The Service Agreement is used as a standard agreement for the contracting of services from the community sector by the Department of Health and Human Services and the Department of Education and Training.
The community sector had significant concerns about the content and implementation of the 2012-15 Service Agreement. The major concerns the sector had with this Agreement were:
- it did not recognise that not-for-profit community organisations are independent, self-governing entities that have obligations under other laws
- the agreement had been drafted with extensive rights and very broad discretion in favour of the Department, with very vaguely drafted discretions in the Agreement which created uncertainty and confusion for organisations
- the subjective clauses and vague standards in the Agreement with clauses with terms such as “in the department’s reasonable opinion” or “to the Department’s reasonable satisfaction
- the powers of the Department to materially vary, suspend or terminate the Agreement and a lack of consistency and procedural fairness.
VCOSS, and the non-government members of the Service Agreement Working Group (SAWG) convened by the Department of Health and Human Services to review the 2012-15 Service Agreement heavily advocated for changes to the Agreement over an 18 month period.
With the other non-government members of the SAWG, VCOSS saw this review as an opportunity to substantially redress the issues that arose as a result of the 2012-15 Agreement.
After broad consultation by VCOSS with community sector organisations we found the priority areas for change to the Agreement related to:
- ownership of client records, which interrupts engagement and relationships with clients in need of support
- difficulty in disposing of assets purchased with departmental funding
- lack of procedural fairness in relation to notice periods and variations to the agreement
- insufficient dispute resolution procedures
- clauses giving the department the right to unilaterally suspend, cease or terminate the current Service Agreement are overly complex, inconsistently drafted and lacking in procedural fairness
- the unrestricted license given to funding departments to use an organisation’s background and current intellectual property.
Significant changes to the Service Agreement 2015-2019
The Department of Health and Human Services, on behalf of the cross-government representatives, agreed to the following changes to the Agreement following negotiations with VCOSS and the non-government SAWG members, with the support of Justice Connect Not-for-Profit Law.
Notice periods: In some instances the department will have to give a minimum of five business days’ notice when they request certain things. This is a change from no notice in many cases. Further, the Organisation can request an extension which will not unreasonably be refused.
Assets: Amendment to clause 7.2 states that value of Asset on disposal will be depreciated value. New clause 7.10 states that clause 7 applies only to assets for which funding has been specifically allocated.
Dispute Resolution: The Service Agreement will permit a voluntary mediation process that can be entered into prior to or following the Dispute Resolution Officer deciding on disputes.
Suspension: Amendments to clause 12 give the Organisation 5 business days’ notice of suspension in certain circumstances.
Cessation: The department will have to give three months’ notice if cessation is due to change in government policy or insufficient funds. Further, there is a new definition of ‘Material Breach’ that means the department cannot require cessation of services for a single minor breach.
Termination: Three months’ notice will be required to terminate a contract when there is a change in Government policy or insufficient funds from parliament or the Commonwealth Government. Further, the organisation will be able to claim reasonable costs arising from the termination to be paid by the Department. These costs will be capped at the amount of funding.
Intellectual Property: The Department must have regard to the Whole of Victorian Government Intellectual Property Policy. If the Department considers it should own intellectual property it must give written notice to the Organisation prior to the delivery of relevant services. Further, a new clause will be added that clarifies that background IP will only be licensed if it is needed for the Department to enjoy the full benefit of the services.
Privacy and data protection: There are some changes required by the Privacy and Data protection Act 2014. This change will require an Organisation to inform their clients that they may disclose personal or health information to the department for specific purposes.
NOTE: Outstanding Issue of Records Ownership
Under clauses 6.7, 6.8 and 6.9 of the 2012-15 Service Agreement, the Department owns an organisation’s records that relate to the Service Agreement, including governance, client and other records. VCOSS members’ preference is that the Organisation owns their records with access given to the Department as required under the Service Agreement because ownership by the Department can interfere with the relationship between the client and the organisation and it limits the independence of the Organisation. The non-government members of the SAWG advocated for the removal of these clauses. Unfortunately, we were unsuccessful this time and will continue to make the case.
Advising the sector of the changes
The Department has informed funded organisations of the changes to the Service Agreement via the Funded Agency Channel.
 Victorian Council of Social Service (VCOSS), National Disability Services (NDS), Victorian Alcohol and Drug Association (VAADA, Victorian Aboriginal Community Controlled Health Organisations (VACCHO, Centre for Excellence in Child and Family Welfare, Berry Street, MacKillop Family Services, Homeground Services (now Launch Housing),