FUNCTIONAL POLICY
MANDATORY PROCUREMENT POLICY REQUIREMENTS FOR THE APPROVED CONTRACTOR
INSURANCE PROGRAM INITIATIVE
Business Process Owner:
Ms Liesl O’Meara, FAS Commercial CASG
Business Process Authority:
Ms Jane Wood, Executive Director Procurement &
Contracting Policy and Practice
Approval Date: 18 March 2016
Functional Policy is issued under the Capability Acquisition and Sustainment Group - Functional
Manual (ADMIN) - Quality Management System Manual [Interim]
Revised Document:
This Functional Policy supersedes Defence Materiel Instruction - DMI (PROC) 13-0-004 V1.0
Mandatory Procurement Policy Requirements for the Approved Contractor Insurance Program
Initiative
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UPDATES
Part Amended
Amendment Reason
Entire document
Updated to reflect streamlined ACIP
protocols achieved since inception of the
program.
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FUNCTIONAL POLICY (PROC) MANDATORY PROCUREMENT POLICY REQUIREMENTS FOR THE APPROVED
CONTRACTOR INSURANCE PROGRAM INITIATIVE
MANDATORY PROCUREMENT POLICY REQUIREMENTS FOR THE APPROVED CONTRACTOR
INSURANCE PROGRAM INITIATIVE
References:
A.
Approved Contractor Insurance Program Initiative
B.
Commonwealth Procurement Rules (CPRs)
C.
ASDEFCON Insurance Handbook and Case Studies
D.
Contract Risk Training Module 1
E.
Defence Procurement Policy Manual (DPPM)
F.
Functional Policy (Procurement) (Formerly the DMI(PROC)s)
G.
Accountable Authority Instructions (AAIs)
H.
Legal Practice Guide No. 3
I.
Liability Risk Management Process (LRMP)
INTRODUCTION
1. The Approved Contractor Insurance Program (ACIP) is a procurement reform initiative that
involves a periodic centralised review by the ACIP Management Team of participating Defence
companies’ global / group and local insurance programs. The purpose of the review is to pre-qualify
a participating company’s insurance program (ie grant ACIP status), provided the ACIP Management
Team is satisfied with the insurances maintained by the company.
2. The ACIP initiative is managed within the Commercial Division CASG by the ACIP Management
Team, which is led by Director ASDEFCON and Contracting Initiatives (DACI). Requests for
assistance and advice in relation to the ACIP initiative are to be forwarded to:
[email protected].
BACKGROUND - OVERVIEW OF THE ACIP INITIATIVE
3. The key objectives of the ACIP initiative are to:
a.
improve the competencies and understanding among CASG procurement staff of
contract insurance related-issues; and
b.
reduce inefficiencies, duplication and costs for both Defence and industry associated
with evaluating, negotiating and monitoring ongoing compliance with contract
insurance requirements for Complex Procurements.
4. In brief, the ACIP initiative operates in the following main ways:
a.
the ACIP Management Team undertakes a high level periodic review and prequalification of the global / group and local insurance program of participating Defence
companies. Following this review, the ACIP Management Team will grant a
participating company ACIP status (subject to conditions agreed with the company) if
satisfied with the company’s insurance program. These conditions will include
providing the ACIP Management Team with timely notice of material adverse changes
to the company’s ACIP; and
b.
in the context of a specific procurement, the ACIP Management Team advises on
compliance issues relevant to insurance requirements specified in a contract where
those requirements relate to policies that fall within a tenderer’s / contractor’s ACIP. In
this way, the ACIP initiative alleviates personnel involved in the procurement from
responsibility for compliance checking contract insurance requirements for the
purposes of tender evaluation, contract negotiation and ongoing contract management.
5. A contractor whose insurance program has been granted ACIP status is deemed compliant with,
and is relieved of certain of its obligations under, the contract’s insurance provisions, to the extent
those requirements are covered by the contractor’s ACIP. However, this deemed compliance and
relief from certain insurance obligations only applies to the extent and for such a time as the
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contractor holds the ACIP status.
Insurance Handbook.
For further information refer below and to the ASDEFCON
6. The primary envisaged benefits of the ACIP initiative include:
a.
streamlining and reducing the administrative burden and costs associated with
compliance checking and management of certain contract insurance issues,
specifically by:
(i)
reducing tender data and contract data deliverable requirements; and
(ii)
reducing tender evaluation, contract negotiation and contract management
effort;
b.
improving risk management within CASG, particularly in respect of insurable risks that
arise in connection with the performance of Defence contracts;
c.
subject to stringent confidentiality safeguards, improving transparency and
understanding of participating Defence companies’ global / group and local insurance
policies; and
d.
developing a corporate level relationship between the ACIP Management Team and
participating Defence companies’ global risk and insurance managers.
