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1.12 Compliance Costs

Any contract or funding management system will necessarily impose some costs on both parties to the contract, but unnecessary compliance costs should be avoided for both parties. There are a number of areas in which unnecessary compliance costs can be reduced:

  • Contract duration.
  • Standardised internal processes.
  • “Short form” contracts that can be used for smaller contracts, reserving “long form” contracts for larger contracts. Inclusion in the agreement of detailed administrative requirements lengthens the contract with material that could just as easily be agreed outside the contracting process. This would mean that alterations to administrative requirements would not require a change to the contract.
  • Standard conditions that are incorporated into all contracts (it may be sensible to discuss the development of such standard provisions with the parties the agency regularly contracts with, since they may be ambivalent about standard provisions – welcoming any reduction in compliance costs, but wanting scope to negotiate over some of these conditions).
  • Standardised reporting templates.
  • Monitoring and reporting regimes that make as much use as possible of the information that NGOs develop for their own accountability purposes. This could include, for example, information provided to the Charities Commission or to accreditation, certification or licensing bodies.
  • Monitoring and reporting regimes that make as much use as possible of the information that other Government agencies that fund the NGO collect for their own accountability purposes.

1.13 Regulatory Considerations

Government agencies must understand any regulations relevant to their contracting arrangements. These include:

  • Regulations specific to their sector (e.g. private childcare centres receive grants from the Government, through Vote: Education, on the basis of the number of children enrolled. To qualify for these grants they must comply with the regulations relating to childcare centres, and are subject to review by the Education Review Office. The regulations define important aspects of the quality of the service).
  • Regulations of general relevance. A particularly important example is the Commerce Act, which is intended to promote competition in markets. The Act prohibits a range of anti-competitive practices.
  • Legal requirements relating to public money, notably the appropriations system. Departments must ensure that any expenditure under a contract (or grant) is consistent with appropriations from Parliament, and their purchase agreement. Considering the appropriation implications of contracting or funding should be part of the planning for both contract management and the budget process. Crown entities should ensure that any expenditure is consistent with their purchase agreement and statement of intent.
  • In addition, the Department of Labour provides guidance on government policies and legislation relating to employment, including contracts for the procurement of services in the public sector. This includes guidance on relevant legislation and policy on occupational health and safety, being a "good employer", and pay and employment equity. See for more information.
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