Frequently Asked Questions (FAQs)
1. Who should use the model contracts?
Bodies which are subject to the Financial Management and Accountability Act 1997 (FMA Act) [
] and the Commonwealth Authorities and Companies Act 1997 (CAC Act) [] and their officials are encouraged to use SourceIT model contracts for simple ICT procurement. Use of SourceIT model contracts is not compulsory. Any customisation of the terms and conditions to suit a specific procurement requirement should be considered carefully by the individual agency. Before using the model contracts, it is important to have an understanding of the relevant procurement policy.
2. What is meant by "simple procurement"?
For guidance on whether a particular procurement is "simple procurement" for SourceIT purposes, please consult the Model Contracts section of this site.
3. What happens with contracting situations that do not involve simple procurement?
The GITC4 'build a contract' function can be used as an interim solution to cater for moderately complex ICT procurement. However, agencies and suppliers should be aware that, with cessation of Endorsed Supplier Arrangements (ESA) on 29 November 2006, GITC4 is being revised. It is therefore important that, before using GITC4, they seek specialist advice to ensure that the scope and risks of each procurement exercise are managed effectively. See www.gitc.finance.gov.au for further information on GITC4 and cessation of ESA.
4. What are the major differences between SourceIT and GITC4?
The suite of SourceIT model contracts provide 'templates' for simple ICT procurement. GITC4 enables agencies and suppliers to 'build a contract' for a broad range of ICT procurement. Over time, further SourceIT model contracts may be developed to suit other ICT procurements.
5. When should GITC4 be used?
GITC4 caters to some types of ICT procurement which SourceIT model contracts do not yet address. Before using this framework, it is advisable that you check with your procurement adviser to find out what its requirements are for IT contracting. For further information on GITC4, including its purpose and the range of procurement types for which it is intended, please see http://www.gitc.finance.gov.au
6. What is meant by a "consultancy service"?
A consultancy service is characterised by:
- features relating to the nature of the benefit to be provided to the customer, including:
- the involvement of specialist professional knowledge and/or expertise that may not be maintained in-house;
- the development of an intellectual output - e.g. research, evaluation, advice, and recommendations - to assist with agency decision-making; and
- the involvement of a one-off task, a set of tasks or irregular tasks (making employment of permanent staff impractical or undesirable).
- features relating to the direction and control over performance, including:
- performance of the service being left largely up to the discretion and professional expertise of the consultant;
- performance of the service being without the agency´s direct supervision; and
- output of the service reflecting the independent views and/or findings of the individual or organisation.
7. Do the SourceIT model contracts contain clauses on liability of a party?
Yes. In applying such clauses (see Note 1 below), persons should consult the following sections in the SourceIT User Notes concerning liability (including limitation of liability):
- section 4 of the SourceIT User Notes - General Requirements; and
- section 17 of the SourceIT User Notes Licence Contract - Commercial off-the-shelf Software.
8. How does regulation 10 apply in relation to contingent liabilities of the Commonwealth arising under SourceIT model contracts?
An agency entering into a contract based on a SourceIT model contract may need approval under regulation 10 of the Financial Management and Accountability Regulations 1997 (FMA Regulations) (see Note 2 below) in respect of certain contingent liabilities (see Note 3 below) arising out of or in connection with the contract. Such contingent liabilities may include a relevant limitation on a supplier's liability other than for damages to the Commonwealth resulting from the supplier's action or inaction (see answer to question 7 above).
The Minister for Finance and Deregulation has delegated his power to give approval under FMA Regulation 10 to Chief Executives of agencies as set out in Financial Management and Accountability (Amendments relating to Regulation 10) Delegation 2003 (the Delegation).
To find out more about how FMA Regulation 10 applies in relation to SourceIT model contracts and contingent liabilities, agencies may also wish to study:
- Finance Circular No. 2007/011 (“FMA Regulation 10”); and
- Finance Circular 2006/03 (“Limited Liability in Information and Communications Technology Contracts”)
9. Do the SourceIT model contracts contain clauses on intellectual property rights in contract material?
All SourceIT model contracts, except for the SourceIT Licence Contract for Commercial off-the-shelf Software, contain such provisions. In applying these clauses, the SourceIT user notes should be consulted at:
- section 31 of the SourceIT User Notes Specific Clauses - Hardware Acquisition and Maintenance Contract (concerning clause 27 of the contract);
- section 23 of the SourceIT User Notes Specific Clauses - Licence and Support Contract - Commercial off-the-shelf Software (concerning clause 19 of the contract); and
- section 17 of the SourceIT User Notes Specific Clauses - IT Consultancy Contract (concerning clause 13).
10. Should a SourceIT model contract be included in documentation when making an approach to market?
It can be useful to include contract documentation (as complete as possible) to assist respondents to take account of contract matters in their response. It is beneficial to include details relating to the specific procurement rather than referring to a template.
11. How do the SourceIT model contracts take account of the US Export Administration Act?
While SourceIT model contracts do not include clauses designed to take account of the US Export Administration Act, agencies may wish to consider inserting the following clause for simple ICT procurement:
"The Customer may not use, resell, sub-licence or export, nor permit the use, resale, sub-licence or export, of any part or whole of any Deliverable or technical information provided by the Contractor without obtaining any licence or consent that may be required under any relevant law or regulation of Australia or of any other country, including the US Export Administration Act."
