Why develop a contract?
The contract defines:
- the relationship between the buyer and the service provider
- describes what the service provider is required to deliver
- described key dates when the services are required to be received
The contract is a written document:
- to be agreed by both parties
- will be signed by both parties, signifying their agreement
The specification generally forms part of the contract.
A well-designed contract is a key tool to mitigate risks identified in Analyse risks.
How to develop the contract
Step 1: Check if templates are available
Construction
Standard form contract must be used – see Standard form contracts.
Limited circumstances apply when the standard form contracts do not need to be used – see Use of Victorian Public Construction Contracts (Instruction 7.1.2).
Goods and services
Standard form templates are recommended for use. See Goods and services standard contracts to select an appropriate template. Note that standard templates may need to be modified.
Step 2: Prepare initial draft
Contracts include:
- terms and conditions – standard across all contracts
- annexures and schedules – describe procurement specific information
Complete the annexures and schedules to the extent possible. Do not change the standard terms and conditions. Seek legal advice is needed to change the terms and conditions.
Prepare the initial draft, drawing on earlier steps.
Ensure that the contract:
- uses the standard form terms and conditions without amendment
- includes as much specific information as possible about deliverables by both parties in the annexures and schedules
- describes how the parties will interact clearly and with clarity
- follows a logical structure
- does not contain superfluous information
- is fair and balanced – does not favour any potential participant
- is consistent with other approach to market documents
Step 3: Include procurement-related policies
When developing the contract, include model clauses for procurement-related policies. Some template contracts include these model clauses. If not, insert the relevant model clauses.
Draw on Plan for procurement-related policies.
Step 4: Consult with key stakeholders
Consult with the following:
- project sponsor
- subject matter specialists
- members of evaluation team, if known at the time
Step 5: Administrative approval
Seek administrative approval for the contract from the project sponsor.
Obtain this administrative approval before approaching the market.
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
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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