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Assisting the Commonwealth Government in drafting and negotiating major agreements June 23, 2017

Maddocks advised the Commonwealth Department of Health on the drafting and negotiation of the Sixth Community Pharmacy Agreement (the 6CPA) with the Pharmacy Guild of Australia. Since 1990, the Government and the Pharmacy Guild have … Continued

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Briefing council: Maddocks launches Victorian local government blog July 20, 2017

Thursday 20 July 2017 Maddocks has today launched Council Brief, a blog designed to highlight and discuss issues of importance to the Victorian local government sector. Leveraging 132 years of experience working with Victorian councils, … Continued

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Ch-Ch-Ch-Changes: FWC announces casual conversion clauses in modern awards, and domestic violence leave is next July 14, 2017

The Fair Work Commission (FWC) has kicked off the new financial year by announcing two proposed changes to modern awards as a result of the four yearly modern award review. The changes are that: • … Continued

Standards Australia suite of contracts: Are you licensed?

Councils throughout Victoria and New South Wales use the Standards Australia suite of contracts for a wide range of matters from routine procurement of works, goods or services through to complex, one off projects. However, there is often confusion about the licence requirements for using these forms of contract. Failure to obtain the relevant Standards Australia licence from SAI Global or to comply with the licence conditions may be a breach of copyright or a licence condition, potentially resulting in legal action against Council. Therefore, council procurement teams need a clear understanding of their rights and obligations when using Standards Australia material.

In this article we look at the options available to councils when procuring works or services based on Australian Standard forms of contract in a few different scenarios.

Scenario 1: Routine procurement

Councils regularly use Standards Australia tender conditions and standard form contracts for routine procurement. These are generally issued to tenderers as unamended standard form documents in non-editable format or include limited special conditions set out in an annexure to the contract.

In this scenario, the Council will need to obtain a licence from SAI Global for use of the relevant standard. Copyright in Standards Australia material is owned by Standards Australia, and SAI Global is exclusively authorised by Standards Australia to issue licences to use, amend and reproduce the Standards Australia contracts. Licences may be issued for a single contract, for a specified number of copies or on an annual basis (in which case the licence will need to be renewed each year).

A licence to use a Standards Australia contract will be subject to conditions which include how the material may be used, modified and distributed, and will impose the payment of royalties and other fees. It is worth noting different forms of licence may be issued by SAI Global which grant differing rights to the licensee. This means each licence should be carefully reviewed to ensure Council has a clear understanding of its terms.

For routine procurement based on Standards Australia contracts Councils need to ensure:

  • Council has a current licence for each Standards Australia contract used for routine procurement
  • Council complies with the licence conditions, which commonly include
  • displaying modifications to the contract in a particular format
    • displaying the licence number on the footer of each page
    • including the required notices on the front cover of the contract
    • distributing tender and execution copies in a non-editable format
  • Council pays the relevant fee or royalties to SAI Global as required under the licence
When are royalties in this scenario payable?

The licence issued to Council by SAI Global will set out the royalties payable in respect of each type of Standards Australia contract covered by the licence. This needs to be checked on a case by case basis.

Generally, the licences require that royalties are payable for each final, tender and execution copy of the contract generated by the Council. This means Council will be required to pay the royalty specified for each copy of the agreement provided to tenderers as part of the tender process. In a competitive tender process, it is generally assumed that tender versions of the contract will be issued to at least two competing tenderers, and therefore royalties will be payable on a minimum of two copies of the contract. Similarly, usually at least two execution copies of the final contract are issued so the Council and the contractor can each retain an original executed copy. Again, a royalty is payable in respect of each execution copy. Generally, draft or working copies issued during the negotiation process will not attract royalties, provided such copies are clearly identified as such by including a watermark on the document.

What if no amendments are made to the standard form?

There is some misconception that if there are no amendments or special conditions to the terms of a Standards Australia contract then no royalties are payable. This is not the case. Each time a Standards Australia contract is issued as a final, tender or execution copy a royalty is payable regardless of whether amendments are made to the terms or annexures.

Is a royalty payable if only Annexure Part A is issued to tenderers?

Yes. Sometimes a council will issue only Annexure Part A containing partially completed contract particulars to tenderers. In this case the Council sometimes makes a copy of the standard terms and conditions of contract available at the municipal offices for tenderers to inspect. Even in this situation, the Council is required to remit a royalty each time it issues the annexure to a tenderer. An annexure to a Standards Australia contract is subject to copyright protection and the full royalty amount specified in the licence is therefore payable.

