Contract management:

The Concession Deed states that the service provider must, for each individual school, develop operations manuals (New South Wales Department of Education and Training 2003: p.13) and is obligated to provide operational performance and payment reports (monthly) to the Project Director (New South Wales Treasury 2005a: p.43).

The Department of Education and Training has an oversight responsibility to ensure that the plans and related documentation are put into place and that they are regularly updated by the contractor on an annual basis (New South Wales Department of Education and Training 2003: p.13; New South Wales Auditor-General 2006b: p.37). The manuals consist of asset management plans, operation plans, maintenance programs and environmental management plans (New South Wales Auditor-General 2006: p.37). These documents must be independently audited at least every 12 months against agreed quality standards (New South Wales Department of Education and Training 2003: p.16). Table 5.2 below outlines what the manuals include.

Table 5.2 Factors / Content That Comprise School Operations Manuals. (Source: New South Wales Department of Education and Training 2003).

Over and above the stated review, update and reporting requirements, the contractor must conduct during every fifth year and on behalf of the Department, a benchmarking exercise to determine the relative quality and competitiveness of its services which should be comparable to those provided by similar organisations that have appropriate skills, resources, reputation and financial standing (New South Wales Department of Education and Training 2003: p.18). The findings may, at the discretion of the Project Director, be subjected to competitive market testing. In such circumstances, if the costs are found to be greater than five per cent either above or below the market cost of providing these services, the monthly fees paid to the contractor will be adjusted to reflect the difference. No adjustment will be made if the difference is five per cent or less (New South Wales Department of Education and Training 2003: p.18). However, if the comparison demonstrates a cost differentiation in excess of 15 % (New South Wales Department of Education and Training 2003: p.18), the contractor will be replaced by the Department.

The Department of Education and Training is also responsible for developing a contract administration manual which should be used, for example, to identify public sector resources and roles needed for successfully managing the contract as well as ensuring that the performance monitoring and reporting strategy is effectively implemented (New South Wales Auditor-General 2006: p.41). However and even though the Department was advised about its responsibility during 2003 (before the operational phase began), the New South Wales Auditor-General found during its audit of the project in 2006, that the manual had not been completed (New South Wales Auditor-General 2006: p.41). The Auditor-General's office therefore recommended that the manual's completion be 'expedited' and then regularly reviewed and updated (New South Wales Auditor-General 2006: p.41).