Engaging Consultants Guideline

State agencies may engage consultants when there is:

• Insufficient or unavailable expertise in the relevant area within the public sector at the time of need;

• A requirement for neutrality, impartiality and a high level of objectivity (external to the State agency or the public sector); 

• A need to draw on expertise and specialised skills available only from external sources; and

• There is a temporary need for specialised skill, that would be inefficient and/or unnecessary to retain internally over the longer term. 

It is generally not appropriate to engage consultants:

• For management or executive decision-making as these tasks are the responsibility of the State agency’s executive;

• Where it is reasonably believed that a conflict of interest could develop;

• To resource long-term projects or ongoing core activities;

• To perform tasks which would be more cost-effective and appropriately resourced in-house; or

• Where the appropriate expertise exists and is available within the public sector. 

When engaging consultants as individuals (as opposed to a corporation or partnership), State agencies must ensure they enter into the correct contract. Occasionally, a State agency will enter into a contract of personal service, which is an employment arrangement, and will come with considerations including taxation, insurance and superannuation. Commissioner’s Instruction 41 specifies the circumstances in which it is permissible to use contracts of personal service to temporarily engage individuals either directly or through labour hire or other companies/organisations. Guidance on applying Commissioner’s Instruction 41 can be found here. 

More commonly, the contract will be for the provision of services with an independent consultant. Under a contract for the provision of services:

• The service required should be related to a single task, wherever possible, rather than an ongoing working relationship.

• The contract must state that the engagement is for a fixed and limited time frame.

• Consultants should not be paid by way of salary, wages, annual remuneration, award rates or anything similar. They should also provide their own plant, equipment, tools etc and take out their own personal sickness, accident, workers compensation, public liability and professional indemnity insurance. 

• Consultants are responsible for the resources and managing the risks associated with the delivering of the scope of contracted work.

When engaging individuals to provide services to a State agency, it is important to determine the correct engagement method. Under the Income Tax Assessment Act 1936 and other legislation such as the Workers Compensation and Injury Management Act 1981 and the Superannuation Guarantee (Administration) Act 1992, individuals primarily providing skill/labour may be deemed to be “employees” even if the arrangement is called a contract for the provision of services (as opposed to an employment contract). Factors contributing to this decision will include whether:

• the consultant is taking direction from the State agency; 

• is receiving reimbursement for expenses; and/or

• the State agency is providing equipment required to carry out the work.

Failing to do so may result in penalties being imposed on the employer for failure to deduct or remit tax as required under the Income Tax Assessment Act 1936. Bona fide corporations or partnerships cannot become employees of a State agency, therefore PAYE tax is not applicable.

When engaging consultants, a State agency should develop specifications that include elements such as:

• Description/objectives of the project and function and boundaries of the consultancy;

• Outcomes/deliverables (e.g. reports, recommendations, seminars, workshops);

• Project time frame, including milestones, deadlines and completion date;

• Project methodologies and management requirements;

• Required knowledge, expertise, experience, interpersonal skills;

• Costing requirements e.g. fixed cost, daily or hourly rates, incidentals etc;

• Proposed payment schedule and terms;

• Professional indemnity, public liability and workers compensation insurance;

• Intellectual property provisions;

• Key performance indicators or success measures; 

• Quality requirements; and

• Where applicable, contractual conditions around the identification, management and disposal of sensitive information.

If there is a desire to use the consultant to build internal capability within the WA Public Sector, any knowledge and skills transfer expectations should be included when developing the specification.

An online training module to support State agencies with their specifications writing is available on this page. 

Intellectual property (IP) includes all copyright and rights in relation to inventions (including patented inventions), industrial designs, registered and unregistered trademarks, plant varieties, confidential information (including trade secrets) and circuit layouts.

Examples of IP that may be produced during the course of a consultancy include:

• Computer source code (computer programs) that are considered literary works;

• Graphics or logos;

• Reports, publications, videos, multimedia products, photographs, plans and construction drawings; and

• Patentable inventions.

It should be noted that even if a State agency has paid the consultant, it does not necessarily mean that the State agency will own any IP created in the course of that consultancy. For this reason, the State agency’s and the consultant’s rights in relation to IP should be clearly stated in the Request specification and conditions of contract.

For more information refer to WA Government Intellectual Property Policy 2023 and IP Agency Toolkit.

