Procurement decisions are made by charities and not-for-profits regularly and can be the source of problems and expense if you don’t get the decisions right.

It’s important that you don’t think that suppliers won’t look to enforce their agreement just because you are a charity or a Not-for–Profit association.

Procurement has its pitfalls and you need to avoid a situation where you might sign up in haste and repent at leisure.

Money wasted on bad procurement decisions means money off the table for your association’s purposes.

We recommend the following tips to avoid problems:

1. Scope of works

Check carefully what it is that you want the supplier to supply and then make sure that the contract covers it. This sounds simple but is often the cause of problems.

2.  Capacity

Make sure that the supplier can deliver the services you want. Confirm the supplier’s capacity to deliver by way of references or sector reputation.

3. Escalation of fees

Check carefully to ensure that there is no automatic escalation of fees which may make the contract onerous in future. Some suppliers will offer discounts over the first year to entice you with significant increases in later years.

4. Exit arrangements

Make sure that you have the capacity to terminate the agreement on reasonable notice without penalty where possible.

5. Automatic renewals

Check carefully to see that the contract does not contain automatic rollover provisions where you may not want them. If there are automatic rollover provisions, make sure that you have capacity to terminate without cause.

6. Test pricing

Undertake a comparative analysis to ensure that you will be getting good value for the services the contractor will provide.

7. Get advice

The big print giveth and the small print taketh away. Make sure that you get advice to ensure that you understand all of your contractual obligations and entitlements.

Please don’t hesitate to contact Bill d’Apice or any one of the lawyers in our Charities & Not-for-Profit team should you require any advice or assistance.

Bill d’Apice, Partner | +61 2 9233 9013 | wdapice@makdap.com.au