The RMA Quality Planning Resource

This section is for guidance only and should not be relied upon in the absence of legal advice. The input of a contract lawyer is recommended when a contract is being drafted.

The contract is the written component of the agreement between the council and the contractor. The form of the contract can vary widely just as the scope of services can vary depending on the specific needs of each council.

The information below is intended to be an overview of the matters which can be considered for inclusion in a contract. Much of the information is oriented toward more significant consent processing contracts, so users will be able to 'pick and choose' those aspects most applicable to their circumstances.

Scope of services: The description of what the contractor is to do

The scope of services is the core of any outsourcing contract and needs to be detailed and unambiguous. It should cover:

  • The type of applications to be outsourced. This may be primarily simple non-notified applications, applications with complexity and potentially notified, or possibly a combination of both. Alternatively, your outsourcing requirement may be primarily for specialist technical input.
  • The specific parts of the process that the contractor is expected to undertake.* Some councils choose to leave this area more generalised, and you may feel that this level of detail is pedantic. However, in some cases the generalist approach has led to confusion about responsibilities and subsequent inefficiencies in the process.
  • How the applications will be issued to the contractor including issues such as regularity, whether the contractor will be notified or expected to check for new applications with the council, and the time frames expected for applications to be uplifted. For example, councils could bundle several similar applications with the same contact person and forward these to a contractor by courier.
  • Where relevant, who the Council's legal or other technical advisors are, and the protocols for requesting their services.
  • How to obtain input from other council staff, how many working days other staff need for effective input and how to deal with technical comments from council staff, including if non-RMA issues arise.
  • The requirements for attending training and up-skilling sessions. A common approach is to require the attendance of the contractor at any meetings and briefings that will impact on their ability to process resource consent applications, including changes to relevant council policy and procedures. State how the contractor will be advised of these meetings.
  • Possible circumstances where professional planning opinions differ. It is important to outline processes for managing these differences.
  • The requirements and opportunities for feedback into the policy/plan loop if the contract envisages this level of consultant involvement.

* For example, the general requirements for overflow consent processing could include the following:

  • checking adequacy of the application in relation to s88, the Fourth Schedule of the RMA and the district plan provisions
  • liaising with other relevant council departments
  • liaising with administrative staff to arrange notification, hearings, data entry and financial reporting
  • providing fee estimates to the council for incorporation as part of any requested estimate of costs by the applicant pursuant to s36(3A)
  • dealing with applicant inquiries and liaison with the council's external experts
  • carrying out a site inspection, taking photographs, and completing where relevant the council's site inspection checklist
  • preparing a s92 request where required
  • identifying persons who may be adversely affected and making a recommendation on notification pursuant to ss95A-95F
  • dealing with any public inquiries associated with the application
  • preparing the s42A report
  • appearing at any required hearings
  • providing a draft decision with appropriate conditions
  • providing advice regarding fee disputes under s357A-D and discounting fees for late applications under the Discount Regulations
  • financial reporting.

General terms

The general terms of the contract support the scope of services and cover many of the procedural issues. The council may have a standard set of professional services contract terms that can be easily modified to suit.

Matters to cover in this part of the contract, and some possible approaches, include:

Duration and termination

  • Consider a fixed-term contract with an option for renewal or extension, as this provides more impetus for reviews.
  • Include a clause for termination following a notice period, but without requiring a reason. This is commonly used to facilitate changes to the contract due to a number of minor issues of non-performance.
  • Include an immediate termination clause for substantive issues of non-performance or conflict. Examples include breaches of contract terms, inability to meet time frames, bankruptcy, drug dependency, failure to report without reasonable excuse, sale or significant changes to the contractor organisation, or unavailability of listed contractor personnel.
  • An alternative to the above, which many councils use, is a standing arrangement whereby applications are forwarded to consultants as and when necessary, and so long as contractor performance is satisfactory. There is no fixed duration to the contract. If performance is not satisfactory for any reason, the consultant may find that they receive fewer or no applications to process. In such a case, it is good practice for a council to advise the consultant what aspect of their performance was unsatisfactory, rather than leave them wondering why the flow of applications has dried up.
  • Define the requirement for the return of all hard and electronic copies of council records on termination of the contract.
  • State that the contractor's liability for acts or omissions remains for a specified period after the end of the contract.

Reporting and communication

Communication is a key issue. Agreed procedures will avoid misunderstandings and make the process of dealing with a contractor seamless for applicants.

To assist in clear communications, council staff should:

  • state the conditions for use of council's or the contractor's letterhead and other branded communications, and what types of communications need to come from whom
  • state the requirements for the contractor entering information into the council's reporting, time recording, and time frame systems
  • state expectations of contractor's interface with applicant (e.g. file note conversations/contact prior to site visits/requests for additional information)
  • state the IT systems being used by the council to ensure compatibility.

Public and media contact

Public consultation and media liaison is crucial to some applications, particularly when they are large and complex. Members of the public may require aspects of the application to be explained to them, and require advice on the submission, hearing and appeal process. There may also be significant media interest so clearly defined protocols for dealing with public inquiries should be provided.