Scenario 2: Maddocks assists Council to prepare ‘precedent’ special conditions or amendments to a Standards Australia form of contract for use on multiple projects

Often Maddocks prepares amendments to a Standards Australia form of contract (whether by way of marked up amendments to that contract or by way of special conditions in Annexure Part B) that Council will use as a precedent for future Council procurement.

In this scenario Maddocks will prepare the precedent special conditions using our licence from SAI Global. A royalty will be payable on the final copy issued to the Council. There are a couple of options for Council for the distribution of the amended contract in this situation.

Option 1: Council can request Maddocks to issue the amended contract to tenderers and for execution.

Where Maddocks issues an amended Standards Australia contract on behalf of Council:

  • Maddocks will ensure that our current licence details for the relevant Standards Australia contract are noted in the footer of each page of the document. Please note that our licence is renewed annually which means the licence number which must be included on the amended contract issued for tender or execution may be different to the licence number used by Maddocks to prepare the precedent special conditions in the first instance
  • the amended contract will be issued in non-editable PDF format
  • Council may not issue the contract or any part of the contract, including Annexure Part A, directly to any tenderer or other third party
  • royalties will be payable by Council to Maddocks for each tender and execution copy issued by Maddocks (charged as a disbursement)
  • Maddocks will remit the royalties paid by Council to SAI Global.
Can Council itself issue the special conditions to tenderers for execution under Maddocks licence and pay Maddocks the royalties?

No. The Maddocks licence can be relied upon to prepare working copies or drafts of the precedent special conditions, and Council can ask Maddocks to distribute the amended contract to a tenderer or print a copy for execution on behalf of the Council. However, if Council wishes to distribute the amended contract to a tenderer or print as an execution copy, Council is only entitled to do so under its own licence. This is explored further in Option 2 below.

Option 2: Council can obtain a licence from SAI Global to enable Council to issue the amended contract prepared by Maddocks to tenderers and for execution.

Where Maddocks prepares precedent amendments or special conditions to a Standards Australia contract for Council and Council then obtains a licence from SAI Global to issue the amended contract to tenderers and for execution:

  • Council needs to ensure that it has a current licence for the amended Standards Australia contract
  • before Maddocks can provide Council with the final version of the precedent special conditions, Council must provide Maddocks with evidence that Council has a current licence for the relevant Standards Australia contract
  • when issuing the final version of the amended contract to Council, Maddocks will remove its licence number from the footer of the document and replace it with a note requiring Council to insert its licence number in the footer
  • when providing copies of the amended contract to tenderers or for execution Council must comply with the licence conditions which commonly include:
    • displaying Council’s licence number on the footer of each page (this should replace the reference in the footer of each page to the Maddocks licence used to prepare the special conditions)
    • displaying the required notices on the front cover of the contract
    • distributing tender and execution copies in a non-editable format
  • Council must pay the relevant fee or royalties to SAI Global as required under the licence.

In most cases, councils will want to control the issue of documents to tenderers, whether through their own electronic portals or otherwise. Accordingly, we think it is generally more efficient for Council to get its own licence for the distribution of tender and execution copies of the amended agreement (option 2).

Scenario 3: Maddocks assists Council to prepare special conditions to a Standards Australia form of contract for a one-off major project

For major projects, more substantial amendments may be made to the Standards Australia form of contract to reflect the complexity of the project and project specific risk allocation. In this scenario, we assume Council would want to control the issue of documents to tenderers. This means the same considerations apply as for option 2 in scenario 2 above. That is, Maddocks will prepare working drafts of the amended Standards Australia contract under the Maddocks licence with SAI Global, and Council will use its own licence to issue the tender and execution copies of the contract.

Conclusion

In summary, councils can protect themselves from a breach of copyright claim by following the guidelines above and:

      • developing clear processes for use of Standards Australia material
      • ensuring procurement teams have a clear understanding of those processes
      • never providing a Maddocks draft or final version of an amended Standards Australia contract in Word or other editable format to any third party
      • never issuing a tender or execution copy of a Standards Australia contract (amended or unamended) in Word or other editable format to any third party.

Consultant Agreements: AS 4122-2010

It is important to note the above scenarios do not apply to the General Conditions of Contract for Consultants AS 4122-2010. This standard has less flexible licensing arrangements than other Standards Australia standard form contracts.

Unlike the scenarios described above, Standards Australia has advised it will no longer provide a licence to amend AS 4122 by marking up the amendments in the body of the contract. Rather, it will only allow amendments to be made using Annexure Part B to insert special conditions.

This can be cumbersome. In addition, the licence options are more limited, ranging from a licence to merely view the form of contract (watermarked ‘internal use only’) through to the right to print and issue a specified number of copies of the contract. For further details on the options available an enquiry can be made at copyright@saiglobal.com or see the SAI Global website.

