Glossary for funded contract management
This glossary is a guide to assist in the understanding of the terms used in the Funded Contract Management Framework. It applies to child and family, community building, domestic and family violence, and homelessness programs only.
This glossary is not to be used in the legal interpretation of terms in DCJ contracts that are the same or similar to the terms as they appear in this glossary.
Agreement for Funding of Services
Allegation of misconduct
A claim made by one party about something wrong, improper or illegal that has or has not been done by another party.
Misconduct refers to any conduct, of any person, that involves serious or persistent harassment, bullying, fraud, corruption or conflict of interest.
- fraud, forgery, misappropriation, misuse, misdirection, misapplication, maladministration or waste of funds
- conflicts of interest, nepotism, favouritism
- theft, embezzlement, tax evasion
- corruption, dishonesty involving influence
- assault, blackmail, taking or offering bribes
- abuse of public trust
- other criminally prosecutable offences directly related to employment
- failure to report or concealment of an indictable offence
- unreasonable danger to health or safety of clients
- failure to act in accordance with the applicable professional and ethical standards
- blatant disregard for policies
- other serious acts such as refusing to carry out lawful and/or reasonable actions required under a contract.
See contracting issue.
In the context of funded contract management, annual accountability is a mandatory process that ensures funded service providers are accountable for the funding they receive and the services they are contracted to deliver on behalf of the NSW Government.
The annual accountability process requires service providers to submit information to DCJ to verify that they:
- used funds as agreed in the contract with DCJ, and can account for that usage
- complied with key elements of the contract
- achieved the performance requirements set out in the contract.
The process is also used by DCJ to ensure service providers have relevant practices in place to minimise the risk of instability to, or interruption of the services agreed in the contract.
There are separate requirements for reporting annual accountability at the corporate and contract levels.
For DCJ contract managers, the annual accountability process is in two parts:
- Part 1. Check and accept submissions
- Part 2. Conduct performance and risk assessments.
During Part 1, contract managers formally check and accept the accountability information provided by service providers.
Note that ‘accepting’ annual accountability submissions does not mean DCJ agrees with them. It means that DCJ acknowledges the submission has been received, and that Part 1 has been completed.
This information is then used as part of the assessment conducted during Part 2 of the process, which is completed immediately following Part 1.
Service providers may be contacted to provide information about their annual accountability submissions during one or both parts of the DCJ review and assessment process.
Annual accountability focus areas
The annual accountability focus areas address various aspects of governance, financial management and/or service delivery, to ensure funded service providers have sound governance, financial and service system controls in place, for stable and uninterrupted delivery of services.
The focus areas form part of the requirements for reporting annual accountability – corporate level.
The focus areas change from year to year, based on:
- common issues identified during previous annual performance and risk assessments
- significant systemic issues arising during the year
- complaints received about service providers or their staff.
Annual performance and risk assessment
Part 2 of the annual accountability process for DCJ contract managers, the annual performance and risk assessments are used to:
- review the performance of service providers to identify issues which may affect their ability to deliver services
- assess the level of risk, based on the severity of any issues identified
- take the initial actions necessary to assist service providers to address any issues, completed at the corporate and contract levels.
Change of control
A change in the direct or indirect beneficial ownership or control of an organisation; for example, a merger, acquisition or amalgamation.
An approach that puts clients and outcomes at the centre of service delivery. It leverages the strengths of the partnerships between government, non-government and private organisations to deliver the best outcomes for clients.
At DCJ we apply this through five commissioning principles:
- client-centric – having meaningful and culturally appropriate engagement with clients to ensure their feedback, needs and aspirations shape policy, service design and implementation
- outcomes based – focusing on the outcomes to be achieved, and being flexible about who delivers the services and how they deliver them
- value for money – delivering quality services that meet the needs and aspirations of our clients, in the most efficient and sustainable way
- integrated – coordinating and integrating activities across DCJ, together with service partners, to support delivery that improves outcomes for clients
- evidence informed – learning from programs, innovative pilots, literature and evaluation to inform future design and practice.
The person making a complaint.
The process for managing complaints.
Complaints are managed in accordance with the NSW Ombudsman’s Complaint Management Framework (June 2015) and complaint handling model policy, which conform to the Australian and New Zealand Standard Guidelines for complaint management in organizations (AS/NZS 10002:2014).
