
PURPOSE
WHEN AGENCIES NEED LEGAL SERVICES
WHO CAN PROVIDE LEGAL SERVICES TO THE COMMONWEALTH
1. This information provides Commonwealth departments and agencies (agencies) with general guidance on some of the issues relevant to the acquisition of legal services, particularly through competitive tendering and contracting (CTC) processes.
2. The Financial Management and Accountability Act 1997 requires the efficient, effective and ethical use of Commonwealth resources. Agencies should be familiar with and follow the various government policies and guidelines referred to below when acquiring legal services. Failure to do so may amount to a breach of the Financial Management and Accountability Regulations 1997 (see Government Policies and the Acquisition of Legal Services below).
3. Agencies should obtain specialist advice, where appropriate, on their specific requirements.
4. Agencies may need access to legal services for a variety of reasons. They may, for example, require specialist advice on the portfolio specific laws that they administer. They may need to defend their decisions in courts or tribunals. They may require more general legal advice about their compliance with public law and the laws that regulate them in their public sector functions. They may also want advice on their liability under the general law of negligence, compensation, copyright, etc. Some agencies may need commercial law advice on their contracts, leases and financial arrangements.
5. A legal services provider can:
6. Commonwealth agencies are able to choose their legal services providers for most of their legal work requirements. Subject to certain restrictions described below, agencies can obtain legal services from the Australian Government Solicitor (AGS), private lawyers, counsel or in-house lawyers. The Attorney-General's Department is also able to provide legal advice on the legislation it administers, public international law matters and matters relating to the drafting work of the Office of Legislative Drafting.
7. With this freedom of choice, agencies are better able to ensure that they receive value in their expenditure on legal services.
8. The Judiciary Amendment Act 1999 commenced on 1 September 1999. It amended the Judiciary Act 1903 to:
9. The Government's reforms of the Commonwealth legal services market, including the enactment of the Judiciary Amendment Act 1999, are designed to achieve a more efficient Commonwealth legal services market. They give Commonwealth agencies greater freedom of choice and enable them to ensure that they receive value in their expenditure on legal services. The AGS competes with private law firms on an equal footing for most government work. The AGS is subject to competitive neutrality principles that require it to either pay the same taxes payable by its private sector competitors or make tax equivalent payments.
10. As of 1 September 1999, private law firms, as well as AGS, have been able to conduct litigation in courts where the litigation does not involve tied categories of work. However, this untying of litigation is subject to safeguards to protect the public interest which are contained in the Legal Services Directions issued by the Attorney-General under the Judiciary Act.
11. Pursuant to section 55ZF of the Judiciary Act, the Attorney-General has issued Legal Services Directions that apply to the performance of Commonwealth legal work generally with effect from 1 September 1999. The Directions are designed to enable the Attorney-General to manage and reduce risks inherent in the provision of legal services to the Commonwealth and to ensure that these services are of a high standard and consistent with the public interest.
The Directions provide that the Chief Executive of an agency is responsible for ensuring that the agency's arrangements for legal services are handled efficiently, effectively and in compliance with the requirements of the Directions.
The Directions also require the Chief Executive to ensure that lawyers (whether the AGS, the Attorney-General's Department, private lawyers, in-house lawyers or counsel) who provide legal services to a Commonwealth agency are aware of, and assist the agency to comply with, the Directions.
The Directions are substantially based on the various policies that have governed the conduct of Commonwealth litigation in the past. Some of the issues that they cover include:
12. The Government has decided that some legal work should remain tied to government legal providers. Tied work comprises core areas of government legal work relating to Cabinet, constitutional, national security and most public international law matters. This policy was outlined by the Attorney-General in his Second Reading Speech of 3 December 1998 on the Judiciary Amendment Bill 1998. The Attorney-General has also issued a Legal Services Direction that provides that agencies must use a government provider of legal services for tied work (see paragraph 2 and Appendix A of the Legal Services Directions).
13. Further, only the Office of Parliamentary Counsel can undertake, or arrange for, the drafting of government Bills and parliamentary amendments of Bills. Only the Office of Legislative Drafting in the Attorney-General's Department can undertake, or arrange for, the drafting of instruments made by the Governor-General (including Regulations, laws of external territories and Proclamations).
14. Further information on the scope of tied work and who can perform it, can be obtained from the Office of Legal Services Coordination (see paragraph 72).
15. APS employees are obliged to ensure the proper use of Commonwealth resources, taking particular care to make the most efficient and effective use of public money.