7. The ACIP is currently open to the ‘top’ six to seven major Defence companies. Participation by
companies in the program is entirely voluntary. On application, companies will have their global /
group and local insurance policies reviewed and approved (subject to conditions) by the ACIP
Management Team. A register of companies with ACIP status (and therefore eligible to participate
in
the
ACIP
initiative)
is
located
at
http://intranet.defence.gov.au/dmoweb/sites/PP/comweb.asp?page=116647&Title=ACIP%20Registe
r.
8. The conditions that attach to a company’s ACIP status include the requirement to provide the
ACIP Management Team:
a.
with written details of any material adverse change to its ACIP; and
b.
within 30 days of renewing any policy relevant to its ACIP, with a certificate of currency
evidencing the relevant insurances have been renewed and written confirmation that the
cover under the renewed policies has not materially adversely changed from the cover
determined available as at the date of the company’s last ACIP review.
9. Importantly, the ACIP Initiative does not:
a.
alter responsibility for undertaking a Liability Risk Assessment (LRA) in order to identify
and assess contract specific risks and determine appropriate contract insurance
coverage and associated requirements (including by identifying relevant types of
policies, appropriate limits of indemnity and other specific coverage requirements, eg
appropriate geographical and / or jurisdictional limits). The assessment of these risks
must be wholly uninfluenced by the details of any ACIP. In other words, the ACIP
initiative does not in any way alter the fundamental premise that it is the LRA that drives
and informs the development of appropriate contract insurance requirements (subject to
the overall value for money test);
b.
change or eliminate the need to properly manage risks, including by developing
appropriate risk management or mitigation strategies (eg appropriate contract insurance
requirements for insurable risks);
c.
remove the need to specify insurance requirements in the draft contract included in any
request documentation;
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d.
alter responsibility for evaluating, negotiating and ensuring tenderer compliance with
contract insurance requirements not covered by a tenderer’s ACIP;
e.
alter a company’s responsibility to properly manage risks and its insurance program,
and to discuss appropriate contractual insurance requirements;
f.
seek to inform or advise companies about their insurance requirements or programs;
g.
benchmark (or compare) an individual company’s insurance program against the
insurance program maintained by any other company; or
h.
concern Defence insurable risks which are managed by the Defence Insurance Office
through Comcover or Comcare and not impacted in any way by the ACIP initiative.
10. As mentioned in clause 9.a, conducting a LRA remains in all cases a key step in the
procurement process for determining insurance requirements for contracts. CASG Personnel are
directed to the CPRs (paragraphs 8.1 to 8.3), Defence AAIs (Chapter 1), DPPM (Chapters 3.2 and
3.15), Functional Policy (Procurement) Procurement Policy And Process Requirements From
Planning To Contract Signature For Complex Procurements Involving Materiel Acquisition And / Or
Support Requirements (paragraph 65), Liability Risk Management Process (LRMP), DMM (PROJ)
11-0-002 Project Risk Management Manual (PRMM), DMM (LOG) 04-0-003 Risk Management in
Sustainment and Contract Risk Module 1 (Limitation of Liability, Indemnities, Warranties and
Insurance) for policy and guidance on risk management and the LRA. Where a limitation of
contractor liability is not being considered, a LRA focused on insurable risks is still required in order
to determine appropriate contract insurance requirements.
ACIP INITIATIVE AND THE PROCUREMENT LIFECYCLE
11. To further assist CASG Personnel understand the ACIP initiative, this section contains a brief
overview of the operation of the initiative and its impact on roles and responsibilities at the various
key points during the procurement lifecycle:
a.
Request Documentation - develop request documentation (including draft contract
insurance requirements) in the usual way – noting, however, the relevant ASDEFCON
templates are structured to adjust the manner in which tenderers respond to the draft
contract insurance requirements depending on whether a tenderer has ACIP status
(refer, for example, ASDEFCON (Strategic Materiel) TDR C-3).
As further explained below in paragraph 23, appropriate ASDEFCON template
insurance provisions (without any material changes) must be included in the draft
contract, except where approval is obtained from the ACIP Management Team not to
include, or to amend, these provisions. For further information on the ASDEFCON
insurance clause, refer to the ASDEFCON Insurance Handbook and Case Studies.
b.
Tender Evaluation:
Tender Data Requirement (TDR) – Standalone insurance section
(i)
Tenderer with ACIP status – is not required to provide the information requested
in the insurance TDR (other than cost), to the extent that the insurance policies
the tenderer intends to rely upon in respect of the draft contract are within the
scope of the tenderer's ACIP status.
However, prior to contract negotiations if selected as a preferred tenderer, the
tenderer is to provide the information requested in the insurance TDR in respect
of any insurance policy which falls outside the scope of its ACIP status.
