What is a contract review?
A contract review closely examines a contract to ensure it meets high standards including:
- accuracy
- completeness
- legality
The review looks at the specifics, such as:
- performance
- commitments
- expectations
- potential challenges
The review helps an Agency understand if the contract is fit-for-purpose and provides value for money. This informs decision making about the future of the contract.
The contract should be reviewed at least annually, prior to exercising an option to extend or variation, on contract closure, and as required.
Typically, legal experts, contract managers, or other senior managers conduct the review to ensure alignment and protect the Agency’s interest.
For goods and services see, Value for money – goods and services guide.
How to conduct a contract review
Step 1: Review supplier performance
Review, Monitor performance activities to assess how the supplier is performing.
Check to see that the overall performance aligns with the contract. This review may include:
- performance measures listed in the contract
- reporting requirements
- measures to address underperformance
- dates for delivery
- quality requirements
- complaints raised about service delivery
- user feedback
- review of issues and risks
Step 2: Review the scope of work
Review the scope of work in the contract.
Check to see that it aligns with the requirements and specifications agreed upon by the Agency and supplier.
Consider if the scope of work has changed, and if there are any new requirements.
Step 3: Terms and conditions
Carefully examine all terms and conditions to ensure they are clear, fair, and legally sound.
This may include:
- payment terms, see Contracts for fair payment
- delivery schedules
- warranties
- indemnification clauses
- dispute resolution mechanisms
- termination clauses
Step 4: Pricing and Payment
Confirm that the pricing details, payment schedule, and any applicable discounts or penalties are accurately reflected in the contract.
Step 5: Compliance and regulations
Consider if the contract complies with all relevant laws, regulations, industry standards, and procurement- related policies.
Step 6: Intellectual Property Policy
Review clauses related to intellectual property ownership, licensing, usage rights, and confidentiality to safeguard proprietary information and prevent disputes.
For more information see, Intellectual Property Policy
Step 7: Insurance and liability
Consider that insurance requirements and liability provisions adequately protect both parties in the event of unforeseen circumstances or damages.
For goods and services see, Insurance provisions – goods and services guide.
Step 8: Termination and exit strategy
Review conditions and procedures for contract termination. This may include:
- notice periods
- termination for cause
- associated penalties or obligations upon termination
Step 9: Dispute resolution
Examine the dispute resolution mechanisms outlined in the contract to ensure they are practical and fair for the Agency and supply. This may include:
- negotiation
- mediation
- arbitration
- litigation
Step 10: Appendices and attachments
Review all supporting documents referenced in the contract to make sure they accurately reflect the agreed-upon terms. This may include:
- appendices
- attachments
- specifications
- drawings
Step 11: Signatories and authorisation
Confirm that the contract is signed by the Agency’s authorised delegate.
Check the supplier representatives has authorisation so that both signatures are valid and binding.
Step 12: Report outcomes of the contract review
Follow Agency processes to report the outcome of the contract review.
For goods and services contracts, Contract management – goods and services guide sets out a scalable framework for reporting.
Step 13: Implement remedies, if needed
If shortcomings are identified, determine, and implement remedies.
If the contract effectively captures the intent of the Agency and supplier it can mitigate potential risks and disputes.
Step 14: Create and retain records
Follow Agency specific processes to record performance monitoring activities. Good record keeping helps to:
- manage risk
- provides auditable evidence of events and decisions
Follow Agency specific rules for recording decisions and storing records.
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:
- procurement rules and policies
- Agency specific rules and policies related to monitoring performance
Follow Agency specific rules on when to seek an approval and who can give the approval.
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