16. Regulation 9 of the Financial Management and Accountability Regulations 1997 precludes a person approving a proposal to spend public money unless satisfied, after making such inquiries as are reasonable, that the proposed expenditure is in accordance with the policies of the Commonwealth. Regulation 13 requires that a person not enter into a contract, agreement or arrangement under which public money is, or may become, payable unless the proposal to spend public money has been approved under regulation 9.
17. The Government also requires agencies to consider ways in which performance improvement tools, such as benchmarking, business re-engineering, purchaser/provider arrangements and competitive tendering and contracting, may improve the performance of the public sector. Public service managers will need to take account of relevant government policies when choosing a legal services provider. These policies, some of which are discussed in more detail below, include:
The Performance Improvement Cycle - Guidance for Managers and Competitive Tendering and Contracting - Guidance for Managers are currently being reviewed. For further information visit the Department of Finance and Administration website.
18. Failure to act in accordance with government guidelines and policies in arranging for the provision of legal services may constitute a breach of the Financial Management and Accountability Regulations. A failure to comply with relevant legal services policies may similarly breach the Regulations.
19. In addition, regulation 8 of the Financial Management and Accountability Regulations requires officials performing duties in relation to the procurement of services to have regard to the Commonwealth Procurement Guidelines and Best Practice Guidance (2002).
20. The Performance Improvement Cycle - Guidance for Managers (March 1998), published by the Department of Finance and Administration (DOFA), and currently being reviewed, sets out a four-phase cycle for ensuring resources available for public expenditure are used effectively, efficiently and in a way that reflects the community's priorities. This cycle can help managers meet the Government's requirement that they:
21. The cycle encourages managers to ques tion the relevance of activities in meeting the Government's objectives and to test whether the current arrangements for their activities use resources in the most effective and efficient way. It also encourages managers to search for new ways to:
22. The cycle comprises the following 4 stages:
23. An agency undertaking phase 1 will need to analyse:
24. Where an agency concludes that it requires legal services, it needs to test cost and effectiveness to determine the best method of obtaining those services. The agency will need to:
25. In this phase, agencies should analyse their current arrangements for obtaining legal services to determine whether they reflect the Government's priorities, and whether the agency is able to manage the activities and any associated risks successfully. Testing cost and effectiveness also requires gathering and evaluating information on factors such as:
26. In considering the alternatives, agencies should note the Government's interest in promoting the use of market-based tools, such as CTC, to improve the performance of the Commonwealth public sector. In particular, agencies should consider the advantages that CTC offers as a visible and transparent means of comparing alternatives.
27. Agencies will need to identify their needs as clients of a legal services provider and the interests of relevant stakeholders. An agency may need legal services that are not only cost efficient, but also take account of the needs and circumstances of the agency's stakeholders and any government policies relating to those stakeholders. These stakeholders may include members of the public who will be affected directly and indirectly by the legislation the agency administers or who are the clients of a government service that the agency provides.
28. Agencies can obtain legal services in a number of ways. Depending on an agency's needs, one or more of the following options may warrant consideration and testing for cost and effectiveness as part of phase 2:
29. An exclusive contract with a single legal services provider may have the advantage of greater consistency in the legal services provided and may allow the provider to develop a role as an adviser to the agency. In other circumstances, dividing work between a panel of providers may give the agency greater flexibility and efficiency in the way it obtains its legal services.
30. In analysing these issues, agencies will need to consider whether the legal services they require include matters that are tied to government providers. Where an agency is contemplating an exclusive arrangement with a particular provider, or panel of providers, the agency will need to ensure that it has made appropriate arrangements to cover its obligation under the Legal Services Directions to use government lawyers for any tied work.
31. The Performance Improvement Cycle notes that, in deciding which option to take up, agencies need to consider:
32. Managing risk is an integral part of good management. Many managers already do this in one form or another, for example, when negotiating contract conditions or developing contingency plans.
33. Risks associated with the acquisition of legal services can be managed if those risks are accurately identified and analysed so that strategies can be developed to address them.
34. The following risks may be relevant to some agencies in obtaining legal services:
35. Guidance on risk management and limitation of liability is available on the CTC website.
36. Once a decision is made as to how legal services will be obtained (externally, internally or a mix) the implementation of that decision has a number of critical strategy factors.
37. In particular, in the context of the acquisition of legal services, this involves:
38. Evaluation and review enable policy makers to determine whether the decisions made about the supply of legal services and the performance improvement strategies applied have been successful.
