4.13 How to vary the agreement
With the introduction of three year agreements and consistent with the principles of the partnership agreement, a distinction is made between funding that is negotiated and changes to funding to reflect price and or service changes, movements or adjustments.
Variations
A service agreement variation refers to the process through which organisations agree to change funding for one of the following:
- growth or reduction in services
- new services
- minor capital
- one-off items.
Changes due to service and funding model redevelopment are implemented through this process during the term of the agreement.
Variations are negotiated with an organisation and processed at set times throughout the year. There are three standard variation processing periods per year, in August/September, November/December and March/April. Processes have been developed for any variation that needs to occur outside of the designated variation processing periods.
The variation process involves:
- negotiating the substance of the variation (as required),
- reissuing, via the Funded Agency Channel, any service agreement schedules that are affected by the variation, and
- completing the variation.
Organisations will receive a copy of the revised service agreement (principally schedules 2 and 3) via the Funded Agency Channel. These are to reflect conversations and negotiations with departmental staff.
The variation becomes an addendum to the original service agreement and forms the revised basis on which the service agreement will be conducted.
Adjustments
Adjustments are changes to funding levels that occur automatically.
The main type of funding adjustment is a price adjustment. Price adjustments are made to provide increased funding for wages and non-wage cost increases. They reflect increased funding for the same service delivery outputs.
The other type of adjustment is a service adjustment. Service adjustments will only be made where the number of services actually delivered is used to adjust funding and the adjustment is not negotiated.