Establishing the Contract

A contract defines the rights and obligations of both parties once the contract is awarded and is established when an offer is made and accepted.

Depending on the complexity, value and type of goods, services or works being contracted, government agencies will enter into a contract by:

  • paying for the goods, services or works provided;
  • issuing a letter of acceptance;
  • issuing a Purchase Order; or
  • using a more formal written Agreement / Contract which is signed by both parties.

Regardless of the approach, a contract is formed between the Government and the supplier in each case.

For complex or high value purchases, it may be necessary for the parties to enter into negotiations prior to finalising the contract. The purpose of these negotiations is to:

  • test your understanding and assumptions in determining your costs;
  • clarify and rectify any false assumptions;
  • achieve operational refinements and enhancements that may result in cost reductions.

If negotiations are allowed, you will generally be advised that this will be the case in the procurement documentation. The outcomes of these negotiations are reflected in the final contract. Once completed and agreed a contract is then established.

For more information, see Managing the Contract.

The Government's Confidentiality Policy applies to all contracts entered into by Government agencies. The policy provides that in any contract between the Crown and another party, confidentiality requirements in relation to the provisions of the contract are not to be included unless an exemption has been approved as being in the public interest. Exemptions are available in specified circumstances. Further information is available from the publication, Crown Contracts Confidentiality Policy.

When is a more formal written Agreement/Contract required?

Formal written agreements are generally required in the following circumstances:

Goods and Services

Building and Construction

Roads and/or Bridges

  • Purchases over $50 000.
  • Complex purchases.
  • Most IT hardware or software purchases.
  • All minor and major works.
  • All minor and major works.

 

Most formal written agreements entered into by Government agencies will use a standard Conditions of Contract based on the type of purchase being undertaken. These may be varied to suit the particular contract and you should ensure that you read and understand all Conditions of Contract before entering into an Agreement. The key Conditions of Contract used are:

Used for ...

Conditions of Contract...

Most Goods and/or Services procurement excluding IT purchases. Formal Instrument of Agreement attached to request for Quotation documentation or Conditions of Contract attached to the Request for Tender.
Computer hardware, software and IT services (regardless of value). Government Information Technology Conditions (GITC) which have two components:

  • a generic Head Agreement between the Crown and an IT company (organised by Treasury and containing general IT terms and conditions); and
  • individual purchase orders between an agency and an IT company (organised by agencies and containing specific requirements).
​Minor Works
  • ​Formal Instrument of Agreement attached to the Request for Quotation (for low risk/low value works)
  • Australian Standard AS 4905-2002 Minor Works Contract Conditions
​Major Works ​Australian Standard AS 2124-1992 General Conditions of Contract
​Building Construction Consultant Contract​Building Construction Consultant Contract
​Design and Construct Works
  • ​Australian Standard AS 4300-1995 General Conditions of Contract for Design and Construct
  • Australian Standard AS 4902-2000

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