ SACOSS further submission ‐ OOHC growth placements ‐ DCP comment 1Hi Aaron, As requested, please find attached DCP’s draft supplementary response subject to Executive approval. We are currently in the process of seeking Executive approval and will confirm final version as soon as received. Should you have any queries please feel free to contact me. Kind Regards Kristal Comeadow Senior Project Officer Stakeholder Engagement Contract Management Reform Department for Child Protection / Level 2 East, 31 Flinders St, Adelaide SA 5000 t (08) 8226 3240 e Kristal.comeadow2@sa.gov.au w www.childprotection.sa.gov.au From: Witthoeft, Aaron (OSAPC) <Aaron.Witthoeft@sa.gov.au> Sent: Tuesday, 23 April 2019 10:27 AM To: Evans, Peter (DCP) <Peter.Evans3@sa.gov.au>; Comeadow, Kristal (DCP) <Kristal.Comeadow2@sa.gov.au> Subject: SAPC Procurement Inquiry ‐ SACOSS further submission ‐ OOHC growth placements ‐ DCP comment Hi Peter and Kristal, Following the roundtable held in relation to NFPs on 16 April, SACOSS have provided a supplementary submission to the Commission. That submission again raises the issue of the growth in Out of Home Care places beyond the block funded places, its views around late payments and an alternative approach. SACOSS set out the issue in some specificity. To ensure the Commission can reflect a balanced view on this specific issue can I please ask you to consider SACOSS’ views around the OOHC places. I make this invitation acknowledging your most recent comments I have received regarding Information Request 6.7, and your previous advice in relation to OOHC place management. You may wish to comment on the specific timeframes SACOSS has raised, any specific feedback DCP has received from service providers about any difficulties created through the current funding arrangement, and comment on their proposal to use a standard G&S contract (which I understand is consistent with your most recent advice of DCP intending to offer service providers fee for service arrangements). I would also be happy to meet and/or discuss on the phone with you. If we could aim to have something from you by no later than COB Wednesday 1 May that will assist me to meet our drafting timeframes. If this timeframe is not amenable please give me a call to discuss. Although there may be some further points of clarification from me in relation to your most recent response, or to seek DCPs comments on other industry submissions, I wanted to give you as much opportunity to consider the specific issues raised in this submission as possible. Happy to chat and thanks. Aaron Witthoeft T: 08 8226 7107 Principal Inquiry Economist W: www.sapc.sa.gov.au aaron.witthoeft@sa.gov.au 2Information contained in this e-mail message may be confidential and may also be the subject of legal professional privilege or public interest immunity. If you are not the intended recipient, any use, disclosure or copying of this document is unauthorised. 356SA Productivity Commission – Government Procurement Inquiry supplementary response Following the roundtable held in relation to Not for Profits (NFPs) on 16 April 2019 and supplementary submission from SACOSS, SAPC requested DCP to be provide additional information. Draft recommendation 6.2: Noting the role of the NFP Funding Policy in the procurement and grants process, the government independently evaluate in the second half of 2019 the implementation of the NFP Funding Policy and associated reforms to identify any impediments to and opportunities to strengthen, implementation, with the evaluation process to consider the views of public authorities and the NFP sector (page 229 of draft report). Extract from SACOSS supplementary response We propose that DR 6.2 be amended as follows (changes in italics): Noting the role of the NFP Funding Policy in the procurement and grants process, the government independently Department of Treasury, in conjunction with NFP Peak bodies, evaluate in the second half of 2019 the implementation of the NFP Funding Policy and associated reforms to audit contracts issued since 1 January 2019 and establish base-line data and identify any impediments to and opportunities to strengthen, implementation, with the evaluation process to consider the views of public authorities and the NFP sector. DCP Supplementary response This recommendation focuses on ways to reduce potential impediments to the implementation of the NFP Funding Policy, with discussions at the SAPC roundtable further focussing on potential areas for review within the suite of the State Procurement Board (SPB) policy. The implementation of DPC Circular 044 and associated NFP elements of SPB Policy has increased knowledge of NFP procurement and has alleviated a great deal of ambiguity between previous grant funding processes and the need to transition to activity now covered by the State Procurement Act. Whilst the initial implementation of the policy has been successful, more complex issues surrounding the implementation of this policy are now arising, which are highlighting inconsistencies with existing State Procurement Board policy. To ensure compatibility and alignment with the NFP sector principles at a practice level, DCP suggests the following policies and guidelines are reviewed:  Direct negotiation requirements o DCP has found the SPB to be considerate in granting direct negotiation approval in justifiable instances since the implementation of the NFP policy. The enforcement of a Purchase Recommendation in instances where minimal negotiation is required (i.e. renewal of existing services) results in the procurement process becoming less efficient as a result of bureaucratic requirements, that may not be required. For 1 Commercial in Confidence / Sensitive example requiring resources to draft and coordinate approvals of purchase recommendations, increased timeframes and reduction of