Tenderers with ACIP status are to indicate in their Statement of Non-Compliance
against the insurance TDR that they have ACIP status and they are to identify
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any insurance policy which falls outside the scope of their ACIP status that they
intend to rely upon in respect of the draft contract.
Insurance is not "within" a tenderer's ACIP status if it was not reviewed by the
ACIP Management Team as part of the ACIP pre-qualification review process or
if it is specifically carved out of the tenderer's ACIP approval in the ACIP review
report. A common example is where a tenderer within the ACIP relies upon a
project specific insurance policy. Such a policy would not ordinarily form part of
the tenderer's ACIP status. Another example would be where a contract requires
a type of insurance cover (say, marine liability) and the ACIP review report does
not cover such insurance.
CASG considers workers compensation insurance and compulsory third party
insurances as required by law to be within a contractor's ACIP status (even if
those policies were not reviewed as part of the ACIP pre-qualification review).
This position does not apply if there is evidence to suggest that the ACIP
contractor is in breach of the law and has failed to maintain such insurance.
As further explained below in paragraph 28, for the purposes of tender
evaluation, it must be assumed a tenderer is compliant with any draft contract
insurance that the tenderer identifies as coming within its ACIP (subject to any
contrary statements in the tenderer’s Statement of Non-Compliance). At this
stage in the procurement process, there is no requirement to seek supporting
documentation or evidence verifying the tenderer’s compliance with the draft
contract insurance requirements.
(ii)
Tenderer who does not have ACIP status – is required to provide details of all
costs associated with the insurance policies covered in the tenderer’s insurance
response and, prior to contract negotiations if selected as a preferred tenderer, is
to provide the information requested in the insurance TDR for the current or
proposed insurance policies that they intend to rely upon in respect of the draft
contract.
Tender Data Requirement (TDR) – Statement of Non-Compliance
(iii)
Tenderer with ACIP status – is required to indicate in its Statement of NonCompliance against the insurance TDR that it has ACIP status and to identify
only those insurances (if any) that it intends to rely upon in satisfaction of the
insurance obligations in the draft contract that fall outside the scope of its ACIP
status.
A tenderer with ACIP status will be deemed compliant with, and is relieved of
certain of its obligations under, the insurance provisions of a contract to the
extent the insurances required by the contract fall within the tenderer’s ACIP
status. This is intended to eliminate the need for tenderers with ACIP status to
tender non-compliances and negotiate the insurance clause to the maximum
extent possible. Accordingly, a tenderer with ACIP status is only required to
indicate the following non-compliances as regards to the insurance obligations in
the draft contract (for those insurances which fall within its ACIP status):
o
non-compliances with the limits of indemnity of the insurance policies
selected (including the business interruption and advanced consequential
loss limits);
o
non-compliances with the clauses for which the contract does not deem
compliance or relieve the contractor from its obligations while it maintains
ACIP status; and
o
any other non-compliances that it intends to raise in contract negotiations.
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For those insurances (if any) which do not fall within its ACIP status, a tenderer is
required to indicate in its Statement of Non-Compliance against the draft contract
insurance requirements any non-compliances.
(iv)
c.
Tenderer who does not have ACIP status – is required to indicate in its Statement
of Non-Compliance against the insurance TDR and the draft contract insurance
requirements any non-compliances.
Contract Negotiations:
(i)
Tenderer with ACIP status – an ACIP Assurance Report must be requested from
the ACIP Management Team if the draft contract specifies any of the following
insurance requirements and the tenderer has identified any of the following types
of policies as coming within the scope of its ACIP:
(1)
any liability insurance policy for which the limit of indemnity specified in the
draft contract exceeds the nominated monetary threshold (ie $25m – refer
paragraph 30 below);
(2)
any property policy which insures Commonwealth property, or transit or
contract works policy, with a value which exceeds the nominated monetary
threshold (ie $25m – refer paragraph 30 below); or
(3)
any type of aviation or marine insurance policy.
This ACIP Assurance Report will summarise the tenderer's known compliance (or
otherwise) with the draft contract insurance requirements that the tenderer
identifies as coming within its ACIP and is to be used to identify insurance related
issues requiring resolution during contract negotiations.
For any draft contract insurances that are not covered by the tenderer’s ACIP,
these insurances are evaluated in the usual way to determine whether the
tenderer complies with those requirements.
If paragraphs (1) (2) or (3) above are not met (ie there are no aviation or marine
policies, and no liability, transit or contract works policy, or property policy which
insures Commonwealth property, with a specified limit of indemnity greater than
$25 million in the draft contract), an ACIP Assurance Report is not required and
the tenderer’s ACIP status must be relied on to deem the tenderer compliant with
the draft contract insurance requirement(s) that the tenderer identifies as coming
within its ACIP (subject to any contrary statements in the tenderer’s Statement of
Non-Compliance).
