Infrastructure advisory contract framework user guide

The long form contract includes a fitness for purpose warranty from the Service Provider in respect of any design contained in contract deliverables.

The short form contract does not include a fitness for purpose clause. To the extent this is required, this should be included in the short form contract as a Special Condition.

The IA contracts include 2 optional clauses in relation to IP rights. The first (and default) clause is that the contract materials vest in the agency on creation and the Service Provider is given a licence to use the contract materials to perform the required services (Default IP Clause).

The second (and alternate) clause is that the Service Provider retains IP rights in contract materials and grants a licence to the agency to use and reproduce those materials (Alternate IP Clause).

Whilst the Default IP Clause should apply in most circumstances, there may be circumstances where that may not be the preferred option considering the needs of both parties.

Whether ownership is necessary or preferable over a licence will depend on the specific circumstances and needs of the agency. The below questions could be considered to determine a preferred IP position:

• Does the agency have its own internal default IP position? You may need to seek internal guidance from your Legal Team on the default IP position for your agency.
• Has the Alternate IP Clause been actively considered in this case, or has the Default IP Clause been adopted without consideration?
• What are the key purposes and IP needs of the procurement?
• Which IP position will result in better value for money?
• Has the agency required only the IP rights necessary to achieve its needs?
• Will the preferred IP position result in a proper use of resources? For example, is the IP approach for the specific procurement unrealistic and will this increase time and cost of negotiations for all parties?
• Will the IP be owned by the party which is best able to exploit and improve it and which is able to accept the costs and risks of doing so?
• Should the Default IP Clause be retained because the agency has strategic or whole-of-government importance?
• Does the IP position preserve the principle of competitive neutrality, that is, that government businesses not enjoy a net competitive advantage as a result of public sector ownership?
• Guidance is provided to agencies so that its preferred IP position is included in both the request for tender and contract documents.

The IA contracts include optional clauses that can be used when infrastructure advisory services include or impact ICIP material.

“ICIP” refers to the rights that Aboriginal people have in relation to all aspects of their heritage, knowledge and cultural expressions, including:

• traditional knowledge (scientific, agricultural, technical and ecological knowledge, ritual knowledge)
• modern and emerging knowledges that have been developed by Aboriginal people based on history and culture
• traditional cultural expression (stories, designs and symbols, literature and language)
• performances (ceremonies, dance and song)
• cultural objects (including, but not limited to arts, crafts, ceramics, jewellery, weapons, tools, visual arts, photographs, textiles, contemporary art practices),^* human remains and tissues
• the secret and sacred material and information (including sacred/historically significant sites and burial grounds)
• documentation of Aboriginal peoples’ heritage in all forms of media such as films, photographs, artistic works, books, reports and records taken by others, sound recordings and digital databases.

These clauses should be included where relevant to ensure suppliers consult with the relevant Indigenous communities and stakeholders and obtain permission for the use of the ICIP in contract materials.

The clause also provides the option for agencies to incorporate their own internal ICIP protocol where one exists.

There may be some circumstances where agencies need to provide deliverables received under an IA contract to third parties, such as other Government authorities or prospective tenderers for construction of the project.

Where the agency needs to provide the deliverables to a third party, it may need to provide them 'for use' by that third party i.e. the third party is entitled to contractual relief if those deliverables do not meet agreed requirements.

The Long Form IA Contract provides agencies with 2 options to obtain deliverables from Service Providers 'for use' by third parties:

1. The Service Provider will indemnify the agency with respect to any claims from the third party ‘for use’ of the deliverables, subject to the terms of the IA Contract and any overall liability cap agreed in the IA Contract (see Limitation of Liability below). This means the agency must manage any claims regarding third party use of the deliverables under its contract with the third party and seek relief from the Service Provider under the IA Contract; or
2. The Service Provider will provide a direct reliance letter to the third party. This means the third party can make a claim directly against the Service Provider under the letter. Agencies should only request a direct reliance letter in specific circumstances e.g. where the third party, scope and period of reliance are known. A pro forma reliance letter is attached to the Long Form contract with further guidance on the types of details that would need to be known before it can be requested from a Service Provider.

Under the IA contracts, the parties can agree to a cap on the Service Provider’s liability, which is subject to certain standard exclusions.

The liability cap may be expressed as a multiplier of the Fee or a dollar value. It should reflect the risk and nature of the Services. In determining the quantum of the liability cap, the agency should:

• consider the extent to which insurance for the relevant infrastructure project may cover the risks and ensure the liability cap does not preclude available insurance cover
• determine limitations on liability on project/market basis (as opposed to a standard ‘portion of contract value’) to appropriately reflect the level of financial risk retained by the agency.