39. To ensure that the information on which to base judgments about performance is available, attention to evaluation and review requirements will be required early in the cycle. Evaluation and review mechanisms should be incorporated in the analysis of the options for obtaining legal services during phase 2. Similarly, planning to meet performance information requirements, which is central to evaluation design, should be part of the implementation phase.
40. Information gained from evaluation and review activities can then be used in the analysis required for phases 1 and 2 of the next application of the cycle.
41. Having worked through the performance cycle, an agency may decide to either outsource their legal services requirements, or establish or maintain an in-house legal team. For some agencies a mix may be the most appropriate solution. Under the Legal Services Directions, agencies covered by the Financial Management and Accountability Act 1997 may only use an in-house lawyer to conduct court litigation as solicitor on the record or counsel with the express approval of the Attorney-General (see paragraph 5 of the Directions).
42. Where an agency proposes to seek advice from external providers (AGS, private law firms or, in some areas, the Attorney-General's Department), it will need to decide how to select its external provider.
43. The following Government policies, issued by the Minister for Finance and Administration in March 1998, need to be considered when choosing a legal services provider:
44. Agencies covered by the Financial Management and Accountability Act 1997 which are proposing to outsource their legal services will need to consider the Commonwealth Procurement Guidelines - Core Policies and Principles. As noted above, regulation 8 of the Financial Management and Accountability Regulations requires officials performing duties in relation to the procurement of services to have regard to the Guidelines and to make written records of any actions that are not consistent with the Guidelines and their reasons for doing so. The Guidelines may also provide useful information for bodies covered by the Commonwealth Authorities and Companies Act 1997.
45. The Guidelines state that the fundamental objective of Commonwealth procurement is to provide the means to deliver the Government's programs efficiently and effectively.
46. This objective is supported through the following core principles, which underpin the procurement activities of government agencies:
47. The Commonwealth Procurement Guidelines do not require agencies to use a particular form of procurement. While ensuring open and effective competition, agencies need to strike a balance between the costs reasonably incurred in promoting competition and the benefits to be obtained. In this context the costs of bid evaluation during a tender, the time taken in the procurement process including briefing and debriefing suppliers, and the benefits gained from any increases in the fields of bidders, are all matters needing consideration.
48. Agencies that choose not to seek competitive tenders for their legal services should consider the need to implement other measures to ensure that their legal purchasing arrangements are cost effective.
49. Agencies that decide to obtain legal services though a competitive tendering process should closely examine the DOFA publication, currently under review, Competitive Tendering and Contracting - Guidance for Managers (March 1998). The Industry Commission's 1996 report, Competitive Tendering and Contracting by Public Sector Agencies, found that when done well, CTC could lead to significant benefits to clients, taxpayers and the broader community. The report also found that there was scope to increase the use of CTC in the Australian public sector.
50. Effective planning for competitive tendering requires:
51. These issues are dealt with in more detail in Competitive Tendering and Contracting - Guidance for Managers.
52. The competitive tendering process involves:
53. These issues are also dealt with in more detail in Competitive Tendering and Contracting - Guidance for Managers.
54. The Federal Court decision of Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 held that the tendering process could result in a preliminary contract between the tendering agencies and the tenderers under which the agency could be liable to tenderers. The case demonstrates the importance of agencies conducting their tender processes with proper care and supervision. Agencies contemplating competitive tendering should therefore consider whether to obtain professional advice.
55. DOFA has established a panel of qualified CTC consultants to provide agencies with quick access to expert advice. The panel offers consultancies in 5 distinct CTC areas: management consultancy, project management, change management, legal advice relevant to CTC and CTC training. (See paragraph 67.)
56. Whatever method is chosen for appointing a legal services provider, agencies will need to identify selection criteria, which may include the following:
57. Where legal services are outsourced the matters identified below, that may previously have been covered by legislation, may now need to be dealt with by way of specific arrangements with the outside legal services provider.
58. When obtaining legal services under contract from external legal services providers, agencies should be aware that privacy issues are likely to arise whenever information about identified or identifiable individuals is involved. It is Government policy that privacy protection be provided in relation to personal information that is held or used by contractors when performing services under contract to the Commonwealth. Proposed Government privacy legislation will apply to contractors but until that is in operation Commonwealth agencies that are covered by the Privacy Act 1988 are required to ensure that any contract for the provision of legal services obliges the legal services provider to comply with the Information Privacy Principles in the Privacy Act.
