The case for converting the GMC for Services into a light form of MSA

A bit of history

In July 2023, the Government Model Contracts (GMCs) will become teenagers, as it’ll be 13 years since they were introduced. Here’s a quick potted history of their life to date:

• The GMCs were launched in July 2010. All Public Service agencies, the New Zealand Police, and the New Zealand Defence Force, were required to pilot them from October 2010.
• The pilot was reviewed in 2011, and in October of that year the second edition was launched.
• Fast forward to late 2019. MBIE consulted on refreshed versions of the GMC templates and then, in February 2020, published the third edition.
• In August 2021 they were updated (version 3.1) to reflect the target set for central government agencies to pay 95 per cent of domestic invoices within 10 business days, and a new privacy clause was inserted to align with the Privacy Act 2020.

When I sketched out this potted history I was taken aback, as I remember providing comments on early drafts of the first version when working in-house. Hard to believe we’ve been using them for nearly 13 years!

How they’re used in practice

As MBIE’s guidance on the third edition explains, the GMCs are intended to be used for the purchase of low-value, low-risk routine goods and services. At the same time, “it is for each agency to determine, depending on the scale of their procurement activities, what low value, low-risk means”, and the guidance also refers later on to the GMCs being used for “low/medium risk + low/medium value” purchasing.

In practice, agencies use the GMCs for a wide-range of purchasing, from everyday low risk and low value transactions, through to transactions of at least medium risk, and sometimes with values getting ‘quite up there’. While not designed for ICT purchasing, they can also be used for some kinds of lowish risk ICT purchasing (such as setting up online courses with an open source learning management system, or maintaining a website) if appropriate amendments are made, and relevant supplementary clauses are added.

However, one limitation of the GMC for Services is that it is based on defined services being described in Schedule 1 when the contract is entered into (which is fine) but without contemplating additional pieces of work down the track under the same contract. One can, of course, vary the description of services in Schedule 1, but sometimes it’s preferable to be able to enter into separate statements of work, as that can be easier than amending or supplementing the original service description, charges section, etc. And there are situations where being able to use the GMC for Services in this way is preferable to entering into a more detailed Master Services Agreement, because the supply market is familiar with the GMC and, for that reason alone, it can be easier to get it across the line. I’m not suggesting that the GMC should be used in this way where a fuller MSA is required, but there can be situations where a fuller MSA is not required.

Converting the GMC for Services into an MSA

Thankfully, it’s quite easy to convert the GMC for Services into a fairly light form of MSA. All one needs to do is add an ‘Additional Services’ clause, and attach one or more statement of work templates to Schedule 1 (e.g., as an Appendix to Schedule 1). Depending on how you’re using the GMC, you might need some additional clauses, but as always that’s context-dependent.

If you’re interested in using the GMC in this way and want to build one quickly, with the ‘Additional Services’ clause, other clauses you might need, and one or both of the statement of work templates I’ve mentioned, you can subscribe to the Contract Foundry and do it in a flash with the GMC builder. When I say ‘in a flash’, I mean literally in a few minutes! That’s how quickly you can do it.

Let me show you what I mean (you can click the full screen button within the video controls if you’d like to enlarge the video size):

If only

When I was an in-house lawyer, I would have loved to have had this tool, because I was reviewing and amending more GMCs than I could shake a tree of sticks at while also being wrapped up in common capability contract negotiations and giving the usual range of advice that in-house lawyers are asked to give. If we could have pumped out the GMCs faster and more consistently, it would certainly have reduced stress levels, got parties to the signing table faster, and freed up time for more complex work.

Back then, contract builders developed specifically for public sector agencies were hard to come by. With the Contract Foundry, that’s no longer the case.