For this reason, Maddocks has prepared precedent consultant services agreements. There are a range of template contracts available for the appointment of both major and minor consultants, for design and non-design services.

Please contact a member of our Construction & Projects team if you have any questions about licensing arrangements for Standards Australia material, or if you are interested in finding out more about our precedent amendments to Standards Australia contracts or our precedent consultant agreements.

 

Councils throughout Victoria and New South Wales use the Standards Australia suite of contracts for a wide range of matters from routine procurement of works, goods or services through to complex, one off projects. However, there is often confusion about the licence requirements for using these forms of contract. Failure to obtain the relevant Standards Australia licence from SAI Global or to comply with the licence conditions may be a breach of copyright or a licence condition, potentially resulting in legal action against Council. Therefore, council procurement teams need a clear understanding of their rights and obligations when using Standards Australia material.

In this article we look at the options available to councils when procuring works or services based on Australian Standard forms of contract in a few different scenarios.

Scenario 1: Routine procurement

Councils regularly use Standards Australia tender conditions and standard form contracts for routine procurement. These are generally issued to tenderers as unamended standard form documents in non-editable format or include limited special conditions set out in an annexure to the contract.

In this scenario, the Council will need to obtain a licence from SAI Global for use of the relevant standard. Copyright in Standards Australia material is owned by Standards Australia, and SAI Global is exclusively authorised by Standards Australia to issue licences to use, amend and reproduce the Standards Australia contracts. Licences may be issued for a single contract, for a specified number of copies or on an annual basis (in which case the licence will need to be renewed each year).

A licence to use a Standards Australia contract will be subject to conditions which include how the material may be used, modified and distributed, and will impose the payment of royalties and other fees. It is worth noting different forms of licence may be issued by SAI Global which grant differing rights to the licensee. This means each licence should be carefully reviewed to ensure Council has a clear understanding of its terms.

For routine procurement based on Standards Australia contracts Councils need to ensure:

  • Council has a current licence for each Standards Australia contract used for routine procurement
  • Council complies with the licence conditions, which commonly include
  • displaying modifications to the contract in a particular format
    • displaying the licence number on the footer of each page
    • including the required notices on the front cover of the contract
    • distributing tender and execution copies in a non-editable format
  • Council pays the relevant fee or royalties to SAI Global as required under the licence
When are royalties in this scenario payable?

The licence issued to Council by SAI Global will set out the royalties payable in respect of each type of Standards Australia contract covered by the licence. This needs to be checked on a case by case basis.

Generally, the licences require that royalties are payable for each final, tender and execution copy of the contract generated by the Council. This means Council will be required to pay the royalty specified for each copy of the agreement provided to tenderers as part of the tender process. In a competitive tender process, it is generally assumed that tender versions of the contract will be issued to at least two competing tenderers, and therefore royalties will be payable on a minimum of two copies of the contract. Similarly, usually at least two execution copies of the final contract are issued so the Council and the contractor can each retain an original executed copy. Again, a royalty is payable in respect of each execution copy. Generally, draft or working copies issued during the negotiation process will not attract royalties, provided such copies are clearly identified as such by including a watermark on the document.

What if no amendments are made to the standard form?

There is some misconception that if there are no amendments or special conditions to the terms of a Standards Australia contract then no royalties are payable. This is not the case. Each time a Standards Australia contract is issued as a final, tender or execution copy a royalty is payable regardless of whether amendments are made to the terms or annexures.

Is a royalty payable if only Annexure Part A is issued to tenderers?

Yes. Sometimes a council will issue only Annexure Part A containing partially completed contract particulars to tenderers. In this case the Council sometimes makes a copy of the standard terms and conditions of contract available at the municipal offices for tenderers to inspect. Even in this situation, the Council is required to remit a royalty each time it issues the annexure to a tenderer. An annexure to a Standards Australia contract is subject to copyright protection and the full royalty amount specified in the licence is therefore payable.

Scenario 2: Maddocks assists Council to prepare ‘precedent’ special conditions or amendments to a Standards Australia form of contract for use on multiple projects

Often Maddocks prepares amendments to a Standards Australia form of contract (whether by way of marked up amendments to that contract or by way of special conditions in Annexure Part B) that Council will use as a precedent for future Council procurement.

In this scenario Maddocks will prepare the precedent special conditions using our licence from SAI Global. A royalty will be payable on the final copy issued to the Council. There are a couple of options for Council for the distribution of the amended contract in this situation.