  • Define whether the contractor should be available to answer questions from applicants, the media, or the public at large. Generally all media enquiries made to a contractor should be forwarded to council.
  • Provide a copy of the council's media policy to the contractor and ensure it is understood.
  • Require the contractor to make the application file available for public inspection.

Ownership of resources

Specify the council's resources to be provided and, where relevant, include a requirement that these are returned either at the end of specific consent processing or at the end of the contract period.

These items could include:

  • the use of council systems and resources including whether office accommodation, telephone, electricity, secretarial and other services and equipment are to be provided on a regular or ad hoc basis
  • original or duplicate copies of relevant property and application files
  • the necessary templates and electronic formats for reports, and any protocols for deviating from them
  • access to council staff and legal or specialist advice.

Confidentiality and security

Councils have obligations to record all information and keep it secure. Having an external contractor complicates this process. In addition, contractors can become privy to internal policy decision making, including internal guidelines on notification, and sensitive commercial information associated with applications.

Consider the following options to ensure confidentiality requirements are met:

  • require the contractor to work from council's offices
  • specify in the contract that the contractor must keep accurate and separate records, and that they are secure at all times
  • include an explicit confidentiality clause in the contract
  • specify in the contract that a breach of confidentiality will result in the immediate termination of the contract.

Conflicts of interest

Ensure contractors are obligated to self-police these areas, and that conflicts of interest are promptly identified and discussed with the contract manager. Conflicts of interest can arise either with particular applicants or with particular issues. The fundamental position must be that potential conflicts of interest are disclosed. Where ongoing contractual arrangements are in place, it is advisable for the contractor to be upfront about areas where conflicts may arise. Divulging this type of information may avoid unnecessary delays when allocating resource consent applications.

Require that the contractor complies with the NZPI code of ethics or other relevant professional institutes' code of ethics.

Availability and accountability

Consider specifically naming personnel in the contract.

You may prefer to deal with specific individuals rather than any member of a consultancy team. If this is the case, ensure that each individual's role is recorded in the contract and make provision for procedures to be followed should that person not be available at any particular time. Also ensure that the assignment or subcontracting of any of the contractor's obligations to a third party is prohibited.

Individuals can be identified by various methods, including:

  • attaching a schedule listing individuals and hourly rates
  • simply requesting that a particular person process a consent when allocating it to the consultant company, and seeking confirmation or otherwise of their availability
  • including individuals in the contract body with hourly rates but further specifying that 'easy' work is to be completed at a minimum hourly rate, or by specific staff within the consultancy - if this approach is taken there should also be a clear process for contractors to get new staff registered on the contract
  • specifying a manager for the contract who is responsible for workload coordination, meetings attendance, outstanding accounts, operational issues and general monitoring of progress and communication.

If the use of specific personnel is crucial to the council, a clause requiring the notification of the absence of any nominated personnel should be included, as well as a requirement for requesting changes to the nominated personnel to be in writing. It is also helpful for councils to specify their liaison personnel.

Service standards

Clearly define service standards.

To ensure the success of contracting out services the council must make the expected performance standards clear. Any benefits from outsourcing can be lost through the mismanagement of the contractor's performance. Clear guidelines in the contract will make this process easier and more transparent.

Typically, contracts focus on the following two issues when defining performance standards:

  • the time frames for completing stages of the process, usually outlined in a schedule to the contract
  • the quality of reports and correspondence. (Note: Some councils have attempted to quantify an acceptable standard, for example, no spelling or grammatical errors for correspondence and not more than 85 per cent content change for reports. Another way is to specify aspects of the process that must be correct, for example, the identification of all aspects of non-compliance and addressing all matters of relevance under the RMA. A third method is a broad statement that the report content and quality must be such that it would sustain the scrutiny of the Environment Court.)

Any deviation from the expected performance standards should also have clear consequences. The council will need to decide what constitutes a breach of the contract terms and immediate termination of the contract, and what can be dealt with in a proactive management process to ensure improvement. It is standard for councils to specify that all defects and mistakes are to be remedied by the contractor at their cost.

The flip-side of this is that the council must also ensure it provides deliverables on time and with the accuracy required from the contractor. Services such as provision of the necessary documentation, timeliness of responses to requests for information, advice on changes in policy and feedback on performance, if performed well, will ensure the smooth operation of the relationship.

Peer review and audits

Be specific about the peer review and audit process.

Generally, under most contracts there are two parts to the peer review process. A first review takes place within the contractor's organisation to ensure quality standards are maintained. A second review is conducted in-house by the council, which may or may not include making the decision on non-notified applications.

For both processes the contract should specify:

  • the individuals responsible
  • the stage(s) of the process when the review(s) need to occur
  • the time allowed for the review
  • the method of signing off the document in question.

When choosing council peer reviewers select staff who are senior, objective, and have experience in peer reviewing work.

It is more efficient to select peer reviewers who will pay attention to substance rather than style. If deficiencies become an issue, an audit of a contractor's work may also be warranted.