DCJ is committed to implementing the NSW Ombudsman commitments to effective complaints handling through its policies, procedures and practices. The commitments acknowledge that everybody has the right to complain, and are centred on respectful treatment, information and accessibility, good communication, taking ownership, timeliness and transparency.
The legally binding agreement between DCJ and a service provider to deliver funded services.
- Contracts executed before August 2017 consisted of a Funding Deed and Program Level Agreement (including its schedules and annexures).
- From August 2017, most new contracts will consist of a Human Services Agreement (HSA) comprising an Agreement for Funding of Services – Standard Terms, and Agreement for Funding of Services – Schedule.
In both cases, the two documents form the contract and must be read in conjunction with each other.
Contract-level accountability requires service providers to report income and expenditure against DCJ funding, declare unspent funds, and certify they met the financial responsibilities and contractual obligations for the reported financial year.
The person who has a principal role in managing our relationship with service providers. They manage the contract by:
- engaging closely with the service
- supporting the service provider
- monitoring service delivery and performance
to ensure services are provided as agreed in the contract.
When we refer to ‘contract managers’, lead contract managers are included.
An expression of dissatisfaction made to DCJ, about DCJ or a service provider, in relation to its staff, services or handling of complaints, where a response or resolution is explicitly or implicitly expected or is legally required.*
Contracting complaints relate to matters concerning funded contract management. This includes:
- the way the contract is being managed, and decisions made
- the quality, level and/or timeliness of communication and contracting support provided
- behaviour of DCJ contracting staff
- failure to meet promises or commitments related to managing the contract
- the service delivery practices of another DCJ-funded service provider, such as denying a client access to its services or of providing insufficient service.
A DCJ contracting complaint is not a matter that relates to services funded by another agency or that has another specific process for its management. The following are not treated as contracting complaints:
- allegations of misconduct
- issues arising during the negotiation of a contract with a service provider
- privacy complaints
- requests for information
- concerns, feedback and enquiries
- child protection-related complaints raising risk of harm concerns.
* This definition is adapted from the definition of a complaint in AS/NZS 100002:2014, and is based on and the definition used in the DCJ Complaints and Feedback Management Policy.
A matter which either:
- has had or has the potential to have an adverse impact on the delivery of funded services, and may be related to governance, financial management or service delivery practices
- relates to the conduct, competence or decisions of DCJ, a service provider or their staff
- relates to non-compliance with the terms and conditions of the contract.
The following matters are not contracting issues:
- activities and tasks required to be done as part of managing the contract
- concerns, feedback and enquiries
- the request for an available service to be provided
- an enquiry seeking information or advice
- a request for review in relation to a DCJ policy, without invoking the dispute clause of the contract.
Corporate-level accountability requires service providers to report financial health at the whole-of-organisation level, and declare compliance with their ongoing responsibilities and contractual obligations.
A matter raised by invoking the dispute resolution clause in the contract.
See contracting issue.
DCJ-funded service provider
An organisation contracted by DCJ to deliver funded services on behalf of the NSW Government.
Also referred to as ‘service provider’ and 'funded service provider'.
DCJ-funded service providers include:
- non-government organisations, including peak organisations
- other government agencies.
The efficient and effective management of funds, which includes careful planning, directing, control and reporting of the financial resources of an organisation.
Funded contract management
'Funded contract management' refers to the systems and processes that support the way DCJ manages its contracts with funded service providers.
The objective is to enable both parties to work together to deliver quality services and achieve the outcomes agreed in contracts.
The systems and processes ensure contracts are managed positively and effectively, using a strengths-based approach to work with service providers so that:
- DCJ contracts are achieving better outcomes for clients
- service providers have the ongoing capacity and capability to deliver the outcomes agreed in contracts
- DCJ and service providers are managing issues and risks to ensure the stable and uninterrupted delivery of services
- there is clarity and accountability for all parties as to how funds are being used to meet client needs.
Note that these processes differ with those used to manage goods and services contracts.
Funded Contract Management Framework
The mechanism for documenting and describing how DCJ delivers funded contract management.
The framework specifies the requirements for the funded contract management processes. This ensures service providers and DCJ staff have a common understanding of each other’s roles and responsibilities, as well as the activities to be carried out.
- the terms and conditions of the contract
- details about who can access the service
- workforce, governance, data collection, financial management and other requirements.
The Funding Deed must be read in conjunction with the relevant Program Level Agreement.
Activities for which DCJ pays another organisation to deliver on behalf of the NSW Government.
The system of rules, practices and processes by which an organisation is directed and controlled.
