Conclude the contract

Understand the steps involved to conclude a contract.

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What is concluding the contract?

Concluding a contract may involve:

  • winding up the contract, when the service is either:
    • fully delivered
    • no longer required
  • winding up the contract and transitioning to a new contract
  • ending the contract early

A contract may be concluded for reasons including:

  • performance – both parties have performed contractual obligations
  • consent – both parties agree to end the contract early
  • breach – a breach of an essential terms of the contract gives the party not a default the right to end the contract early
  • frustration – an unpredictable event occurs, without default by either party, that makes continuing with the contract:
    • impossible
    • commercially impractical
  • insolvency – if one party to the contract becomes insolvent, the other party may end the contract early

Tailor actions related to concluding a contract to suit the contract, considering the contract’s:

  • size and length
  • scope
  • complexity

How to conclude a contract

Step 1: Review contract

Review contract documents to identify service provider obligations, including:

  • performance requirements
  • reporting requirements
  • transition requirements

Conduct end of contract reviews, following procedures set out in:

Step 2: Determine if service provider has fulfilled its obligations

Determine if the service provider has completed its obligations.

Has the service provider fulfilled its obligations:

  • If yes, go to Step 3.
  • If no, implement remedial action, then go to Step 1.

If the service provider is unable to fulfil its obligations, see Resolve disputes.

Determine if the service provider has fulfilled its commitments made under procurement-related policies.

Step 3: Confirm that the Agency has fulfilled its obligations

Confirm that the Agency has fulfilled its obligations.

Review contract documents to identify Agency obligations.

Step 4: Implement transition activities

Does the contract include transition activities?

  • If yes, implement the transition activities.
  • If no, go to Step 5.

The transition stage of a contract can include:

  • intellectual property hand over
  • data and asset transfer to the service provider
  • enacting an option for the new service provider to employ staff currently providing the services
  • maintenance of service commitments by the outgoing service provider
  • inducting the new service provider

Step 5: Action return of data and assets

Review records of data and assets transferred to the service provider.

Implement contract processes for the return of data and assets:

  • transferred to the service provider
  • generated by the service provider during the contract

Confirm that the service provider has transferred data and assets.

Has the service provider completed all actions related to transfer of data and assets?

  • If yes, go to Step 6.
  • If no, arrange with service provider to remedy the shortfall.

Step 6: Surplus materials and assets

For are any surplus materials and assets, implement local Agency processes for disposal of assets and material.

For goods and services contracts, see Market analysis and review – goods and services policy.

Step 7: Complete financial matters

Pay any outstanding invoices.

Return bank guarantee or other security held, if appropriate.

Step 8: Initiate warranties or defects period

Depending on the deliverables, initiate:

  • warranties, such as registering the start of a warranty period
  • for construction contracts – the defect liability period.

Step 9: Asset management

Update records in the asset register, following local Agency processes.

Deliverables that may require recording as an asset include:

  • buildings and works
  • information communication technology systems
  • deliverables that include intellectual property
  • deliverables that include data

Step 10: Update contract register

Update Agency contract register, where one is used.

Step 11: Actions at the end of warranty or defects period

At the end of the warranty or defects period, review contractual requirements to ensure the asset is performing as required.

Is the asset performing as required?

  • If yes, release any outstanding bank guarantees.
  • If no, implement actions to remedy any outstanding defects, then release outstanding bank guarantees.

Step 12: Close outstanding purchase orders

Close outstanding purchase orders in the Agency’s financial management system.

Consider:

Manage probity and conflicts of interest

Manage probity – consider issues raised at Probity issues by stage and task.

Conflicts of interest can arise during this task. Identify, declare and manage these.

Address Agency rules

Consult Agency procurement team for advice on meeting:

Follow Agency specific rules on when to seek an approval and who can give the approval.

Follow Agency specific rules for recording decisions and storing records.

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