12. What implications does the US Sarbanes-Oxley Act have for SourceIT model contracts?
The US Sarbanes-Oxley Act prevents a company which operates in the US from bringing profits to book while there is an outstanding liability (including indemnities issued by that company). This could have implications for a subsidiary of a US company operating in Australia that signs a contract specifying unlimited liability for faults in their product over the life of the contract.
Agencies therefore need to consider carefully the implications of the US Sarbanes-Oxley Act when contemplating procurement contracts under which suppliers provide long term indemnities.
13. What are the implications of the USA Patriot Act for agencies entering into SourceIT model contracts with:
(a) USA companies or their subsidiaries operating in Australia; or
(b) subsidiaries of Australian companies operating in the USA?
Whether the USA Patriot Act would be used to compel entities referred to in (a) or (b) to provide Australian Government information to the USA Government would depend on the circumstances surrounding a particular contract. In general, it would be unlikely.
However, prospective parties to a SourceIT model contract may wish to contact the Department of Foreign Affairs and Trade (DFAT) for more detailed information on this matter if they consider that the Patriot Act could be applicable in their particular circumstances.
14. Do Australian Government Telecommunications Arrangements (AGTA) come within the SourceIT or GITC framework?
No.
The Australian Government Telecommunications Arrangements (AGTA) comprise a contractual framework applying to the procurement of telecommunications services by Australian Government agencies. This is separate from the GITC and SourceIT frameworks.
The use of AGTA, which was established in 1997, is mandatory for Financial Management and Accountability Act 1997 (FMA Act) Agencies.
Telecommunications consists of the carriage of voice, data, mobile voice and satellite services together with the systems and hardware supporting the carriage of communications.
The AGTA framework:
- saves agencies time, effort and resources in acquiring telecommunications services by using a contractual head agreement;
- provides up-to-date benchmarked data that enables reliable pricing/costs for services;
- secures discounted rates, thereby maximising benefits to agencies and government; and
- minimises duplication of effort (involving the sharing of knowledge, tools, best practice and telecommunications expertise across agencies).
15. What does the IPv6 protocol mean for ICT procurement?
Internet Protocol version 6 (IPv6) is a standard comprising a suite of protocols, definitions, transition mechanisms, and operational procedures. In contrast to the current Internet Protocol standard (IPv4), which provides for a limited number of addresses, IPv6 allows for virtually unlimited address capacity.
IPv6 is expected to become the standard for internet communications over the coming years with IPv4 becoming gradually redundant. Countries such as China, South Korea and Japan have invested heavily in IPv6 and the Office of Management and Budget in the United States has mandated that all US Federal Government agencies have IPv6 capable network backbones by July 2008.
Specification and standardisation of IPv6 has been the responsibility of the IP Version 6 Working Group of the Internet Engineering Task Force. For further information on the Working Group and its activities see: http://www.ietf.org/html.charters/OLD/ipv6-charter.html []
While the Australian Government has not mandated IPv6 for agencies purchasing relevant ICT equipment, it is strongly recommended that agencies consider the potential impact of IPv6 on the specifications of their procurement and consequently any contract for such procurement.
16. What Green procurement issues should be considered in using SourceIT model contracts?
When preparing specifications for the Statement of Work for a Hardware Acquisition and Maintenance Contract, customers should refer to:
- Environmental Purchasing Guide []issued by the Department of the Environment and Water Resources (DEW)
- Green Office Guide [] issued by DEW
- Measures to support Environmentally Friendly ICT published by the Australian Government Information Management Office of the Department of Finance and Deregulation
Customers should also consider these publications where they require removal of equipment to be specified in the Contract Details of the contract.
17. Where relevant, what guidance on Assistive Technology is available to assist with preparing ICT contracts?
Information on assistive technology for employees of the Australian Government, including guidance in relation to ICT contracts or tender documents.
18. Will there be further refinements over time of SourceIT model contracts?
Yes, in all likelihood.
The Department of Finance and Deregulation (Finance) will, over time, refine the SourceIT model contracts as appropriate, having regard to policy changes and feedback from agencies and suppliers on the application of the contracts.
In particular, Finance will implement a change management process to ensure that the model contracts continue to remain usable and reflect (as appropriate) user feedback, Commonwealth Government procurement policy (including the Commonwealth Procurement Guidelines) and leading practice ICT contracting methodologies.
Also, any feedback received by the SourceIT Helpline will be considered for inclusion in the future versions of the SourceIT documents.
Further questions and answers will be added to this section as feedback is gathered via the Helpline.
Notes:
- Clause 32 of the SourceIT Hardware Acquisition and Maintenance Contract, clause 24 of the SourceIT Licence and Support Contract for Commercial off-the-shelf Software, clause 13 of the SourceIT Licence (only) Contract for Commercial off-the-shelf Software and clause 18 of the SourceIT IT Consultancy Services Contract set out the limitations that may be imposed on the liability of a party to such a contract.
- FMA Regulation 10 provides that if any of the expenditure under a spending proposal is expenditure for which an appropriation of money is not authorised by the provisions of an existing law or a proposed law that is before the Parliament, an approver must not approve the proposal unless the Finance Minister has given written authorisation for the approval.
- Contingent liabilities are those liabilities that may or may not be incurred depending on a forthcoming event.
Contact for information on this page: ICT Procurement