Develop the contract

Understand how to create the contract using standard form templates.

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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

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:

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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