In some instances, the ACIP Management Team will identify issues which require
further information from the tenderer. The ACIP Management Team may choose
to investigate those issues through the ACIP process. The purpose of this
approach is to centralise the collection of the information from ACIP contractors.
The ACIP Management Team will identify any insurance issues which the
personnel involved in the procurement remain responsible for resolving.
(ii)
d.
Tenderer who does not have ACIP status – the personnel involved in the
procurement are responsible for assuring in the usual way that the tenderer
complies with the draft contract insurance requirements and for identifying any
insurance related issues for resolution during contract negotiations.
Contract Management – post contract signature:
(i)
Contractor with ACIP status – the ACIP Assurance Report (and any follow-on
advice received from the ACIP Management Team from time to time) is to be
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relied on, and / or the contractor’s continuing ACIP status if an ACIP Assurance
Report is not required (refer paragraph 11(c)(i) above), for assurance of ongoing
contractor compliance with the contract insurance requirements covered by the
contractor’s ACIP other than matters for which the report identifies as requiring
personnel involved in the procurement to monitor. The ACIP Management Team
will monitor the contractor’s ACIP and advise of any issues or concerns that arise
from time to time and what steps should be taken in response to those matters.
For any contract insurances that are not covered by a contractor’s ACIP, the
personnel involved in the procurement are responsible for monitoring and
validating contractor compliance with those requirements in the usual way.
(ii)
Contractors who do not have ACIP status – monitoring and validating contractor
compliance with contract insurance requirements is done in the usual way.
12. An important issue that tenderers / contractors and personnel involved in the procurement need
to consider in procurements with insurance requirements that include both ACIP and non-ACIP
insurances is seamlessness and completeness of coverage for all insurable risks arising from
performance of the contract. Drawing on the LRA and other information provided, the ACIP
Assurance Report will include details of any identified potential material gaps in the overall contract
insurance coverage.
ACIP MANAGEMENT TEAM COMMUNICATION PROTOCOLS
13. In order to respect the confidentiality and sensitivity of companies’ ACIPs (and to reinforce the
ongoing importance of the LRA in determining contract insurance requirements), the ACIP
Management Team will apply the following communication protocols:
a.
the ACIP Management Team will only provide information on a company’s ACIP in the
form of an ACIP Assurance Report and through follow up correspondence in respect of
same;
b.
ACIP Assurance Reports will only assess a company’s compliance against the
insurance cover and limits tendered by the company in response to the request
documentation, or as otherwise agreed with the company during contract negotiations;
c.
ACIP Assurance Reports will not contain details of a company’s ACIP beyond what is
necessary to provide assurance that the company complies with the relevant contract
insurance requirements;
d.
the ACIP Management Team can provide information outside of the ACIP Assurance
Report that is general in nature and which does not contain details of a company’s ACIP
or specific details of a company's insurances beyond what is necessary to provide
assurance that the company complies with the relevant contract insurance
requirements; and
e.
in any circumstance with consent from the ACIP contractor.
14. The ACIP Management Team will endeavour to assist with insurance issues relevant to any
ACIP based on its understanding of general insurance practice and, where appropriate, calling on
the expertise and knowledge of the ACIP Management Team’s retained specialist legal service
provider. The ACIP Management Team utilises the services of an external legal services provider to
assist with the preparation of ACIP Assurance Reports and respond to related ad hoc queries.
Funding for any external legal services provider used by the ACIP Management Team to assist with
preparation of an ACIP Assurance Report is the responsibility of the business unit involved in the
procurement.
15. From time to time, the ACIP Management Team may recommend consultation with other
experts and advisers who may be better placed to assist with specific insurance issues. It is the
responsibility of the business unit to separately arrange and fund the services provided by any such
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recommended specialist provider.
SCOPE
16. Subject to paragraphs 17 to 19, this functional policy applies to all Personnel in the CASG who
are involved in Complex Procurements on and from 3 September 2012 (Date of Effect).
Application to existing request documentation
17. This functional policy does not apply to any request documentation released before the Date of
Effect.
Application to existing contracts
18. This functional policy does not apply to contracts in place before, or which are formed following
the release of request documentation before, the Date of Effect (‘Existing Contracts’), except where
the contract is with a contractor that has ACIP status.
