Skip to content
State Government of Victoria logo
Service Agreement Information Kit for Funded Organisations

3.10 Assignment and subcontracting

Disclaimer: this disclaimer must be read in conjunction with the content of this page.

The Service Agreement includes provisions allowing organisations to subcontract any or all services to a third party if the department has provided its prior written consent.

What is subcontracting?

Subcontracting refers to a funded organisation engaging another organisation or person (excluding employees of the funded organisation) to undertake the services set out in the Schedules of the Service Agreement. For example, an organisation is funded to provide 100 episodes of community respite services may wish to engage another organisation under a subcontract to deliver 20 of these episodes.

For the purposes of this clause, the following is not considered subcontracting:

  • employment of contract or temporary staff to fill vacancies within the organisation that is ordinarily funded to provide the services 
  • services being provided to an organisation for its ordinary operational needs that do not directly involve the provision of the funded services, such as information technology, human resources or cleaning
  • where the purpose of the funding is specifically for the organisation to engage or fund other providers to deliver services or supports. For example:
    • where an organisation is funded a discretionary amount for client directed supports eg. the engagement of a massage therapist for a service user
    • where a peak research body is funded to provide grants to other organisations for health research.

Process for obtaining approval for subcontracting

Any proposal for subcontracting needs to be made in writing and include all relevant information on the proposed subcontracted services, including the period of the proposed subcontract and details of the proposed subcontractor. The department will only be taken to have consented if consents in writing, and may impose conditions as part of its consent.

Engaging a subcontractor

If the funded organisation wants to assign its rights or obligations or subcontract with a third party for the provision of all or part of the services, the funded organisation must satisfy the department that the relevant third party can deliver the services on the same terms and conditions as the Service Agreement and that the third party agrees to comply with any requirements of the department as a condition of granting its consent.

Before subcontracting services, organisations are strongly advised to seek their own legal advice. Organisations must ensure that a subcontracting arrangement does not compromise their obligations under the Service Agreement.

The contract between the organisation and the subcontractor will need to include the same terms and conditions as the Service Agreement, including a term that specifically allows the department to access the subcontractor’s premises or place of business to conduct a performance review or audit of the subcontractor on the same terms and conditions as clause 9 of the Service Agreement (see chapter 3.9).

Despite the department consenting to a subcontracting arrangement, the funded organisation remains responsible for the delivery of any subcontracted services. The acts, omissions and mistakes of a subcontractor performing any services will be taken to be the acts, omissions and mistakes of the funded organisation.

Information for Department of Health and Human Services (human services)

Funded organisations that have their services reviewed by an independent review body under clause 3 of the Service Agreement (see chapter 3.3.3) will need to ensure that any contract with an approved subcontractor includes a term that the subcontractor agrees to allow an independent review body to access the subcontractor’s premises or place of business to conduct a review.