Determining the process
The area of your organisation responsible for procurement will be able to advise you on the process to follow when sourcing goods and services and then managing any contracts/agreements. This will vary depending on the type and value of the goods or services required. The Victorian Government website buyingfor.vic.gov.au is the authority on goods, services and construction work procurement and provides valuable advice and information.
Records must be created and properly managed during the sourcing (planning, approach to market, tendering, offer selection) and contract management phases, in accordance with Standards set by PROV. PROS 19/04 Operational Management Standard states the mandatory requirements, with the Operational Management Standard Implementation Guide providing advice on how to implement them.
It should be possible to reconstruct the entire sourcing and contract management processes from records, while they are still in business use and for their minimum retention period. The head of the public office is responsible for ensuring these obligations are met.
Suppliers (private or not for profit sector) are NOT bound by the Public Records Act 1973, so do not have to comply with the PROV Standards. This means the public office needs to:
- Include any recordkeeping requirements in the contract (for example, if the supplier will be creating or receiving information/records which need to be handed over to the public office)
- Monitor performance against the recordkeeping requirements, as part of contract management
- Factor in the costs of the supplier fulfilling any recordkeeping responsibilities.
Why are sourcing and contract management records important?
Records documenting the sourcing phase provide evidence of how the selection of a supplier(s) was carried out and how and why decisions were made and approvals given. Records are needed to demonstrate that decisions were based on obtaining value for money as required under the Financial Management Act 2004 Standing Directions 2018 S. 18.104.22.168 (e). It is not uncommon for sourcing decisions to be queried - by unsuccessful suppliers, the media and during audits (internal and external).
Contract management records provide evidence that government has received the services and goods it has paid for and that taxpayers money has been used properly and effectively. Conflicts can arise when obligations and deliverables are not clear or not met. Disputes can be costly, time-consuming and damaging, particularly if they result in legal proceedings. It is recommended that public offices seek legal advice before entering into a contract with a supplier, particularly for high value or complex services, programs or products.
Good recordkeeping through the entire sourcing and contract management phases protects the interests of all parties and deters corrupt conduct. Full and accurate records defend staff and the public office against complaints or challenges. To achieve this, the records need to form an audit trail, which fully explains what happened, when, why, how and with whose authority.
Recordkeeping clauses for contracts
Requirement 5.1 of PROS 19/04 Operational Management Standard states that:
"When contracting a supplier to deliver services, programs or products to the public office or on behalf of the public office, recordkeeping requirements must be identified and included in contracts and agreements."
Section 5 of the Operational Management Standard Implementation Guide sets out some recordkeeping considerations when contracting a supplier(s) to:
- Deliver a service or product to the public office; or
- Deliver a service or product on behalf of the public office.
Section 6 Appendix of the Guide has some examples of possible wording for recordkeeping clauses. These are provided for guidance only and can be adjusted for different scenarios.
Outsourcing government functions
It is common for public offices to contract a supplier(s) to deliver a government function on their behalf. This is often referred to as "outsourcing" the delivery of a program or service. For example, a not-for-profit organisation might be contracted to deliver counselling services to public clients or a private company to deliver a licensing program to businesses, on behalf of a public office.
When a government function is "outsourced" and delivered by a supplier, the records created and received as part of delivering that function must be designated as "public records" and managed in accordance with PROV Standards. This includes ensuring that:
- Government can access any information it needs
- Records are retained for their lawful minimum retention period and not destroyed unless authorised
- Records which are not yet eligible for destruction are returned to government when the contract ceases
- Permanent value records are identified and transferred to PROV at the agreed time
- Resources for properly creating and managing the necessary records are factored into the cost of the contract.