19. For Existing Contracts between the Commonwealth and a contractor with ACIP status, this
functional policy applies in the following way:
a.
if the contract does not contain:
(i)
a liability insurance policy that exceeds the relevant monetary threshold (ie $25m
– refer paragraph 30 below);
(ii)
any property policy which insures Commonwealth property, or transit or contract
works policy, with a value which exceeds the nominated monetary threshold (ie
$25m – refer paragraph 30 below); or
(iii)
any type of aviation or marine insurance policy,
then the contractor's ACIP status is to be relied on for assurance of the contractor's
compliance with the contract's insurance requirements and personnel involved in the
procurement are relieved from the ‘standard’ contract management activities as regards
confirming the contractor’s compliance with these requirements (eg seeking certificates
of currency), unless otherwise notified by the ACIP Management Team; or
b.
if the contract contains an insurance policy of a type specified in paragraph 19.a and an
ACIP Assurance Report has been provided for that contract, then this functional policy
(ie Policy Directive 4) applies to the contract.
To facilitate a smooth transition and ramp-up of the ACIP initiative, the ACIP
Management Team will provide an ACIP Assurance Report for Existing Contracts
determined to most likely benefit from the ACIP initiative. These contracts are
anticipated to include long term contracts (eg longer than 5 years) that have recently
commenced operation or contracts that are the subject of a major contract amendment
that materially impacts on the scope and / or duration of the contract).
If an ACIP Assurance Report has not been provided for such a contract, then the
insurance requirements of the contract are to be managed in the usual way.
If there is an Existing Contract that would benefit from the ACIP initiative, advice may be
sought from the ACIP Management Team.
DEFINITIONS
20. See Annex A for a list of Definitions.
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Key Terms
21. The words ‘must’, ‘should’ and ‘may’ are important words used throughout this functional policy
to identify whether the requirements are mandatory or better practice guidance.
a.
must / must not - means that the requirement is mandatory with no exceptions.
b.
should / should not - means that the requirement must be complied with except for
where there are valid reasons not to do so. For any Complex Procurement where a
‘should’ requirement is not met, this decision should be recorded in (or be capable of
clear explanation by reference to) the procurement record.
c.
may - means that the requirement is optional but is generally considered ‘better
practice’ and should be considered in each case.
22. Other key capitalised terms used throughout this functional policy have the meanings described
in Annex A. Other terms have their ordinary dictionary meaning. Annex A also contains a table of
acronyms used throughout this functional policy.
Policy Directive 1 – Request Documentation
The appropriate ASDEFCON template insurance provisions (without any material change)
must be included in contracts for all CASG Complex Procurements, except where approval not
to use (or to materially amend the provisions) is obtained from the ACIP Management Team.
23. In order to improve the quality of CASG contract insurance requirements, achieve the objectives
of the ACIP initiative and enhance the level of standardisation in the use of ASDEFCON template
insurance provisions within CASG, the ASDEFCON insurance provisions must be used for all
CASG Complex Procurements without making any ‘material’ changes to the template provisions. If
alternative insurance provisions, or material changes are proposed to the appropriate ASDEFCON
template provisions, approval must be obtained from the ACIP Management Team. This
requirement applies whether or not the procurement (as a whole) uses a contract based on an
ASDEFCON template – and whether or not the ‘change’ is recommended by an external or internal
legal services provider or other specialist adviser.
24. When using the ASDEFCON insurance clause, select and include any optional clauses that are
considered appropriate for the circumstances of the procurement. For further information and
assistance in selecting the appropriate optional clauses, please refer to the ASDEFCON Insurance
Handbook and Case Studies.
25. For the purposes of this functional policy, the selection of appropriate optional clauses, the
specification of appropriate limits of indemnity for the relevant policies, and any other tailoring as
directed by the clauses or which are necessary to embed the ASDEFCON clauses into the draft
contract (particularly where the draft contract is not based on an ADEFCON template) are not
considered to be ‘material’ changes and do not require approval from the ACIP Management Team.
26. Any requests for approval are to be directed to the [email protected].
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Policy Directive 2 – Tender Evaluation
When a tenderer responds to request documentation by indicating it has ACIP status, the
tender evaluation personnel must confirm the tenderer’s status and, if confirmed, evaluate the
tenderer’s compliance with the draft contract insurance requirements on the basis of the
tenderer’s Statement of Non-Compliance. For any of the tenderer’s insurances that are
covered by a tenderer’s ACIP status, no insurance TDR response (other than cost) is required
to demonstrate or verify compliance with the draft contract insurance requirements. For any
of the tenderer’s insurances that are not covered by a tenderer’s ACIP status (which will be
indicated in the Statement of Non-Compliance), at the tender evaluation stage no insurance
TDR response (other than cost) is required to demonstrate or verify compliance with the draft
contract insurance requirements.
For any tenderer without ACIP status, the tender evaluation personnel must evaluate the
tenderer’s compliance with the draft contract insurance requirements on the basis of the
tenderer’s Statement of Non-Compliance. At the tender evaluation stage no insurance TDR
response (other than cost) is required to demonstrate or verify compliance of the tenderer’s
insurances with the draft contract insurance requirements.
