Contract consolidation – making government contracts simpler

Contract consolidation is part of the Government's Social Investment approach to improve outcomes for New Zealanders by making it easier for providers and agencies to work together.

The focus is on reducing unnecessary complexity in the contracting system so providers can spend more time supporting people and communities, and less time managing paperwork, reporting and multiple administrative processes.

This work is not about reducing services. It is about making it easier for providers to deliver services, easier for agencies to work together, and easier for people and whānau to access the support they need.

What is contract consolidation?

Contract consolidation involves bringing together multiple contracts so they are easier to manage and deliver against. The intended outcome is that providers hold fewer contracts, but their contracts have clearer expectations and a stronger focus on outcomes. Consolidated contracts also aim to give a holistic view of services delivered by providers and provide a broader understanding of how social supports work together.

Contract consolidation does not change a provider’s role or funding unless this is discussed and agreed through normal contracting processes.

What it is:

• Reduces duplication and administrative burden for both providers and government agencies.
• Makes contracts clearer and easier to manage through simplified and aligned reporting, monitoring and payment processes.
• Supports a stronger focus on outcomes.
• Voluntary. Providers are not required to have their contracts consolidated, and any changes to contract requirements and terms need to be agreed by the relevant parties.

What it is not:

• It is not a funding reduction exercise or intended to reduce the number of providers funded.
• It is not an opportunity for providers to secure new or additional funding. Agencies will continue to follow good practice procurement processes for the allocation of funding

Why this work is important

Many providers deliver a range of services that support people, whānau and communities. Over time, this has often resulted in multiple contracts, reporting requirements and agency relationships for related services.

Providers have told us that managing multiple contracts can create duplication and take time away from service delivery. This can include:

• reporting similar information in different ways
• managing different reporting cycles and requirements
• working with multiple relationship managers
• navigating different processes across agencies.

While these arrangements have developed for good reasons, there is an opportunity to simplify them where it makes sense to do so.

Working together to simplify the system

Our aim is to work alongside providers, communities and partner agencies to create simpler and more joined-up contract arrangements.

This may include:

• bringing related services together under a simpler contract structure
• aligning reporting requirements where possible
• reducing duplication across agencies
• providing a clearer relationship management approach
• creating greater certainty and stability for providers.

We recognise that every provider is different, and a consolidated approach will not look the same in every circumstance. Any changes will need to support service delivery and reflect local needs, relationships and community aspirations.

How contract consolidation fits within the wider Social Investment approach

Different parts of government are contributing to this work in different ways.

Social sector agencies and Regional Public Service Commissioners are focused on identifying practical opportunities to simplify existing contract arrangements, reduce duplication, and improve the experience for providers.

The Social Investment Agency (SIA) is leading work that explores how government funding and services can be aligned around shared outcomes for communities. This can involve more significant system changes.

Together, these efforts support a more connected and responsive system.

How contract consolidation works

There are three main ways contracts can be consolidated, depending on context and readiness: streamline, merge and integrate.

Streamline

Streamlining brings multiple contracts together into a simpler contract arrangement, typically supported by a single relationship manager.

This may result in:

• fewer contract documents
• clearer relationship management
• less duplication in day-to-day administration

Merge

Merging brings contracts for similar services, communities or outcomes together and aligns reporting around higher-level outcomes where appropriate.

This may result in:

• more aligned reporting requirements
• reduced duplication across service lines
• a stronger focus on outcomes rather than individual contracts
• greater flexibility to deliver joined-up support

Integrate

Integration involves agencies aligning funding and services around shared outcomes for communities. It can require changes to funding and accountability arrangements across government.

This may result in:

• more coordinated support for communities
• services that are designed around shared outcomes rather than organisational boundaries
• new tools and processes for measuring impact and achievement of outcomes

Leadership

• Streamline and Merge are led by social sector agencies and Regional Public Service Commissioners.
• Integrate is led by the Social Investment Agency.

For more information on SIA’s integrated consolidations click here.