Refer to INSW’s Commercial Principles for Infrastructure Projects for further guidance on limitations of liability.

Liability may be apportioned amongst parties according to their proportionate responsibility pursuant to Part 4 of the Civil Liability Act (NSW) 2002 (CLA). Under the CLA, it is open to the parties to agree whether or not this regime is applicable to the relevant contract. Contracting out of Part 4 of the CLA  generally designates a single point of responsibility amongst multiple concurrent wrongdoers.

The IA Services contracts include an optional clause (which can be used or deleted) to contract out of Part 4 of the CLA. Using this clause is generally recommended however this should be considered on a case-by-case basis having regard to the following factors:

• the size, cost, complexity and risk of the procurement
• the extent to which the agency is able to manage risks associated with the procurement through means other than contracting out of proportionate liability, including assessing suppliers’ respective expertise, skills and financial resourcing
• the extent to which contracting out of proportionate liability potentially reduces competition and value for money for a given procurement activity
• the potential flow-on costs to the agency in contracting out
• any concerns raised by suppliers in relation to contracting out
• any other relevant factors or circumstances.

The template contracts include optional clauses which can be included (or deleted if not applicable) to ensure compliance with the Building and Construction Industry Security of Payment Act 1999 (SOPA) where applicable to the particular engagement. This includes requirements for head contractors to provide accompanying supporting statements when they serve payment claims and requirements for agencies to issue payment schedules and make payment within certain time periods.

To check whether the SOPA is applicable to your particular engagement (and if you should keep or delete these optional clauses), refer to the Security of Payment and Infrastructure Advisory services summary.

Default insurance requirements are set out in the IA Services contracts in the following amounts:

• professional indemnity - at least $1 million (under the Short Form Contract) and at least $10 million (under the Long Form Contract)
• public liability - at least $20 million under both the Short and Long Form contracts
• workers compensation - in the amount required by relevant workers compensation legislation.

The insurance details can be modified in the IA Services contracts so that agencies can specify the minimum insurance amounts and any other additional insurances as required.

Short form contracts will enable novation to other Authorities.

Long form contracts will enable novation to other Authorities and a construction contractor. Agencies are required to nominate in the Key Contract Terms whether it will seek to novate the Deed to a construction contractor at a future point in time.

IA template Deed of Novation is attached to the Long Form Contract and must be used for future novation to construction contractors.

Where the novation relates to architectural services, the Australian Institute of Architects' Code of Novation should be considered by the Principal.

All contracts will include standard confidentiality obligations. A proforma Confidentiality Deed Poll will be annexed to the template long form contract and the agency can request that this be executed by the Service Provider where required.

To determine if a Confidentiality Deed Poll may be required, some factors to consider include the:

• sensitivity of the information being shared (e.g. sensitive third party commercial information or sensitive information about the project)
• amount of information being shared.

The template contracts include optional clauses which can be included (or deleted if not applicable) to ensure compliance with the Security of Critical Infrastructure Act 2018 (Cth) (SOCI) where applicable to the particular engagement. This includes requirements for the Service Provider to retain particular records and reports, notify the Principal of potential SOCI cyber security incidents and assist the Principal in meeting its obligations under SOCI.

To check whether the SOCI is applicable to your particular engagement (and if you should keep or delete these optional clauses), consider if the engagement falls within one of the following applicable critical infrastructure sectors and seek further guidance from your legal team:

• communications
• data storage or processing
• financial services and markets
• water and sewerage
• energy sector
• health care and medical
• higher education and research
• food and grocery
• transport
• space technology
• defence industry.

The Long Form IA Contract includes model clauses for relevant policy items, including modern slavery and the Aboriginal Procurement Policy plus options for agencies to include other relevant policies as required. These may include agency-specific policies or other whole-of-government policies (for e.g. the Small Business Shorter Payment Terms Policy).

Agencies should consult their procurement teams or NSW Procurement for further guidance.

Are the IA contracts mandatory?

No. At this stage, the IA contracts are recommended for use and aren't mandatory. If you're buying infrastructure advisory services (including from any of the IA schemes), it is recommended that you use the IA contract framework.

Can I vary any of the terms?

Yes, but this should be limited to a needs-only basis where there are specific matters or requirements relevant to the agency or the project which are not already covered in the IA contract. Variations from the standard terms should be dealt with as special conditions.

Do I have to use the IA schemes when buying IA Services?

No, but the IA Schemes are recommended to support standardisation and reporting.

If I'm engaging an infrastructure advisory service provider outside the IA schemes, can I use the IA contracts?

Yes. While agencies are encouraged to use the IA schemes for the procurement of IA services, it is recommended that the IA contracts are used whenever you are buying IA services (whether or not under the IA schemes).