27. If a tenderer indicates it has ACIP status, the tenderer’s status must be confirmed by consulting
the
ACIP
register
available
at
http://intranet.defence.gov.au/dmoweb/sites/PP/comweb.asp?page=116647&Title=ACIP%20Registe
r.
28. If a tenderer is confirmed as having ACIP status, the tenderer’s compliance with any draft
contract insurance requirements must be evaluated on the basis of the tenderer’s Statement of NonCompliance. For any of the tenderer’s insurances that are covered by a tenderer’s ACIP status, no
insurance TDR response (other than cost) is required to demonstrate or verify compliance with the
draft contract insurance requirements. For any of the tenderer’s insurances that are not covered by
a tenderer’s ACIP status (which will be indicated in the Statement of Non-Compliance), at the tender
evaluation stage (subject to any statement to the contrary in the request documentation), 1 no
insurance TDR response (other than cost) is required to demonstrate or verify compliance. Moving
the demonstration or verification of compliance with the draft contract insurance requirements to the
Offer Definition and Improvement Activities (ODIA) or contract negotiation stage is considered
appropriate in order to reduce the cost of tendering for both Defence and industry.
29. If a tenderer does not have ACIP status, the tenderer’s compliance with the draft contract
insurance requirements must be evaluated on the basis of the tenderer’s Statement of NonCompliance. At the tender evaluation stage (subject to any statement to the contrary in the request
documentation), no insurance TDR response (other than cost) is required to demonstrate or verify
compliance of the tenderer’s insurances with the draft contract insurance requirements. Moving the
demonstration or verification of compliance with the draft contract insurance requirements to the
ODIA or contract negotiation stage is considered appropriate in order to reduce the cost of tendering
for both Defence and industry.
1
CASG personnel are advised that the insurance TDR requirements in request documentation based on older versions of
ASDEFCON may not have been updated to reflect this aspect of Functional Policy.
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Policy Directive 3 – Contract Negotiation
For contract negotiations that involve a tenderer with ACIP status, an ACIP Assurance Report
must be requested from the ACIP Management Team if the draft contract specifies any of the
following insurance requirements and the tenderer has identified any of these policies as
coming within the scope of its ACIP:
a.
any liability insurance policy for which the limit of indemnity specified in the draft
contract exceeds the monetary threshold of $25 million;
b.
any property policy which insures Commonwealth property, or transit or contract
works policy, with a value which exceeds the nominated monetary threshold (ie $25m
– refer paragraph 30 below); or
c.
any type of aviation or marine insurance policy.
An ACIP Assurance Report will summarise the tenderer's known compliance (or otherwise)
with the draft contract insurance requirements and is to be used to identify insurance related
issues requiring resolution during contract negotiations. If paragraphs (a), (b) and (c) above
are not met, an ACIP Assurance Report is not required and the tenderer’s ACIP status must
relied on to deem the tenderer compliant with the draft contract insurance requirement(s) that
the tenderer identifies as coming within its ACIP (subject to any contrary statements in the
tenderer’s Statement of Non-Compliance)
In some instances, the ACIP Management Team will identify issues which require further
information from the tenderer. The ACIP Management Team may choose to investigate those
issues through the ACIP process. The purpose of this approach is to centralise the
information collected by ACIP contractors. The ACIP Management Team will identify any
insurance issues which the personnel involved in the procurement remain responsible for
resolving.
For any draft contract insurance requirements that fall outside the tenderer’s ACIP or for any
tenderer without ACIP status, the personnel involved in the procurement remain responsible
for ensuring compliance with draft contract insurance requirements, including by identifying
any insurance-related issues for resolution during contract negotiations.
30. The nominated $25 million threshold for when an ACIP Assurance Report must be requested
from the ACIP Management Team reflects a risk management decision on the part of the CASG
Executive that at or below the $25 million threshold the insurable risks of a specific procurement (as
assessed by the personnel involved in the procurement) do not justify the administrative effort and
costs associated with confirming details of the tenderer’s ACIP with the ACIP Management Team.
31. Where an ACIP Assurance Report is requested from the ACIP Management Team, this request
should be accompanied by:
a.
a copy of the procurement’s LRA that was used to determine the draft contract
insurance requirements;
b.
a copy of the complete draft conditions of contract (and relevant attachments such as
the Glossary), including the draft clauses (and any annexes) addressing insurance,
indemnities and limitation of liability;
c.
a detailed description of the nature of the procurement, including the types of supplies
and / or services being procured by Defence;
d.
the proposed (maximum) duration of the draft contract;
e.
relevant extracts from the tender dealing with insurance and liability issues;
f.
complete copy of any related relevant draft contracts or agreements (eg GFF licences);
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and
g.
the insurance TDR response and Statement of Non-Compliance.