Option 1: Council can request Maddocks to issue the amended contract to tenderers and for execution.

Where Maddocks issues an amended Standards Australia contract on behalf of Council:

  • Maddocks will ensure that our current licence details for the relevant Standards Australia contract are noted in the footer of each page of the document. Please note that our licence is renewed annually which means the licence number which must be included on the amended contract issued for tender or execution may be different to the licence number used by Maddocks to prepare the precedent special conditions in the first instance
  • the amended contract will be issued in non-editable PDF format
  • Council may not issue the contract or any part of the contract, including Annexure Part A, directly to any tenderer or other third party
  • royalties will be payable by Council to Maddocks for each tender and execution copy issued by Maddocks (charged as a disbursement)
  • Maddocks will remit the royalties paid by Council to SAI Global.
Can Council itself issue the special conditions to tenderers for execution under Maddocks licence and pay Maddocks the royalties?

No. The Maddocks licence can be relied upon to prepare working copies or drafts of the precedent special conditions, and Council can ask Maddocks to distribute the amended contract to a tenderer or print a copy for execution on behalf of the Council. However, if Council wishes to distribute the amended contract to a tenderer or print as an execution copy, Council is only entitled to do so under its own licence. This is explored further in Option 2 below.

Option 2: Council can obtain a licence from SAI Global to enable Council to issue the amended contract prepared by Maddocks to tenderers and for execution.

Where Maddocks prepares precedent amendments or special conditions to a Standards Australia contract for Council and Council then obtains a licence from SAI Global to issue the amended contract to tenderers and for execution:

  • Council needs to ensure that it has a current licence for the amended Standards Australia contract
  • before Maddocks can provide Council with the final version of the precedent special conditions, Council must provide Maddocks with evidence that Council has a current licence for the relevant Standards Australia contract
  • when issuing the final version of the amended contract to Council, Maddocks will remove its licence number from the footer of the document and replace it with a note requiring Council to insert its licence number in the footer
  • when providing copies of the amended contract to tenderers or for execution Council must comply with the licence conditions which commonly include:
    • displaying Council’s licence number on the footer of each page (this should replace the reference in the footer of each page to the Maddocks licence used to prepare the special conditions)
    • displaying the required notices on the front cover of the contract
    • distributing tender and execution copies in a non-editable format
  • Council must pay the relevant fee or royalties to SAI Global as required under the licence.

In most cases, councils will want to control the issue of documents to tenderers, whether through their own electronic portals or otherwise. Accordingly, we think it is generally more efficient for Council to get its own licence for the distribution of tender and execution copies of the amended agreement (option 2).

Scenario 3: Maddocks assists Council to prepare special conditions to a Standards Australia form of contract for a one-off major project

For major projects, more substantial amendments may be made to the Standards Australia form of contract to reflect the complexity of the project and project specific risk allocation. In this scenario, we assume Council would want to control the issue of documents to tenderers. This means the same considerations apply as for option 2 in scenario 2 above. That is, Maddocks will prepare working drafts of the amended Standards Australia contract under the Maddocks licence with SAI Global, and Council will use its own licence to issue the tender and execution copies of the contract.

Conclusion

In summary, councils can protect themselves from a breach of copyright claim by following the guidelines above and:

      • developing clear processes for use of Standards Australia material
      • ensuring procurement teams have a clear understanding of those processes
      • never providing a Maddocks draft or final version of an amended Standards Australia contract in Word or other editable format to any third party
      • never issuing a tender or execution copy of a Standards Australia contract (amended or unamended) in Word or other editable format to any third party.

Consultant Agreements: AS 4122-2010

It is important to note the above scenarios do not apply to the General Conditions of Contract for Consultants AS 4122-2010. This standard has less flexible licensing arrangements than other Standards Australia standard form contracts.

Unlike the scenarios described above, Standards Australia has advised it will no longer provide a licence to amend AS 4122 by marking up the amendments in the body of the contract. Rather, it will only allow amendments to be made using Annexure Part B to insert special conditions.

This can be cumbersome. In addition, the licence options are more limited, ranging from a licence to merely view the form of contract (watermarked ‘internal use only’) through to the right to print and issue a specified number of copies of the contract. For further details on the options available an enquiry can be made at copyright@saiglobal.com or see the SAI Global website.

For this reason, Maddocks has prepared precedent consultant services agreements. There are a range of template contracts available for the appointment of both major and minor consultants, for design and non-design services.

Please contact a member of our Construction & Projects team if you have any questions about licensing arrangements for Standards Australia material, or if you are interested in finding out more about our precedent amendments to Standards Australia contracts or our precedent consultant agreements.