Delegations

Define the extent of delegations with specialist legal input. This includes both officer type delegations under the RMA, as well as any delegated authority to sign letters on behalf of the council. This area has been legally ambiguous and has been the subject of legislative review which should now provide clearer guidance. Check the legal sections below and obtain advice on the legality of any delegations.

Liability

This can be a difficult area for both councils and contractors to negotiate as it usually attempts to shift risk from councils to contractors.

Separately consider the issues of liability and insurance. Many councils state in contracts that a contractor must have a certain amount of insurance, without actually stating what the contractor is liable for. Professional indemnity insurance is insurance that protects professionals against liability claims resulting from negligent work. Insurance covers a risk, for which the contractor is liable. Without specifically addressing liability in the contract, this issue remains arguable. Simply saying that a contractor must have a certain level of professional indemnity insurance may imply liability to a certain level, but does not explicitly say so. Further, consider how realistic it is to transfer risk to the contractor - it is likely that council's managers and insurers will retain control of any liability situation. If the contractor's work is closely peer reviewed, and council officers make the actual decisions, then there may need to be some sharing of liability.

Common approaches include:

  • requiring the contractor to rectify minor defects at no cost to the council or applicant
  • close peer reviewing and decision making by the council, with the contractor having only limited liability
  • the contractor having an unlimited liability and it being up to the contractor how much insurance they have
  • the contractor having limited liability, with a specific level of insurance being required (usually $1M).

Include a requirement for the contractor to have general public liability insurance. Public liability insurance is a general term applied to forms of third party liability insurance with respect to both bodily injury and property damage liability. It protects the insured against claims brought by members of the public.

Require both types of insurance to be held for a specified period after the end of the contract.

Provide copies of the council's written health and safety policy, brief the contractor on specific OSH requirements, and request evidence of the contractor's health and safety policy and record.

Fee expectations

There are two critical elements in avoiding difficulties arising over fee expectations:

  • the method of calculating the amount of payment
  • the timing of invoice and payment.

In terms of calculating the amount for payment, the majority of councils choose to pay an hourly rate - this ties in with the specification of personnel and their individual hourly charge-out rates. For overflow consent processing, a few councils choose to set a maximum expected fee for particular types of consents with a process to follow if it is exceeded. This is usually based on complexity but generally excludes high complexity applications which require a higher degree of management, as each application must be assessed and graded as the first step. Having different payment rates for different types of consents adds a layer of administrative complexity, but may help to ensure the contractor is applying the right level of professional expertise to each consent. Another way of dealing with this is to specify that low complexity consents cannot be charged out at a rate higher than that specified for the junior planner.

  • State whether the contractor is to invoice on an aggregate basis - which may be suitable for secondment-type services - or to provide invoices for individual applications. Specify the level of detail required on invoices, including:
    • individuals who have completed the work, hours and rates
    • an itemised breakdown of tasks undertaken by individuals (and the time involved)
    • details of any disbursements
    • order numbers and application numbers
    • reference to the amount of any fee estimate.
  • Include common invoice dispute resolution processes, which should be available from other council contracts. Ensure the cost of these processes is consistent with the fee value of the work - don't commit to an unnecessarily onerous process for a few hundred dollars.
  • Define whether the contractor will respond to invoice queries from applicants, formal s357 (A) - (D) objections and fee discounts under the Discount Regulations. If so, state whether the time taken will be paid by council.
  • Note whether a discount of fees is expected (and if so how much) when a consent application does not meet the RMA’s timeframes and the council is required to discount its charges.
  • Include dates by which invoices must be received and the date they will be paid. For example, an invoice may need to be received by the 5th of the month in order to be processed in council's systems for payment on the 20th of the month. However, if the council is going to be issuing an invoice to the applicant for further payment, the contractor's invoice may be needed very quickly, for example 48 hours after a hearing or, in the case of a non-notified application, upon completion of processing.

Section 36(3A) of the RMA states that a council must provide an estimate of any additional charges beyond a fixed fee (e.g. for consent processing) if requested to do so. Therefore contractors should be advised to be prepared to provide such estimates for the consents they are processing if so requested.

Timeframes

Specifically  state the time frames that must be met.

Clearly  these time frames need to be tied to the scope of services. Allow time at the  beginning and end for administrative processing within council, and again at  the end for peer review and decision making. Guidelines may be:

  • one working day for collection of the application   from council and identifying any potential conflict of interest
  • three working days for information assessment
  • three working days for an affected party/notification   determination
  • 10 working days for reporting.

Protocols and guidance

As an alternative to covering all matters in the formal contract, several councils, have developed less formal protocols and guidance documents that are appended to contracts.

Matters covered include:

  • how different council processes are to be undertaken
  • how to interact with other council departments
  • how to interact with the contract manager
  • how peer reviews and feedback will occur
  • what to do with electronic and hard copy files at the completion of a consent
  • how the council's electronic and financial systems work
  • processing guidelines for different types of consents

These documents can be invaluable for recording the less tangible matters that are important for the smooth operation of the council's systems and for reducing risk. It is also easier to alter a non-contractual document to adapt to new and improved procedures. They are usually very council specific as they are strongly based on a particular council's procedures. Councils may be prepared to share these documents with other practitioners in the interests of best practice.