the organisation to be adaptable to meet the needs of children and young people in care. o DCP proposes that the SPB consider a consolidated approval document for use in prescribed circumstances across all values  Simple procurement o DCP is currently participating in the SPB assurance process. Arising from this has been a very black and white interpretation of the Simple Procurement Policy, which increases the bureaucracy of a low value procurement and risks outcomes being achieved, particularly with the NFP sector. o DCP operates a decentralised model for low value procurement (<$550,000), whereby the process is managed by the purchasing business unit, with centralised approval and advice available. Through education, business units are aware of the need to seek multiple quotes and to prepare formal documentation to seek procurement approval. o What is happening in practice (across NFP and non NFP sectors) is that business units are seeking quotes and then completing a Simplified Acquisition Plan (SAP) outlining the outcome of the process. Subsequently, the SAP is serving as a consolidated Simplified Procurement approval document (for use up to $550,0000; not just $220,000). o Where it can be justified that a robust process has been undertaken commensurate with the value of the acquisition and/or where minimal negotiation is required, alignment of this “in practice” approach would enable a more effective and responsive process at low value.  Contract management policy o At present the Contract Management policy attempts to group all deviations under one scale, which creates ambiguity around the assessment and levels of approval required for NFP Funding agreement variations and Goods and Services agreement variations. o DCP proposes that the policy is reviewed to better differentiate what constitutes a variation to an NFP Funding agreement vs a Goods and Services agreement versus a variation to a procurement approval. Also specifying the assessment and approval requirements for each type of variation. o Compulsory Contract management training, required by the SPB, for all personnel managing contracts >$4.4m, does not currently demonstrate a strong working knowledge of contract management within the NFP sector and is focused on traditional commercial relationships. o DCP proposes that this compulsory training is revised to better equip emerging contract managers with the unique challenges facing block funded arrangements or alternatively offering a specialist qualification in NFP Contract Management. 2 Commercial in Confidence / Sensitive  Evaluation guidance (Supplier selection and acquisition planning documents) o Previous versions of the documents provided guidance as to alternate methodologies, however, the current version provides little guidance regarding the level of flexibility tolerated by SPB in adapting differing evaluation methodologies in order to better adapt to NFP sector requirements. o DCP proposes evaluation guidance is reviewed to incorporate alternate methodologies.  Emergency situation procurement policy o The Emergency Situation Procurement Policy currently only applies to those agencies with emergency responsibilities. The policy scope “does not cover ‘urgent’ or ‘unplanned’ procurements undertaken by public authorities as part of their normal, ongoing operations.” o The Child Protection sector is reactive to meet the demand of the children and young people requiring safe quality care outside of the family home. Contractual arrangements are often required on short notice and with a specific service provider who can best meet the care needs of the child or young person, based on individualised and sometimes specialised needs dependent on the child or young person’s situation. o DCP is currently putting into place procurement practices that allow for flexibility, but this is still restrictive. In some cases, existing contractual arrangements cannot meet the needs of the child or young people, either due to capacity or capability of the existing procured services. The wellbeing and immediate placement required to ensure safe quality care of the child or young person, in these situations cannot wait for a procurement approval to be granted. o DCP proposes the policy is reviewed to incorporate a provision to allow some flexibility in the procurement process where the immediate health or wellbeing of a person is at jeopardy, outside of those agencies with emergency responsibility (i.e. responding to a state emergency).  Industry Participation Policy (IPP) o DCP appreciates what the policy is seeking to achieve by maximising economic benefit for South Australia through Government procurements. For DCP this does not impact our decision making processes, as the majority of contracted procurement spend (i.e. 72% of overall annual contracted spend) is attributable to Out of Home Care Service provision by NFPs that needs to occur locally in which to best meet the needs of children and young people (i.e. the carers need to be based in SA where the children and young people are from). o The data collection process within the Economic Contribution Test (ECT) and Industry Participation Plan provides a level of bureaucracy for our service providers, which based on our service requirements, does not produce additional value to procuring local service providers. 3 Commercial in Confidence / Sensitive o SA government currently has a 0.5% Aboriginal spend target, for which DCP is committed to meeting and exceeding. To support DCP in meeting and exceeding this across government target, information on Aboriginal business engagement is essential. o DCP propose that the policy be reviewed to remove the necessity for the data to be collected for weighting purposes in the overall evaluation plan, and instead be used as a data gathering instrument in which to measure and report on Aboriginal business engagement. 