Some of the key actions to consider include:

a.

Engaging the supplier in open, transparent, constructive conversation about complaints or disagreements promptly.

b.

Understanding the supplier's perspective.

c.

Agreeing on corrective actions to bring the goods or services within the requirements of the contract.

d.

Escalating issues if necessary to achieve resolution.

e.

Using formal dispute processes only if you are unable to resolve issues using less formal processes (eg negotiation, escalation, mediation).

f.

Ensuring you follow the dispute resolution clauses of the contract to protect the Commonwealth's rights.

g.

Engaging with legal advisers if you need advice regarding escalation and management of disputes.

Tip - managing complaints

End users may approach you with complaints about the goods or services provided to them under the contract. As contract manager, it is your job to look into the complaint, and consider whether it is something that you need to raise with the supplier.

Be aware that sometimes a complaint, even though genuine, is not covered by the contract. For example, a member of staff may complain that the cleaners are not washing dirty dishes in the sink, when this is not included in the cleaning contract.

You need to manage complaints according to the terms and conditions of the contract. If you cannot resolve the complaint, or the complaint indicates a serious or systemic issue, you should escalate the matter to a higher authority.

Early attention to complaints that arise in the contract management phase can prevent formal disputes from occurring. If a dispute about your contract does arise, you must carefully follow the dispute resolution process contained in the contract.

What is negotiation?

In contract management, negotiation usually means talking calmly, openly, transparently and constructively with the other party about the issues raised to see whether it is possible to reach an understanding about how those issues can be resolved. You should aim for a fair and equitable outcome for all parties.

It is preferable to resolve contractual issues as early as possible. This can save time and helps to maintain the delivery of goods or services provided under the contract

You must keep proper records of all negotiations during the life of the contract, whether the negotiation was successful in resolving the issue or not. Proper records will allow you to determine if the same issue keeps arising, if the supplier is performing in accordance with the agreements they made with you and if your entity is honouring commitments made to the supplier.

Any agreement you reach with the supplier must be consistent with the terms and conditions of the contract, with any proposal to change these arrangements identified and managed as a contract variation. You should be careful not to negotiate away important aspects of the goods or services that the Australian Government is paying to receive under the contract. This would reduce value for money obtained in the procurement.

What is escalation?

If you cannot resolve issues directly with the supplier, you may consider escalating the negotiation through your entity's hierarchy so more senior people from your entity can negotiate with more senior people from the supplier.

What is mediation?

Mediation involves the use of a neutral third party (the mediator) to assist the parties to resolve their issues. The mediator does not impose a decision on the parties, but instead applies a structured process to help the parties resolve the dispute themselves.

Mediation can be faster, less formal and less costly than court proceedings or arbitration. Limitations of mediation may include difficulty enforcing the agreement if one of the parties decides they no longer wish to comply, and the risk that the parties cannot reach an agreement at all.

What is arbitration?

Arbitration is a formal dispute resolution process in which the parties refer their dispute to an independent third person (the arbitrator) for resolution. The aim of arbitration is usually to get a final and enforceable result without the costs, delays and formalities of litigation. Arbitration proceedings can be less complex than litigation and the arbitrator can be a person who is able to provide independent technical expertise relevant to the contract.

Arbitration can be costly, and it is possible that neither party will be satisfied with the outcome (which is often binding). Other limitations of arbitration can include difficulty agreeing on an arbitrator and finding an arbitrator with the right expertise for the case.

Get legal advice if you are considering arbitration.

What is litigation?

Litigation is the process of seeking compensation through the courts or other tribunal. A judge will hear the evidence presented by both parties and will reach a binding decision based on the facts of the situation and the application of relevant law.

Litigation is generally the most expensive way to resolve a dispute and can be time consuming, the proceedings are usually public, there are significant risks associated with the process and the parties may not be fully satisfied with the decision of the court. Litigation is generally only undertaken when other avenues of dispute resolution have not been successful or are not available.

If you are considering litigation, you MUST obtain legal advice. Refer to the Legal Services Directions 2017 issued by the Attorney-General for further information about your obligations in this process.