The most suitable form of contract consolidation for any provider will take into account a number of factors including the number and range of services currently contracted and provider and agency capacity to implement change. There may also be statutory  requirements for some services that will need to be considered when exploring contract consolidation opportunities.

Consolidation may start simply through streamlining current contracts, before evolving to merged or integrated contracts over time.

Role of Regional Public Service Commissioners (RPSCs)

RPSCs support coordination across government agencies at a regional level to help ensure government services are seamlessly delivered, local community needs are met and cross-agency resources are efficiently utilised.  They are a key point of contact for providers seeking multi-agency consolidation.

The Regional Leadership Groups that RPSCs convene provide the opportunity for cross agency consideration of contract consolidation opportunities with providers

They do:

• Provide visibility of contracts across agencies regionally
• Endorse providers and services for cross-agency consolidation
• Support agreement on a lead agency to take responsibility for progressing cross-agency consolidation
• Maintain visibility of consolidation activity

They do not:

• Make funding allocation decisions
• Replace the accountability of agencies for contracts and the delivery of services
• Need to endorse providers and services for single-agency consolidations

Working alongside providers and communities

This work will be shaped through ongoing engagement with providers, communities, iwi, hapū, Māori organisations and partner agencies.

We know strong local relationships and community knowledge are essential to improving outcomes. Contract consolidation is intended to support those relationships by reducing unnecessary administrative burden, not replacing local decision-making or community leadership.

What this means for providers

For providers, contract consolidation aims to make it easier to work with government agencies – with fewer contracts, clearer expectations and rationalised administration and contract management.

In many cases, services will remain the same, with some opportunities for increased flexibility in delivery.

Provider Q&A

What should I expect if I’m approached about contract consolidation?

If your organisation is approached by an agency to be involved in contract consolidation, you can expect:

1. You will have the opportunity to discuss whether consolidation is appropriate and workable for your organisation
2. Your current contracts and consolidation options (e.g. streamline, merge, integrate) are discussed together with the lead agency
3. Changes to contracts, reporting, monitoring and other operating protocols are agreed collaboratively
4. Contract specifications are updated to reflect the changes agreed and incorporated under a new consolidated contract.
5. Delivery of services under the consolidated contract continues (with changes generally focused on reducing administrative burden rather than changing services).

Why am I being approached?

You will be approached if you’ve been identified as holding multiple contracts with government agencies that may be appropriate for consolidation.

Is participation mandatory?

No. This is voluntary and based on mutual agreement, providers may choose to opt out at any stage.

How can I opt in to be considered for consolidation?

For more information about getting involved in consolidation, please contact your contract manager or regional contact.  

Are there any funding agencies or services that are out of scope for consolidation?

Whānau Ora and Health NZ clinical services are out of scope of this programme. Disability Support Services (DSS) contracts are not currently in scope for consolidation, but will be incorporated at a later date.

Will funding change?

The focus is on simplifying contracts and their administration, not changing funding or allocating new funding.

Will services change?

It is anticipated that most consolidations, at least initially, will focus on reducing administrative burden through streamlining with no or minimal change to services. In some cases, consolidation enables more flexibility in service delivery, particularly through a merge or integrate approach.

How does this relate to the Social Investment Agency (SIA)?

This work is separate but complementary to SIA’s consolidation pathway and signals a broader system shift towards simpler and more outcome focused contracts.

What if my contracts finish in different years, but I’m interested in consolidation?

Differing contract terms can be accommodated under the three types of consolidation. Contract and service terms will be worked through with providers on a case by case basis as part of consolidation discussions.

Next steps

Contract consolidation is one step towards a simpler and more connected contracting system.

Success will mean:

• less time spent managing contracts
• less duplication across agencies
• stronger partnerships with providers
• more joined-up support for people and whānau
• greater confidence and certainty for providers
• better outcomes for communities.

Providers interested in contract consolidation should speak with their contract manager or regional contact.

Agencies can use this approach to explore and progress consolidation opportunities.

Further information will be provided as this work progresses.