The board, management committee or similar body responsible for governing an organisation.
Human Services Agreement (HSA)
From 1 August 2017, following Procurement Board Direction PBD-2017-01 Procuring human services from NGOs, DCJ is required to use the NSW Human Services Agreement when procuring human services.
‘Human services’ means programs, facilities or services provided to meet the health, welfare and social needs of individuals, families and communities.
The HSA comprises two parts, which must be read in conjunction with each other:
- Agreement for Funding of Services – Standard Terms
- Agreement for Funding of Services – Schedule
DCJ is gradually moving to the HSA. Existing contracts are not affected. DCJ will implement HSAs as existing contracts expire.
See contracting issue.
Joint working arrangement
A mechanism for collaboration and service delivery between organisations in the sector, whether or not the organisations are contracted by the department.
The purpose of the arrangement may be anything from an informal alliance for sharing information, through to a consortium established to tender for a project or services.
There are different approaches to working together, with different levels of collaboration. The nature of the arrangement depends on the needs of each of the organisations involved and, if contracted by the department, the outcomes to be achieved for our clients.
Lead contract manager
This person has an important role as the key representative of the corporate relationship with a service provider.
When a service provider holds multiple contracts with us, or one contract over multiple districts, the lead unit (district or central office unit) assigns the lead contract manager. Both the lead unit and lead contract manager have corporate-level responsibilities for the service provider. However, lead contract managers do not necessarily participate in the formal approval process for all submissions relating to a service provider.
Lead contract managers are responsible for establishing a good working relationship with a service provider’s management team, and for being aware of the overall funding arrangements and performance of each of their services across applicable districts and central office units.
The district or central office directorate responsible for managing the corporate relationship with the service provider.
The person who supervises contract managers.
Line managers may be a grade 9/10, a manager or a director. They provide support and assistance to contract managers in relation to their day-to-day work.
Line managers are the first point of escalation if there are any issues with the contract.
Management and administration fees
For DCJ purposes, when we refer to ‘management and administration fees’ we mean all indirect costs incurred by a service provider in support of delivering the services agreed in the contract with DCJ.
Indirect costs are comprised of all management, administrative, fixed and variable overhead costs.
Management and administration fees are reported as expenses, separately for each contract held with DCJ, as part of contract-level accountability.
Merger, acquisition, amalgamation
‘Merger’, ‘acquisition’ and ‘amalgamation’ are terms used to describe the transaction whereby two or more organisations combine their operations. However, they’re not legal terms with a precise or technical meaning. In fact, different people may use different terms to describe the same transaction.
Regardless of the term used, these transactions involve a change of control.
Some examples of a change of control involving a merger, acquisition or amalgamation are:
- Organisation A gains control of Organisation B, with the ability to decide the composition of its governing body and management, as well as shape its financial and operating policies.
- Organisation A becomes the wholly owned subsidiary of Organisation B. Organisation A retains its governing body and continues to operate under the control of Organisation B. Organisation B may have a majority representation in the governing body of Organisation A.
- Two or more organisations (A and B) join to form a new organisation (C) where the assets and liabilities, rights and obligations of Organisations A and B are then owned by Organisation C. Organisations A and B are dissolved or become dormant.
- Organisation A transfers its operations, assets and liabilities, rights and obligations to Organisation B. Organisation B establishes a new identity with a new leadership team. Organisation A is dissolved or becomes dormant.
- Organisation A takes ownership of the operations, assets and liabilities, rights and obligations of Organisation B. Organisation B is dissolved or becomes dormant.
A cooperative approach between agencies, authorities, services and others throughout the commissioning cycle to ensure the collaborative design and delivery of tailored service responses that improve outcomes for clients
How well a service provider is delivering the outcomes agreed in their contract with DCJ.
In a broader sense, ‘performance’ also refers to a service provider’s ongoing capacity and capability to deliver stable, uninterrupted services, at the level of quality specified in the relevant Program Guidelines.
Performance Improvement Plan (PIP)
A PIP is formal agreement between DCJ and a service provider, jointly developed to identify the actions the service provider will be required to undertake to resolve issues within an agreed timeframe.
At the contract manager’s discretion, and in consultation with the service provider, a PIP is developed and implemented to address either:
- an annual performance and risk assessment that rates ‘high’ overall (instead of developing a Service Development Plan)
- failure to participate or resolve issues identified in a Service Development Plan.
A PIP is mandatory to address either:
- significant issues related to governance, financial management and/or service delivery
- an annual performance and risk assessment that rates ‘very high’ overall.