59. The Archives Act 1983 lists the circumstances in which Commonwealth records may be altered, disposed of, destroyed or their custody or ownership transferred. Failing to comply with the provisions of the Act is a criminal offence. National Archives has issued a guideline for agencies about their responsibilities for record-keeping in outsourcing arrangements, titled Records Issues for Outsourcing - including General Disposal Authority No 25.
60. Lawyers in the public service are subject to a range of administrative law measures such as the Ombudsman, freedom of information and review of decisions. Where services are contracted out, private sector lawyers may not be subject to these administrative law requirements. Agencies need to bear in mind that in some circumstances they may nevertheless be accountable, politically or legally, for the actions of their legal services providers.
61. The Administrative Review Council's report, The Contracting Out of Government Services, focuses mainly on service recipients and others who may be affected by the actions of government contractors. In particular, it deals with matters such as complaint handling and access to information. These issues may have direct relevance to legal services contracts where the performance of the contract involves the legal services provider in dealing with the public.
62. While the primary focus of the report is on the delivery of services to the public, it also raises some issues of general relevance to contracts for the provision of services to government. The report identifies steps that agencies can take to minimise poor or inefficient service delivery, including discussing, for example, contract preparation and monitoring contract performance. Pending the Government's formal response to the report's recommendations, agencies that propose to contract for the provision of legal services should consider the issues raised by the report.
63. The Report of the Review of the Attorney-General's Legal Practice recommended that agencies should assess their in- house legal services providers in the light of the Government's policies on CTC and competitive neutrality.
64. Competitive neutrality principles apply to in- house legal units operating as business activities. An in house legal unit is operating as a business activity if it charges for its services and has a degree of independence in the pricing of those services. In particular, the principles should be applied where an in- house legal unit bids for work under a tender. The Department of Treasury publication, Commonwealth Competitive Neutrality - Guidelines for Managers (1998) provides further guidance on this issue.
65. Under the Legal Services Directions, agencies covered by the Financial Management and Accountability Act 1997 may only use an in-house lawyer to conduct court litigation as solicitor on the record or counsel with the express approval of the Attorney-General (see paragraph 5 of the Directions).
66. The Competitive Tendering and Contracting Branch (CTC Branch), within DOFA, is responsible for:
67. As noted above, the CTC Branch has a panel of advisers which agencies may consult, on a fee-for-service basis, for advice on any aspect of the competitive tendering and contracting process (including tender management, project management and change management). The panel members include legal services providers able to provide advice on issues related to outsourcing legal services and the tender process.
68. The CTC Branch can be contacted through its Purchasing Advisory and Complaints Service on:
| Telephone: | 1800 650 531 |
| Facsimile: | (02) 6275 3628 |
| Email: | pacs@dofa.gov.au |
| Website: | http://www.finance.gov.au/procurement/ |
69. The primary role of the Office of Legal Services Coordination (OLSC) is to assist the Attorney-General in carrying out his First Law Officer functions in relation to delivering legal services to the Commonwealth. OLSC also advises the Attorney-General on the development and administration of Legal Services Directions and other Commonwealth legal services policies. The Directions and other guidelines relating to Commonwealth legal services, are available on the internet at http://www.ag.gov.au/olsc.
70. OLSC is a branch of the Legal Services and Native Title Division of the Attorney-General's Department. OLSC provides information to other agencies with respect to their legal purchasing decisions, including the operation of government policies on CTC.
71. While OLSC can provide advice and assistance to agencies, it does not:
| Telephone: | 02 6250 6611 |
| Facsimile: | 02 6250 5968 |
| Email: | olsc@ag.gov.au |
The Contracting Out of Government Services Report No. 42 Administrative Review Council, CanPrint Communications Pty Limited Canberra, August 1998
Competitive Tendering and Contracting, Guidance for managers, Department of Finance and Administration, March 1998
The Performance Improvement Cycle, Department of Finance and Administration, March 1998
Before You Sign the Dotted Line: Ensuring Contracts can be Managed - MAB/MIAC Report No 23 The Performance Improvement Cycle, Department of Finance and Administration, March 1998
Competitive Tendering and Contracting by Public Sector Agencies, Report No 48, Industry Commission, AGPS, Melbourne, 1996
Commonwealth Competitive Neutrality - Guidelines for Managers Treasury 1998
Managing Risk in Procurement - A Handbook Purchasing Australia(DAS) 1996
April 2000