Foreword

Contracting is an integral part of doing business in the public sector. The delivery of many, if not most, government programmes now involves some contracting with private sector providers. As a result developing and managing contracts is a skill required by public sector entities1 in the management of the majority, if not all, programmes. However, contract management is not an end in itself and it is important that all contracting decisions and actions focus on the outcomes that entities are seeking to achieve.

The Australian National Audit Office (ANAO) and the Department of Finance and Administration (Finance) have a strong interest in efficient contract management, and have provided a range of publications to assist agencies to understand contract and procurement issues. In 2001, the ANAO published a Better Practice Guide on Contract Management. This new Guide, produced by the ANAO in partnership with Finance, reflects the continued interest in, and need for, guidance in this area.

The Guide includes a discussion on developing a contract, commencing from the point where a decision is made on the engagement of a contractor as a result of a tender or other procurement process. The broader focus of this Guide recognises that the foundations for the effective management of a contract are laid at the time the contract is being developed.

The public sector enters into a large variety of contracts. Contracts can range significantly in value, in duration, and in complexity. As a consequence, the nature and extent of contract management practices will vary depending on the size, nature, complexity and risk profile of each contract. Entities and others involved in managing contracts therefore need to apply judgement about the contract development and management practices that are appropriate to their particular situation.

The Guide does not attempt to address all issues that may need to be considered in a particular circumstance. It identifies the key issues and considerations that entities should be aware of in developing and managing contracts. As such, the Guide is intended to be a general reference document for senior managers, contract managers and stakeholders who are involved in the development and management of contracts. The Guide does not address specific issues that relate to high value, complex contracts such as those involving equipment acquisitions. The Guide also does not address the development and management of projects although a number of the issues and considerations are similar.

Recognising that users of the Guide will have different information needs, the Guide is divided into six parts to allow easy reference to each aspect of contracting activity.

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1  In this Guide, the term entities applies to all organisations subject to the Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act).