The need to develop and implement a PIP indicates to DCJ that a service provider has significant issues which pose a very high risk to funded service delivery.
The ongoing interaction between DCJ contract managers and service providers to ensure that funded services are being delivered as agreed and that risk to service delivery is being managed.
The DCJ unit responsible for managing a program and the budget for that program.
Describe how funding programs are to be implemented in NSW. The guidelines ensure that the purpose, parameters and deliverables of the program are clearly articulated, enabling both DCJ and service providers to be clear about what is being funded and why.
Program Level Agreement (PLA)
Outlines the services to be provided by a service provider for a program. A service provider may provide services under multiple PLAs.
The PLA does not provide the full detail of performance measures that service providers are expected to achieve. The document states that services must be delivered in accordance with the:
Schedules to the PLA differ between programs, and may include:
- Practice Guidelines or similar program-related documents
- any implementation plan approved by DCJ
- a Service Delivery Schedule.
The person who heads the area responsible for a program.
This is a role, not a position title.
As defined by ISO 31000, the international standard for risk management, risk is ‘the effect of uncertainty on objectives’. In other words, risk is something that has the potential for positive or negative consequences on objectives.
In the context of funded contract management, a risk is a potential situation, circumstance or event which would adversely affect the ability to achieve better outcomes for clients.
A risk may occur at any future time, but it is not a certainty. It would arise as a consequence of a situation or weakness which can be identified now.
Service Development Plan (SDP)
An SDP is formal agreement between DCJ and a service provider, jointly developed to identify the actions the service provider must take to resolve issues or make service improvements within an agreed timeframe.
At the contract manager’s discretion, and in consultation with the service provider, an SDP is developed and implemented to address any of the following:
- general service delivery improvements
- minor or moderate issues related to governance, financial management and/or service delivery
- an annual performance and risk assessment that rates ‘low’ or ‘medium’ overall.
An SDP is mandatory to address an annual performance and risk assessment that rates ‘high’ overall.
The quantitative and qualitative measures service providers are required to fulfil to meet their contractual requirements.
Service Delivery Schedule
If included as a schedule to a Program Level Agreement:
- provides more detail about the services, activities, client groups and geographic location of services delivered
- documents any implementation or transition plans, milestones, and how growth targets are expected to occur.
Note that with the introduction of the HSA, service delivery schedules will form part of the schedule to that contract.
Any individual, group or organisation external to DCJ that contributes to designing services.
Our service partners include:
- non-government organisations, including peak organisations
- other government agencies
- community groups
- individual specialists and experts in their field
For DCJ purposes, subcontracting is when a service provider uses the department’s funds to pay a third party — whether an organisation or an individual — to fulfil part or all of the services we have contracted the service provider to deliver.
There are three arrangements we consider to be subcontracting:
- A consortium, where a service provider has a contract with one or more third parties to deliver all or part of the contracted services.
- A fee-for-service arrangement, where regularly or from time to time a service provider uses purchase orders to buy services from one or more third parties to deliver all or part of the contracted services.
- A labour-hire arrangement where a service provider hires contractors, either directly or through a third party — full time, part time or casually — to deliver any aspect of the contracted services.
In a subcontracting arrangement, the third party is referred to as a ‘subcontractor’.
Some typical examples of circumstances which are not subcontracting are when a service provider:
- uses the department’s funds to cover ancillary costs, such as cleaning and security, when they’re required to support the running of the contracted services
- hiring temporary staff or contractors for office administration or other duties that aren’t directly related to the contracted services
- paying for a child or young person in their care to visit the doctor, dentist or similar fee-for-service provider, for one-off or a small number of repeat visits.
In all other cases, if a service provider pays a third party to fulfil any part of the service delivery obligations under the contract with us, it is subcontracting. This includes paying a third party to deliver health services that are within the scope of the services for a child or young person’s therapeutic care.
All employees, contractors and agency personnel working for an organisation.
Unspent funds include funds that:
- have not been spent, including as a result of a service provider having a surplus or underspend of the funds in relation to the contracted services
- have not been contractually committed to be paid to a third party in relation to the contracted services in a way that can be identified in a written contractual arrangement with that third party.
A person who provides information and exposes corrupt conduct within an organisation in the hope of stopping it.
Whistleblowing plays a crucial role in managing risk and cultivating an ethical culture, and is an effective way of uncovering potential fraud and corruption.