Procurement Assignment

Topics: Contract, Standard form contract, 2011 Pages: 15 (4076 words) Published: April 16, 2012

Advanced Procurement C

Kim Grierson

Please note – all information contained in this document is confidential.

Activity 1 – Standard Form Contracts (SFC)

Tendering and contracting is a large part of Queensland Government business and it makes sense to use a short form contract. These types of contracts minimise legal costs, are quick to prepare and ensure consistency.

SFCs are usually used for low value/low risk purchase (ie simple procurement) of a short term nature and should only be used where there is relative low expenditure relative to the total procurement spend. They do not comprehensively deal with every aspect of the contract but rather focus on the most important elements. Quite often a dollar amount is specified (i.e. the SFC can be used to procure goods and services up to $5,000).

SFCc are commonly used in the following areas:

Trade services including repair work;
Ad hoc services (such as occasional cleaning etc)
Finance services for one off purchases
Basic consultancy services.

The QGCPO has a standard SFC which cannot be amended (in PDF format). Where an agency chooses to use the standard SFC and wish to amend the terms of the SFC they may do so in the Invitation to Offer process. The QGCPO also offers a Short Form Conditions of Contract (including Schedule) which includes a schedule that will form part of the Contract (after completion by the relevant agency). These SFCs have been drafted for use in the Queensland Public sector but may not be suitable for all situations where a short form contract is required (QGM website), therefore the person/agency intending to use the QGCPO SFC may need to seek professional advice.

Obviously where the procurement is high risk/high value a different contract format should be used (e.g. a long form contract/standing offer arrangement).

While SFCs are designed to save time it is important to ensure that the current version is used and the entire document is thoroughly examined for any errors.

SFCs are used widely within QGCPO and DPW, for example the finance sections within DPW use SFCs for low expenditure purchases (such as a purchase order where goods are procured).

Due to a SFC’s lack of adaptability (i.e. cannot be modified) suppliers may be hesitant to enter into a contract where changes cannot be easily made. Where allowed special conditions can be annexed to the Contract but care must be taken to ensure consistency.

Most other large businesses use SFCs for general and day to day contracts and an example is Hydro Tasmania (Annexure 1) where they state that:

“without a suite of standard form contracts, we would spend a lot more time and money preparing contracts from scratch”.

A relevant example of a standard form contract is a rental lease agreement (e.g. General Tenancy Agreement Form 18a - Queensland Rental Tenancy Authority – attached as Annexure 2). Not only can significant savings be achieved by using a standard contract, the lessee is also at an advantage with a standard contract as they will possibly come across these sorts of contracts time and time again during their rental tenancies. For the lessee, a SFC contract also provides benefits including uniformity of terminology so that the SFC is understood by the lay person.

Another example is in the construction industry where SFCs are commonly used. Where we have said above the SFCs cannot be amended, there are times where amendments are made to the SFC (often without legal advice). In this case professional legal advice must be sought when both employers or contractors intend amending the SFC. Where amendments are made to a SFC, this can sometimes impact adversely on the intended intention of the parties. The Department of Public Works uses a generic SFC for minor works where the value is less than $80,000 (Annexure 3). This contract is specifically tailored to meet the needs o the Government...
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