32. The ACIP Management Team may request further information relevant to the procurement to
assist with preparation of the ACIP Assurance Report. The responsiveness to requests for
additional information will impact on the ACIP Management Team’s ability to provide a timely and
comprehensive ACIP Assurance Report.
33. Depending upon the complexity of the draft contract insurance requirements, the ACIP
Management Team will generally require a minimum of two weeks (commencing from the date on
which the ACIP Management Team has been provided with all relevant information) to prepare an
ACIP Assurance Report. For procurements with more complex risk / insurance requirements, it is
recommended that at least three weeks be allowed for the preparation of this Report.
34. The ACIP Management Team may advise of the need to engage the assistance of a specialist
external legal service provider to assist with the preparation / review of an ACIP Assurance Report.
As the ACIP Management Team is not centrally funded to cover the costs of any such engagement,
these costs will need to be funded by the business unit. Where the ACIP Management Team
proposes to procure the assistance of an external legal service provider, advance notice will be
provided together with an estimate of the costs of the engagement.
35. For policies identified in a tenderer’s tender as coming within its ACIP, the ACIP Assurance
Report will indicate the extent to which the tenderer is compliant with the relevant insurance
requirements specified in the draft contract. Notwithstanding these comments, the tenderer is
deemed compliant with the identified insurance obligations of the draft contract.
36. The ACIP Assurance Reports are intended to be simple and comprehensive. On this basis, they
do not identify absolutely all non-compliances. The ACIP Assurance Report is not a guarantee that
an insurance policy will respond to a particular incident. The ACIP Assurance Report only deals with
compliance with the insurance obligations in the draft contract. The ACIP Assurance Report may
also identify related insurance issues requiring resolution during contract negotiations. If, during
contract negotiations, the tenderer materially amends its tendered offer in relation to relevant
insurance requirements, an updated ACIP Assurance Report should be requested from the ACIP
Management Team. As stated in paragraph 13, the ACIP Assurance Report will only provide
comment against the insurance cover and limits tendered by the company against the draft contract
requirements or otherwise agreed with the company during contract negotiations. Except as
otherwise indicated in the Report, no further compliance-checking of contract insurance
requirements confirmed in the Report as ‘satisfied’ by the tenderer’s ACIP is required.
37. If there are no aviation or marine policies, and no liability, transit or contract works policy, or
property policy which insures Commonwealth property, with a specified limit of indemnity greater
than $25 million specified in the draft contract, an ACIP Assurance Report is not required and the
tenderer’s ACIP status is to be relied upon to deem the tenderer compliant with the draft contract
insurance requirement(s) that the tenderer identifies as coming within its ACIP (subject to any
contrary statements in the tenderer’s Statement of Non-Compliance).
38. For any remaining draft contract insurance requirements that fall outside the tenderer’s ACIP,
the personnel involved in the procurement remain responsible for ensuring tenderer compliance with
those requirements and for identifying any issues for resolution during contract negotiations.
39. In any situation where a draft contract specifies insurances that fall within and also outside the
tenderer’s ACIP, it is important to confirm there are no ‘gaps’ in the draft contract’s total insurance
coverage. The ACIP Assurance Report will assist achieve this outcome.
40. For any tenderer without ACIP status, the personnel involved in the procurement are solely
responsible for ensuring compliance with draft contract insurance requirements, including by
identifying any insurance-related issues for resolution during contract negotiations.
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Policy Directive 4 – Contract Management
Once a contract is signed, the personnel involved in the procurement are alleviated from
primary responsibility for ongoing monitoring and assuring compliance with contract
insurance requirements to the extent these requirements are covered by the contractor’s
ACIP.
If however the personnel involved in the procurement become aware of any information that
may reasonably cause them to suspect non-compliance with any ACIP covered contract
insurance requirement, this information must be promptly provided to the ACIP Management
Team.
If, during the term of the contract, there is a proposal to amend the contract to materially
broaden or increase the contract’s insurance requirements relevant to the contractor’s ACIP
(ie by introducing or changing any marine or aviation insurance or by increasing the limit of
indemnity for a liability, transit, contract works policy, or property policy which insures
Commonwealth property, so that it exceeds the nominated $25m threshold), details of the
proposed change must be provided to the ACIP Management Team. At the discretion of the
ACIP Management Team, a new or updated Assurance Report may be prepared to assess the
impact of this change. If determined appropriate by the ACIP Management Team, the relevant
contract amendment must not be finalised or approved without first receiving and considering
the new or updated ACIP Assurance Report.
41. The ACIP Management Team has responsibility for monitoring the ACIPs of all contractors
participating in the ACIP initiative. In keeping with this responsibility, the ACIP Management Team
will advise personnel involved in procurements for which it has provided an ACIP Assurance Report,
of any issues that may arise from time to time with a contractor’s ACIP and what steps should be
taken in response to those issues.
