Contracting Principles

Contracting practice needs to be based on respect, clear expectations and healthy relationships between the parties. Sound contracting principles should be applied consistently across all contracting arrangements.

Principles will differ depending on:

• the sector in which the agency operates
• the term of the contract
• the service and expected outcomes.

 

The Auditor-General expects public entities to demonstrate that they have entered in and managed funding arrrangements with Non-Government Organisations according to the following principles:

• Lawfulness: Public entities must act within the law , and meet their legal obligations.
• Accountability: Public entities should be accountable for their performance and be able to give full and accurate accounts of their activities, and have in place governance and management arrangements suitable to address any concerns.
• Openness: Public entities should act in a way that is - and is seen to be - transparent.
• Value for money: Public entities should use resources effectively, economically and without waste in achieving their policies and end-user benefits.
• Fairness: Public entities have a fundamental public law obligation to always act fairly and reasonably. What public entities do should be open and impartial.
• Integrity: Anyone who is managing public resources should do so with the utmost integrity.

A number of principles underpin Treasury's Guidelines for Contracting with Non-Government Organisations for Services Sought by the Crown (2003):

• Services purchased through contracts and other types of funding relationships should contribute to the achievment of Government outcomes and objectives.
• Contracting should reflect the needs of the ultimate users or recipients of the services.
• Contracts should provide appropriate accountability for public money.
• Contracts should represent value for money.
• The quality of service delivery will usually be of central importance.
• The Crown and its organsiations should act in good faith.
• Government agencies should understand the nature of the organisations they and the Crown contract with.

The Ministry of Health's contracting principles reflect those contained in the Treasury Guidelines for Contracting with Non-Government Organisations.

To enhance its contracting practices, the Ministry of Health revised their Buying Goods or Services policy, drawing together a number of separate policies and processes relating to departmental and non-departmental expenditure contracting.

The following principles are drawn from this policy.

Ministry of Health's principles

Ministry staff involved with buying goods or services will:

• buy in a manner that maximises value for public money and contract in a manner that ensures high levels of accountability for public money
• buy goods or services on an open and competitive basis
• be aware of the Ministry’s public law obligations
• be aware of, and comply with, the relevant law concerning the formation and performance of contracts
• treat all potential providers in a fair and equitable manner
• not pay for services related to contracts that are in draft form unless the payment is approved by the relevant Deputy Director General
• ensure the choice of buying method is defensible to both audit and government query
• avoid creating a contractual situation during the competitive bid process itself, ie: don't commit the Ministry to any obligation during or outside the process (except at the point of signing the contract)
• not enter into verbal agreements under any circumstances
• file all documentation covering the lifecycle of buying goods or services.

Compliance with other policies

Ministry staff involved with buying goods and services will comply with the Ministry of Health's:

• Code of Conduct
• risk-management policies when identifying and managing procurement and contracting risks
• Conflicts of Interests Policy
• Foreign Exchange Policy when purchasing goods and/or services from overseas
• Financial Delegations Policy
• Petty Cash Policy
• Credit Card Policy
• Purchase Orders Policy
• government procurement policies (especially in relation to legislative and inter-government commitments), as detailed by the Ministry of Economic Development, in Government Procurement in New Zealand: Policy Guide for Purchasers.