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 efficiency.
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 Changes).
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 provision.
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.
