Managing contracts
Find good practice advice for managing a school’s contracts.
| Level of compliance | Main audience | Other |
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Recommended
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By following this advice, buying staff can simplify contract management while remaining fully informed about their school’s position.
- Beginning the contract
- Day-to-day administration
- Managing a supplier’s performance
- Reviews
- Contract closure
- Further information
Beginning the contract
A contract summary should be prepared for higher value contracts when a contract begins.
Contract documents can be lengthy and difficult to interpret. The contract summary will therefore serve as an easily accessible source of information about the contract for school buying staff and users of the contract.
The summary should cover details about the:
- relationship between the school and supplier
- service to be delivered by the supplier
- financial arrangement that is in place.
| Type of details | What to record |
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Relationship
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The name and contact details of the school and supplier’s key contacts.
The responsibilities of the school and supplier’s key contacts.
The dates and location of scheduled meetings and standard points to cover in them.
The process for agreeing to and implementing changes (a variation) to the contract.
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Service
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A timeline of all key actions, deliverables, milestones and payments.
The people who are authorised to request services under the contract and what that process is.
The process to be carried out by the school to check the supplier’s performance.
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Financial
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The payment procedures to be followed and frequency of payment.
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The contract summary should be kept up to date whenever any changes to the contract are made.
Contract registers
Staying on-top of crucial contract information is made easier by the use of a contract register.
Contract register template [XLSX, 19 KB]
Day-to-day administration
Throughout the course of the contract, school buying staff should take regular action to administer the contract.
| Area to manage | Actions to take |
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Finances
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Check invoices for accuracy.
Pay invoices promptly.
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Record keeping
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Keep copies of all invoices and the dates that payments are made.
Keep copies of all correspondence with suppliers. These may be useful for resolving a dispute if one occurs.
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Variations
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Manage all variations in accordance with the process stated in the contract.
Communicate clearly with the supplier about the variation and acquire their signature.
File variations with the contract.
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Managing a supplier’s performance
Effectively monitoring a supplier’s performance is essential, as it enables underperformance to be identified and addressed.
Information can be received through scheduled reports from the supplier and feedback from those in the school who use the goods or services.
School buying staff should constantly ask themselves:
- is the supplier meeting their contracted requirements?
- are there any changes that should be made to the contract?
It is important that schools provide suppliers with feedback on their services. If suppliers are performing well, let them know. If suppliers are underperforming, address the issue.
Managing poor performance
If a supplier is performing poorly, communicate with them and find a solution quickly. Poor performance should not continue over an extended period.
Try to communicate with suppliers in a written format so that the conversation can be referred to later. If communication is verbal, send a follow up email to the supplier, so that there is a written record of the details that were discussed verbally.
When schools raise concerns, it may prompt suppliers to improve their performance.
If the supplier continues to perform at a level that is unacceptable under the terms of the contract, the school should follow the contract’s dispute process or issue the supplier with a notice of breach.
Contact school.buying@education.govt.nz for advice on issues with supplier performance.
Reviews
Formal reviews should take place at assigned times during the course of the contract.
- When the contract is awarded, review the buying process that took place. Look to identify areas to improve on in future purchases.
- During the contract (at least once every year), review the supplier’s performance and seek to make continuous improvements.
- At the end of the contract, complete a thorough review to decide if the contract should be renewed (if a right of renewal exists). If not renewing, establish what the contract lacked, that the school will seek in a new contract.
How to conduct the review
Both key contacts should be present and prepared to contribute and receive constructive feedback.
When conducting a review, refer to information from sources including:
- the school’s business case/statement of requirements
- the opinions of those using the goods or services about the supplier
- reports from previous reviews.
Reviews should inform recommendations for future changes to the contract and what the school will look for from a new contract.
Contract closure
Based on the contract’s final review, decide if the school will be renewing the contract or going to market again.
Market conditions should also influence this decision. The market may have changed since the current contract was signed and a better deal may be available.
If going out to market again, plan early. Request a final report from the supplier and ensure that all invoices are paid.
Terminating early
Contracts can typically be terminated early by either party by giving notice to the other party (referred to as termination for convenience) as per the termination provisions in the contract.
In this situation, the terminating party provides the other party with the period of notice stated in the contract.
In some cases, early termination may result in the school being required to pay an early termination fee. The value of the early termination fee must be considered before making a decision to terminate. It may be economical to complete the full contract term rather than terminating early.
If terminating because of a dispute or breach of contract, seek legal advice.
Contact school.buying@education.govt.nz for advice on contract termination.
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