3.6. Awarding the contract

While the actual process of awarding the contract will be straightforward in many situations, for larger value and/or sensitive contracts, a considerable amount of time and effort may be involved. Irrespective of the particular circumstances, it is important that in finalising each contract all the required approvals are obtained and protocols followed. This involves making sure that all necessary matters are covered in the final contract; completing the drafting of the contract; briefing stakeholders as required; obtaining the required approval(s); and arranging for contract signing.

The contract constitutes the record, usually the full record, of an agreement between the two parties that is enforceable by law. In the majority of cases, a contract will represent the entire agreement. In this way the contract effectively supersedes all prior offers, representations, agreements and understandings, whether oral or in writing, relating to the contract. It is better practice for this to be stipulated in the contract itself, particularly in major contracts that are awarded as a result of a formal tender process.

In finalising a contract, the following documents, where available, should be used as a basis to accurately reflect the parties’ agreement:

• any records of agreements made during post-tender discussions or negotiations;
• the documentation containing the acquiring entity’s requirements as contained in its request documentation, including the draft contract terms and conditions; and
• the tenderer’s submission (response) which may include the tenderer’s preferred terms and conditions.

Completing the contract drafting

The steps that generally need to be followed to complete the contract documentation are:

• obtaining all necessary approvals required to comply with legislative and policy requirements^[75];
• carefully reviewing the final document and ensuring all aspects of the contract are completed, including schedules and plans;
• having the final contract checked by legal advisers or other advisers, where appropriate;
• notifying the successful contractor and making sure they understand the contract signing formally constitutes acceptance of the contract terms and conditions;
• arranging physical signing of the document which can involve a formal signing ceremony in some cases; and
• notifying unsuccessful tenderers.

It is likely that such things as insurances, indemnities, and Intellectual Property Rights or deeds have been checked prior to deciding to negotiate with particular tenderers. However, a final check to ensure that all necessary contract provisions have been met and any relevant documentation has been provided should be undertaken before the contract is approved.

Briefing of stakeholders

It is important that stakeholders^[76] are briefed on the progress and/or the outcome of tender evaluations^[77] and/or contract negotiations. The purpose of these briefings is two-fold. Briefings provide the opportunity for input from stakeholders on their requirements and expectations. They also provide the negotiating team and/or the contract manager with the opportunity to update stakeholders on any issues or concerns that may affect them. Where the contract manager has not been involved in the development of the contract and/or negotiations, a full debrief should be provided to the contract manager to enable understanding of the background to the contract and to support effective contract start-up and management.

Contract approval and signing

The contract signatory is responsible for entering into a contract agreement or arrangement under which public money will become payable in accordance with the terms of the contract. It is important that the person who signs a contract has the appropriate authority to do so, is fully aware of their responsibilities and is satisfied that all necessary approvals (including those required under FMA Regulation 9 and 10) have been obtained and relevant policies have been complied with.^[78] Identification of the officers who have the necessary authority to enter into contracts to certain financial limits will generally be contained in the acquiring entity’s Chief Executive Instructions (or equivalent) or procurement procedures. It is essential that the contract is approved by a person who has the appropriate authority.

It is better practice for the delegate responsible for the contracting process to also actually sign the contract, whenever possible. In some circumstances this may not be possible and in such situations the signatory to the contract needs to make sufficient enquiries, of those that have been involved in earlier stages of finalising the contract, to be satisfied that all necessary matters have been appropriately dealt with.

The order in which parties sign the contract has no bearing on the legal status of the document. It is, nevertheless, better practice for the acquiring entity to request a contractor to sign the contract first as this allows the entity to ensure that the final contract has not been varied in any way from that which was agreed between the parties.

A practice that is sometimes adopted at this stage is for the contract signatories to initial each page of the contract, including all annexures and attachments. There is no legal requirement for this to be done. However, it is important that the final contract is checked carefully for accuracy and consistency and the contract signatories may consider it appropriate to initial each page of the contract as evidence of the contract’s completeness. Another practice that is commonly adopted is to bind the contract, thus reducing the risk of inadvertent or deliberate replacement pages being inserted.

Notifying tenderers of contract award

Following the award of a contract, the acquiring entity must promptly inform all tenderers of the decision. On request, the acquiring entity must provide each unsuccessful tenderer with the reasons why its submission was not successful, and if requested, provide debriefings to successful tenderers.^[79] In the case of an expression of interest process or an application for inclusion on a multi-use list, unsuccessful tenderers may request written reasons for rejection. It is better practice for acquiring entities to provide feedback in person as a matter of course. Some entities schedule debriefing sessions and invite tenderers to attend, leaving it to them to participate if they wish.

Public announcement

Details of the successful contractor are generally made public, according to public sector reporting requirements and organisational protocols.^[80]

In some circumstances, for example, following a high-profile procurement process, the Government may wish to publicly announce the award of a contract. Any public announcement of a contract award should not be made until the successful completion of all contract negotiations, a contract has been signed by both parties and all unsuccessful tenderers have been notified.

The public announcement of the award of a contract prior to at least these steps being completed has the potential to undermine the acquiring entity’s negotiation position and its legal rights. In exceptional circumstances, where a decision is made that an announcement prior to contract signature is necessary, the announcement should indicate that the award of the contract remains subject to the negotiation of final terms and conditions satisfactory to the acquiring entity.

 

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