4.7 Ending the agreement, suspending the agreement and dispute resolution
If during the term of the service agreement either the organisation or the department considers that the other is not meeting its obligations, or one of the parties admits to an inability to satisfactorily meet its obligations, there are processes in place to deal with the situation. Figure 1 shows the steps involved to resolve a breach of the service agreement, resolve disputes and terminate a service agreement.
All parties will act reasonably and in good faith to resolve a dispute. Should the issue not be resolved by the procedures outlined below, the dispute may be referred to the responsible Regional Director or Executive Director for final determination.
The Regional Director/Executive Director will use the following principles when reaching a final decision:
- The determination will be based on relevant information, facts and evidence.
- Parties will have the opportunity to present their case to the Regional Director/Executive Director.
- The process of determination will be fair and undertaken in a spirit of goodwill.
- Advice of the determination and the reasons for it will be provided to the organisation within 14 days.
Note: The dispute resolution process for hospitals is different from the process used for other types of service agreements.
Termination process
A service agreement may be terminated by the department if:
- an organisation undergoes a change of ownership
- an organisation undergoes a change of effective control, affecting its suitability to provide the service
- an organisation does not pay its debts
- an organisation comes under any form of an administrator's official management, receivership or liquidation
- where the service agreement is with a 'natural person', the 'natural person' becomes mentally incapacitated, falls ill for more than 14 days, dies or is convicted of a crime punishable by imprisonment
- statements provided are materially misleading or deceptive, or contain material omissions
- an organisation does not comply with or meet its obligations under the service agreement.
A service agreement can also be terminated by the organisation under the 'breach of the agreement' clause, if the department fails to comply with or meet its obligations under the service agreement.
Step 1: The deparetment/organisation provides notification to the other in writing. The notification must contain:
- reason for termination;
- the date on which services will cease;
- details of any outstanding requirements (e.g. data reporting);
- expected dates for completion of the termination;
- request for a non-audited financial statement (within 14 days);
- request for up-to-date asset register (for any assets purchased using departmerntal funds); and
- any other relevant information.
Step 2: The department and the organisation negotiate:
- any costs incurred by the organisation where the service agreement is being terminated prior to the end date in schedule 1 of the service agreement;
- return of surplus funds to the department; and
- transfer or disposal of department funded assets.
Step 3: The department provides the organisation with written confirmation of decisions reached in negotiations, detailing procedures and agreed time lines.
In normal circumstances, all outstanding requirements should be completed within 30 days of the cessation date.