4 Commercial in Confidence / Sensitive Information request 6.7: The Commission would like to understand the impact (i.e. how many contacts could potentially be affected) of the late payment interest regime in the event the current statutory exclusion of NFPs is remedied. Extract from SACOSS supplementary response …past performance is no indicator of future performance and both we and presumably the government would like to limit or eradicate such late payments, so it is unclear how many contracts may be impacted in future. More importantly though, under the RCTI system, DCP is taking up to a month after the end of the quarter to match its data to establish the supply. Given the growth placements are payment in arrears the sector is exploring whether the standard goods and services contract could apply. Again, this is a current discussion with DCP and is being conducted in good-faith to resolve the issues. We are not sure what the final arrangement will be, but the example does illustrate both the payment delay caused by the RCTI process and the difficulty in estimating which and how many contracts may be impacted by changes to the late payments regime. DCP Supplementary response Late payment interest would only apply to 8% of current Out of Home Care (OOHC) service provider contracts, i.e. those on Goods and Services Agreement, whereby the invoices are created and produced by the Service Provider. The remaining 92% of current OOHC service provider contracts currently exist under a block funded Not for Profit (NFP) Funded Agreement, whereby payments in advance are scheduled as per the contract and a Recipient Created Tax Invoice (RCTI) produced by DCP. DCP developed a growth strategy in late 2017 which focussed on increasing family based care options for children and young people in Out of Home Care (OOHC). This strategy is part of broader OOHC reforms, and critical to supporting the realisation of Nyland Recommendation 128 to Phase out the use of commercial carers in any rotational care arrangements except in genuine short-term emergencies. It is also critical to ensure placements are available to support the significant growth in Out of Home care placement the South Australian Child Protection sector has experienced in recent years, on average 8.91% annual increase since 2014/2015. The strategy to increase and better support foster and kinship care placements through incentivised growth payments to NFPs providing Family Based Care (FBC) services, was introduced in 2018. These growth payments are additional to the scheduled quarterly block funded payments, which are always paid in advance on or before the 1st of the quarter. South Australia is the first jurisdiction to implement this approach, which has been a learning curve requiring DCP to constantly review and fine tune the process based on feedback and analysis. Other jurisdictions generally wait until contract review dates to vary the contract to adjust for any increase in placements or additional payments for services beyond those contracted. Reviewing the Growth Payment process and taking sector feedback into consideration, has meant that we are improving our approach and outcomes every quarter. For example, when the growth 5 Commercial in Confidence / Sensitive payment process was initially introduced in 2018, teething issues associated with a new process and reconciling data from variable and inaccurate data sources meant some substantial delays were experienced. In some instances, taking in excess of 12 weeks for payment to be made from initial receipt of NGO return. As the quality of the data improves, it is anticipated that the payment process will improve. For example, 2018/2019 Quarter 2 growth payments has seen a significant improvement in payment processing times from the initial receipt of the NGO return. Please see figure 1 for an overview of the process and timeline. Figure 1: 2018/2019 Quarter 2 Growth payment timeline DCP is currently working with Family Based Care Providers to provide solutions to fast track growth payments for placements above contract requirements. Two options that are being presented to the sector for consultation include: 1. Investigate options to reduce the reporting and reconciliation period, consequently enabling growth payments to be made earlier. Current process allows 1 month for NGOs to provide their acquittal information and reconciliation of this data, take 2-3 weeks from receipt. An option to fast track the growth payment process, could involve reducing the time period between quarter end and acquittal return date. 2. NGOs chose to move their Family Based Service Contract (in its entirety not just growth element), from a block funded (paid in advance) NFP Funded Agreement, to Goods and Services Agreement (fee for service). This would still require data presented on invoices to be reconciled prior to payment. 6 Commercial in Confidence / Sensitive </div> </article> </div> </div> </div> <script type="text/javascript" async crossorigin="anonymous" src="https://pagead2.googlesyndication.com/pagead/js/adsbygoogle.js?client=ca-pub-8519364510543070"></script> <script src="https://cdnjs.cloudflare.com/ajax/libs/jquery/3.6.1/jquery.min.js" crossorigin="anonymous" referrerpolicy="no-referrer"></script> <script> var docId = '0e272f26f54368b410bf2023b8d6c287'; var endPage = 1; var totalPage = 471; var pfLoading = false; window.addEventListener('scroll', function () { if (pfLoading) return; var $now = $('.article-imgview .pf').eq(endPage - 1); if (document.documentElement.scrollTop + $(window).height() > $now.offset().top) { pfLoading = true; endPage++; if (endPage > totalPage) return; var imgEle = new Image(); var imgsrc = "//data.docslib.org/img/0e272f26f54368b410bf2023b8d6c287-" + endPage + (endPage > 3 ? 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