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2.3 Service agreements with more than one organisation
Incorporated consortium
An incorporated consortium is an arrangement is when members of an alliance incorporate to form a new legal entity. Under this arrangement, the department enters into a direct legal relationship with the new legal entity and not with each individual member. The members retain their separate identities.Non-incorporated alliance
A non-incorporated alliance is when each of the members in the alliance sign the service agreement in their own right. Each organisation agrees to the terms and conditions of the service agreement and is individually bound by them. Each signatory organisation is equally liable for the actions of the alliance and the department is able to take action against each individual signatory.
There is no limit to the number of members permissible under a non-incorporated alliance, although only one member is nominated as the 'lead organisation'. The lead organisation will become the focal point in the alliance and the department will direct all correspondence and notices to the lead organisation. The department will only make payments to the lead organisation and it is the responsibility of the other members to negotiate how and when they receive their payments from the lead organisation.
Sub-contracting
Sub-contracting is when an organisation enters into a service agreement with the department and then sub-contracts the delivery of services to a third party (sub-contractor). Under this arrangement, only the organisation has a direct relationship with the department. The sub-contractor holds a direct relationship with the organisation.
Schedule 1 (except for hospitals) includes provisions for sub-contracting. The organisation must ensure that the sub-contractor has proper legal status and adequate insurance arrangements. The organisation has recourse to legal remedies and insurance claims against the sub-contractor. The department does not have the same recourse, because its direct relationship is not with the sub-contractor. For more information on sub-contracting, see section 4.10.
Organisations working together
Often it is not possible for one organisation to deliver all aspects of a service. In this situation, the department encourages organisations to form partnerships. The department accepts this arrangement, as long as the partnership is capable of meeting all the requirements detailed in the service agreement.
The parties must notify the department of their intent to establish a partnership in their tender or other submission, in the event that they are the successful applicant. Any issues between the partners are to be resolved by them and should not involve the department. In view of this, the department strongly recommends that independent advice be sought before proceeding.