Effective Use of New Service Funding Agreements

Effective Use of New Service Funding Agreements Demystifying the standard agreement Dr Nick Seddon Special Counsel, Blake Dawson Waldron

The agreement - what is it? • Legally, probably a contract • Case law that indicates that these types of agreements are not contracts • But case law is probably out of date • The government certainly wants this to be a contract

What is a contract? • A legally enforceable agreement • Therefore the funding agreement is legally enforceable

Legal enforceability - what does that mean? • Ultimately, either party can enforce in a court • Enforcement is problematic with this type of contract • Usual remedies are not very appropriate eg. damages • Lack of enforceability explains why agreement is somewhat prescriptive

Self-enforcing remedies (ie. not court enforced) • Most obviously, government can withdraw funding/terminate • Lesser measures are included such as dispute resolution

Nature of contract • Obviously very different from commercial contract • Not a zero-sum game like many commercial contracts • Co-operative and work-together ethic in Background

The important bits • Clause 2 - duration - is important for funding security • The services - what the organisation has to do • The funding - what the organisation gets to do it

Duration Probably a matter of policy but obviously the longer the better from organisation’s perspective eg recent move to triennial funding

What the organisation has to do • Combination of cls 3 (services), 5 (various), Sched 2 (services), Sched 3 (reports) • Plus some other bits and pieces eg insurance in cl 5.3 and Sched 6

How is performance measured? • Quality of human services very difficult to measure but remember cl 5.6 (User Satisfaction) • Outcomes (item 2 of Sched 2) often very difficult to state • Outputs (item 3 of Sched 2) easier to state but may not be a significant indicator of performance (eg people through the door)

How is performance measured? • Performance indicators (item 4 of Sched 2) - how different from outcomes or outputs? • How are performance requirements (item 5 of Sched 2) and qualitystandards (item 6 of Sched 2) measured and how are they different from items 2-4?

How is performance measured? • It is very important to pin these things down so as to avoid potential disagreement later • If they cannot be pinned down then omit them • No point in setting standards that cannot be met or cannot be measured

Routine obligations • Meeting various accountability obligations is demanding • For example, reporting requirements • Diverts resources from main task • Nevertheless, must be done

Routine obligations • These are measures that can be assessed by the government • Therefore get them right e.g use Outlook or wall planner • During negotiation process, be absolutely clear about what is required • If in doubt discuss and, if necessary, confirm in writing

Specific clauses - the indemnity (cl 5.4) • Could look worrying but very low risk • It is about the organisation doing something that exposes the Territory to a loss or a claim - organisation must indemnify the Territory • Either insure (if reasonably available) or go bare (with very small risk of going into liquidation)

Specific clauses - conflict of interest (cl 7) • It is not the end of the world to have a conflict • The important point is disclosure (if in doubt - disclose) • The conflict may then be managed • May require no action so long as everyone aware

Specific clauses - intellectual property (cl 9) • Could look worrying for organisation • But will rarely be a problem • Both parties are in effect non-profit bodies • If there is a potential problem, then negotiate

Assets - what’s covered? • Territory assets listed in Sched 5 • if not listed, item worth >$3000 and bought/hired wholly or partly with the Funds • doesn’t cover the microwave or the kettle!

Assets - what obligations? • obligations in Sched 5 eg. maintenance and insurance • money used to purchase may have to be returned if termination of agreement (cl 11) • asset may have to be returned if not passed on to another organisation (cl 11)

Access to premises • Territory’s right to enter premises (cl 5.1) • must be written notice, reasonable period and reasons given • cannot access private information • can ask for specific gender of person doing inspection

Provision of information • Territory’s right to information (cls 5.7 and 6.4) • Request must be in writing • Must give reasonable time for compliance

Treatment of information by organisation • clause 8 looks long and complicated • confidential and personal information must not be disclosed • mostly common sense (if in doubt, don’t disclose) • chatting to a friend about a client is disclosure even if you trust the friend

Dispute resolution, stopping funds and termination • obviously try to sort out difficulty first • stopping funds or termination of agreement absolute last resort

Any questions?

Effective Use of New Service Funding Agreements