42. For any contract for which an ACIP Assurance Report was not required, the ACIP Management
Team will provide a general advisory service that involves timely notice of any issues that may arise
from time to time with a contractor’s ACIP and what steps should be taken in response to those
issues.
43. Consequently, the personnel involved in the procurement are relieved from primary
responsibility for monitoring and assuring the contractor’s compliance with contract insurance
requirements covered by the contractor’s ACIP. However, if at any time there is reasonable
suspicion of any compliance issue, the ACIP Management Team must be promptly notified of any
concerns. The ACIP Management Team will assist in determining an appropriate response to those
issues / concerns.
44. If, during the term of the contract, there is a proposal to amend the contract to materially
broaden or increase the contract’s insurance requirements relevant to the contractor’s ACIP (ie by
introducing or changing any marine or aviation insurance or by increasing the limit of indemnity for a
liability, transit, contract works policy, or property policy which insures Commonwealth property, so
that it exceeds the nominated $25m threshold), details of the proposed change must be provided to
the ACIP Management Team. At the discretion of the ACIP Management Team, a new or updated
ACIP Assurance Report may be prepared to assess the impact of this change. If determined
appropriate by the ACIP Management Team, the relevant contract amendment must not be
finalised or approved without first receiving and considering this new or updated Report. The ACIP
Management Team should be provided with any information reasonably requested for the purpose
of determining if an updated Report is required and / or to assist with the preparation of this report.
45. Business units are responsible for funding the costs of any external legal service provider
engaged by the ACIP Management Team to prepare an updated ACIP Assurance Report.
46. Personnel involved in the procurement are solely responsible for monitoring and ensuring
ongoing contractor compliance in the ‘usual way’ with any contract insurance requirements outside
the contractor’s ACIP or for any contractor without ACIP status.
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RESPONSIBILITIES
47. The ACIP Management Team will:
a.
acknowledge all requests for an ACIP Assurance Report (and other ad hoc assistance)
within 3 business days of receiving a request;
b.
provide a copy of the ACIP Assurance Report (including any updated Report) within the
timeframes agreed (noting at least two weeks will generally be required for a ‘standard’
Report and up to three weeks for procurements with more complex insurance
requirements); and
c.
keep a record of contracts for which an ACIP Assurance Report has been provided and
provide timely notice of any material changes to a relevant company’s ACIP.
48. All CASG Personnel who are involved in procurement activities within the scope of this
Functional Policy must comply with the mandatory requirements set out in this instruction.
49. FAS Commercial CASG, is the Business Process Owner (BPO) for Procurement and
Contracting in CASG and the Procurement Instructions Directorate is responsible for maintaining
and updating this instruction.
50. The Defence Insurance Office is responsible for managing Defence’s own insurance policy
arrangements and claims with Comcover and does not provide advice on contract insurance
requirements or this instruction.
MONITOR AND REVIEW
51. The content of this functional policy will be reviewed whenever any of the identified References
are updated or amended, and no less than every two years.
WORKPLACE HEALTH & SAFETY/ENVIRONMENTAL ISSUES
52. There are no WHS and Environmental issues that are pertinent or relevant to this functional
policy.
TRAINING AND COMPETENCIES
53. Training and competencies are not required for this functional policy,
POINT OF CONTACT
54. The point of contact for this functional policy (and others in the series) is Director Procurement
Instructions.
ANNEXES
A.
Definitions
ATTACHMENTS
1.
Nil
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FUNCTIONAL POLICY (PROC) MANDATORY PROCUREMENT POLICY REQUIREMENTS FOR THE APPROVED
CONTRACTOR INSURANCE PROGRAM INITIATIVE
ANNEX A - DEFINITIONS
Term
Definition
Approved
Contractor
Insurance
Program or
ACIP
means a company’s global / group and local insurance program that has been reviewed
and pre-qualified by the ACIP Management Team. Following this review, the ACIP
Management Team will determine if a company is eligible for ACIP status. Where
granted, ACIP status is given subject to certain conditions agreed with the company.
A register of companies with ACIP status is located at:
http://intranet.defence.gov.au/dmoweb/sites/PP/comweb.asp?page=116647&Title=ACI
P%20Register.
ACIP
Management
Team
means the team with responsibility for managing the ACIP initiative. The team leader of
the ACIP Management Team is Director ASDEFCON and Contracting Initiatives.
Complex
Procurement
means a procurement categorised as ‘complex’ in accordance with chapter 1.3 of the
DPPM.
Personnel
means all CASG staff involved in the procurement, including Commonwealth Officers
(Australian Public Servants and Australian Defence Force personnel from Army, Navy
and Airforce) as well as External Service Providers encompassing consultants,
contractors, Professional Service Providers and Legal Service Providers.
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