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Government Model Contracts2nd Edition
June Ralston | Senior Policy AnalystMalcolm Morrison | Specialist Senior Legal Advisor
Government Procurement SolutionsAugust 2011
Today’s presentation
• Background• 2nd Edition:
- Legal changes- Format changes
• Invoicing & prompt payment• Operational expectations• Government Model RFx• Questions
BackgroundHistory of the GMC
Concept
Government Model Contract • Standard, simple, plain English
set of conditions of contract• Low-value, low-risk, common
goods and services• Used by all Public Service
departments and State Services agencies
Benefits for agency buyers
• Consistent practice across government• Standard treatment of legal risk• Minimise negotiations & legal input• Easy to prepare• Efficiency in high-volume, low-cost
transactional contracting
Benefits for suppliers
• Consistency across government• Plain English, easy to understand• Fairer balance of risk• Minimise negotiations & legal costs• Simplifies doing business with
government
History
• 1st Edition launched July 2010• Piloted by departments• Survey February 2011 (agencies & suppliers)
• Review in March 2011• Additional feedback• Development of 2nd Edition
Review findings
• Piloted by 74% of departments• Wide variety of goods and services• Highest value contract: $6M• Longest term contract: 5+5 years• Value thresholds:
- No threshold = 37%- Under $100k = 30%
• E-commerce:- Allow variations by email = 33%- Allow notices by email = 56%
Biggest challenges to deployment
• Fear of something new• Being used to our own templates• Updating current agreements• Educating people how to use them• Judging the level of risk• Telling supplier’s it overrides their T&Cs• Negotiating appropriate changes
User satisfaction
Rated as ‘good’ to ‘excellent’• Fit for purpose = 70%• Ease of preparation = 75%• Ease of understanding = 77%• Structure, format and content = 77%
What worked well?
• Standardisation across departments• Schedule 2 being locked down• Simple to use & easy to understand• Adaptable model• Endorsed by government• Good balance between managing risk
to the buyer and being fair and reasonable to the supplier
What could be improved – the issues?
• Wording of supplier’s standard of care• Need for insurance & options• Treatment of limitation of liability• No fault termination for policy change• Short form required for minor purchase• Not suitable for some SLAs• Use of colour • Treatment of intellectual property
2nd Edition ChangesLegal
2nd Edition – Legal changes
Insurance 2nd Edition GMC
Default position – no insuranceOption to include a requirement for insurance in Sch 1
Same default position – no insuranceNew box in Sch 1 with insurance options that must be completed
Limitation of liability 2nd Edition GMC
Default position – no limitationOption to include requirement in Sch 1
Same default position – no limit of liabilityOption to include
Civil engineering 2nd Edition GMC
Request that many aspects of the contract be changed to reflect civil engineering industry standards and insurance policy wording.
GMC not intended to replace industry model contracts.MED website now links buyers to:• CCCS• PPP standard contract
2nd Edition – Legal changes
Buyer’s right of termination 2nd Edition GMC
Contained clause allowing immediate termination due to a change in government policy. Seen as unfair and difficult to justify as policy does not change overnight.
Clause deleted.General ability to terminate on 20 business days notice retained.
Supplier’s right of termination 2nd Edition GMC
Suppliers seeking clarity of their rights of termination.
Added that supplier can terminate:• on 20 days notice if buyer fails to pay
an invoice that is due• no fault termination with buyer’s
consent
2nd Edition – Legal changes
Supplier’s standard of care 2nd Edition GMC
1st Edition:Supplier to deliver the services “diligently, efficiently and to a high professional standard.”Range of alternatives offered
Changed to:“with due care, skill and diligence, and to the appropriate professional standard or in accordance with good industry practice as would be expected from a leading supplier.”
Records 2nd Edition GMC
Wording of clause was confusing and subject to misinterpretation.
Clause rewritten with the assistance of Archives NZ. Now called “Information management”
Handover 2nd Edition GMC
Applied only where a contract had been terminated.
Amended to apply when contract has been terminated or on expiry.
2nd Edition – Legal changes
Notices by email 2nd Edition GMC
Original clause stated:“Notices must be signed by the appropriate manager or person having authority to do so.”
Additional wording:“…in the case of an email sent by the appropriate manager or person having authority to do so.”
Confidentiality 2nd Edition GMC
Better wording suggested by a couple of agencies
Improved wording adopted.
2nd Edition – Legal changes
Additional clauses
• Alternative supplier terms and conditions do not apply
• No poaching of staff
• Signing allowed in counterparts
Template name change 2nd Edition GMC
Public Service templates (the Crown) GMC Form 1
State Services templates (any other agency) GMC Form 2
2nd Edition ChangesFormat
Format changes – general
• Versions no longer colour ‘coded’• Instructions in red• Wording to complete in yellow highlight• New Zealand Government brand
removed from Form 2 templates
Format changes – Page 1
• Changed to table format• Definition of precedence moved to
become a separate clause• Some wording moved to definitions
section:- “Party”- “Parties”- “Date of execution”
Format changes – Schedule 1
• New box for insurance • Explanation of ‘Charges’ duplicated
intentionally• Prompt - if not NZD state the currency• Additional tables:
- Currency Exchange Rate box (optional)- Supplier’s Approved Sub-contractor- Address for invoices
New templateGMC Lite
2nd Edition GuidancePrompt payment
Invoicing & prompt payment
• New guidance for suppliers:- Quick Guide to invoicing & payment- Invoicing Check List- Invoice templates
• New Guidance for agency buyers:- Quick Guide to Prompt Payment
• Encourage agencies to publish their invoicing requirements and payment processes – certainty for suppliers
• Support email / electronic invoicing
20th of the month Rule
March April
month of paymentservices delivered
Invoice dated month services delivered
Invoice delivered within 3 business days of following month
Payment by 20th month
GMC provision:If the Buyer receives a Valid Tax Invoice on or before the 3rd Business Day of the month, it must be paid by the 20th of that month.
2nd Edition GMCOperational expectations
In use by 1 December
• Required : Public Service Departments, NZ Police and NZ Defence Force
• Expected: State Services agencies• Agencies can choose how to apply • Template not intended for:
- mixture of goods & services- IT or software development- construction works- professional services - to replace industry model contracts
MED to report back to Cabinet
Rules of use
• Cannot physically change Schedule 2 (pdf)• Minor amendments to terms and conditions
allowed where there is a good business reason to do so
• All amendments recorded in Sch 1• Agencies can modify Page 1 and Sch 1 to
create their own agency standard template• Users cannot amend terms and conditions
in standard template without legal advice
Guidance and support
• Templates = Form 1 and Form 2 versions:- Goods- Services- Minor Purchase (GMC Lite)
• Updated guides:- GMC User Guide- Guide to E-commerce
• One-on-one support:- [email protected]
Government Model RFXNew RFP template
Government Model RFx - concept
• Ongoing simplification of documents• Objective to develop suite of RFx:
- RFQ - EOI - ROI - RFP - RFT
• And the market research tool:= Request for Information (RFI)
Government Model RFx - use
• First template = RFP available 1 October• Use as the default template for standard
RFP tenders• Standard structure that is adaptable• Required : Public Service Departments,
NZ Police and NZ Defence Force• Expected: State Services agencies• Transition & use by 1 Feb 2012• MED to report back to Cabinet
Government Model RFx - features
• Easy to understand – plain English• Simple to navigate• Standard terms and conditions of tender• Buyers encouraged to:
- Provide clear explanation of how tenders will be evaluated
- Publish weightings- Publish guide to scoring
• Standard format for suppliers’ generic information (easy to replicate)
Government procurement reform
driving better value
Q&A
