With the recently announced abolishment of the Department of
Climate Change and Energy Efficiency (DCCEE), you may be hearing a
lot about Machinery of Government (MOG) changes. Here are some MOG
basics to help you navigate this issue.
What is a MOG change?
A MOG change describes an organisational and or functional
change to the way government responsibilities are organised across
portfolios. Generally, a MOG change occurs when a department or
agency is created or abolished, or where portfolio functions and
responsibilities are reshuffled between Ministers for greater
A MOG change is usually formalised by way of an Administrative
Arrangements Order (AAO) from the Prime Minister.
The definitive source of information on MOG changes,
Implementing MOG Changes, is published by the Australian
Public Service Commission and is normally available at its
website. This publication is currently under review, and we
anticipate a new version will be published by the Australian Public
Service Commission shortly.
How does a MOG change work?
Where functions and responsibilities are moved between
departments, there is usually a gaining agency (acquiring
functions/responsibilities) and a transferring agency (transferring
functions/responsibilities). The gaining agency should establish a
steering committee with clear lines of responsibility to oversee
implementation of MOG changes to assist with managing the
transition of functions, staff and funding while ensuring
continuity (see Section 3.1 of Implementing MOG Changes).
Operational decisions affecting the transferring agency will, from
the date of announcement of the MOG change, typically be made by
the Secretary of the gaining agency.
The "staff follow function" rule generally applies to
MOG changes. Essentially, employees of the transferring agency are
moved with their function to the gaining agency, and their
employment status (e.g. ongoing or non-ongoing) and classification
remain the same (see Section 5.3 of Implementing MOG
What happens to current programs and tenders?
Contracts and funding agreements are agreed between the
contractor or grant recipient and the Commonwealth, which is
represented for administrative purposes by a particular agency. A
MOG change does not affect the legal status of any contract or
funding agreement that was in place with the transferring agency
before the MOG change took effect. The practical effect will be
that the gaining agency will now administer the contract or funding
agreement on behalf of the Commonwealth.
Where a procurement process has commenced but has not been
completed when a MOG change is announced, then the Commonwealth
Procurement Rules (CPRs) govern the continued conduct of that
procurement process. That is, procurements must continue unless the
gaining entity determines that it is no longer in the public
interest to award a contract. Clause 10.31 of the CPRs provide that
"Public interest grounds generally arise in response to
unforeseen events or new information that materially affects the
objectives or reasons underlying the original procurement
requirement as specified in the request document." Where the
reasons underlying the procurement were an identified need in the
transferring agency, and that need is not present in the gaining
agency, a procurement process may be cancelled in line with this
What if a contract is no longer needed?
As well as the ability to cancel a procurement process where it
is determined that the procurement or contract is no longer in the
public interest, most Commonwealth contracts include a clause
allowing the Commonwealth to terminate for convenience. Such a
clause allows the Commonwealth, in certain circumstances, to exit
an existing contract at will, without any breach on the part of the
contractor. In certain circumstances, a MOG change may be
sufficient to allow the Commonwealth to exercise its termination
for convenience rights. Reliance on this provision can entail
significant legal risks, and should never be considered without
sound legal advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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