To facilitate the comparison of consultants’ responses to a Request, it is necessary to ensure that all offers are based on the same pricing structure.

Wherever possible, a fixed cost for a specific task should be sought from prospective consultants. This pricing framework makes it easier to compare various bids in the selection process, to manage the consultancy and to make progress payments at appropriate milestones, if these are included in the consultancy brief.

Prospective consultants can be asked to provide a breakdown of their offer into basic fees and other costs (e.g. travel, accommodation, equipment hire). This breakdown should indicate the number of hours or days represented by the basic fee. If a breakdown is not possible, as the overall time required could not be estimated, fees and payments should be based upon established milestones or deliverables as a basis for control and as a means for maintaining the project schedule.

If hourly rates are specified, as might be the case for panel or period arrangements, then the hours should be capped to a maximum total for the project.

Requesting that the proposal contain a schedule of fees may be more appropriate for some consultancy tasks or professions, such as the legal profession. 

Rates for out of pocket expenses and reimbursement arrangements should be agreed to and set out in the conditions of contract prior to awarding a contract. Typical expenses may include travel and accommodation costs, however any resemblance to salary or wages or other forms of remuneration must be avoided. 

A risk assessment should be undertaken during the planning phases of engaging a consultant, with appropriate mitigation strategies determined. Some risks may be managed either through the specification or terms and conditions of the contract or through the use of insurance requirements. The risk assessment should be revisited periodically throughout the term of the contract to ensure it is up to date. 

Some considerations for State agencies when determining the risk profile of engaging a consultant include:

• the monetary value and contract term, noting that:

• there is potentially less risk with a short-term, one-off arrangement versus a period contract; and

• a high value contract may be more politically sensitive;

• contract alignment with, or impact on, the State agency’s strategic objectives;

• whether sensitive/confidential information will be shared with supplier personnel; and/or

• whether the there is a political and/or reputational risk for government.

The engagement of consultants is often considered a high risk area, subject to more public scrutiny than other forms of procurement. As with all procurement activities, State agencies should take appropriate steps to ensure they are acting ethically and with transparency. More information on preventing procurement fraud is available here. 

As with all procurement processes, appropriate due diligence should be undertaken on any potential consultants prior to entering into a contract. More information on due diligence can be found here.

Procurement officers should take care to understand the consultant’s relationship with other businesses and governments, this includes:

• parent companies, subsidiaries or affiliated entities;

• other clients they may be providing services to and/or looking to provide services to in future; and

• level of foreign influence on their business operations. 

When engaging consultants, State agencies should check the Register of Lobbyists as part of the procurement process. If any consultant or professional contractor is identified as a registered lobbyist, consider the risk of undue influence and conflicts of interest that may arise. More information on lobbyists and the procurement process can be found here. 

Many professional services firms, have complex legal structures. As part of undertaking due diligence, State agencies should confirm which legal entity they are contracting with, and how this interacts with other related entities.

Depending on the risk profile of the contract, State agencies may also choose to undertake due diligence on any Specified Personnel proposed to deliver the contract. This may include seeking information on their prior performance, looking into their ethics record, and considering their employment history and relationships with any other organisations.

A training session to support State agencies with their due diligence is available on this page.

State agencies should seek to appropriately identify and manage any perceived or actual conflicts of interest. More information on managing conflicts of interest can be found here. 

Conflicts of interest may be managed by requiring the consultant to:

• disclose any potential conflicts of interest as part of the procurement process (the Department of Finance’s suite of goods and services templates include this a standard disclosure requirement); and

• otherwise notify the State agency as soon as possible if a conflict of interest arises or there is a risk of one arising. 

State agencies should also have appropriate procedures in place for staff to identify any conflicts of interest when engaging and working with consultants. 

Identifying a conflict of interest does not necessarily mean the State agency cannot proceed to work with the consultant. However, the State agency should assess the risks of the conflict and determine whether it would still be appropriate to continue with the contract after any mitigation strategies were employed. 

An online training module to support State agencies to identify and prevent corruption in procurement is available on this page. 

If a consultant is going to be given access to sensitive information, appropriate steps throughout the planning, contract development and contract management phases of a procurement should be taken. 

This includes:

• drafting a contract using adequate conditions that clearly outline which information should be confidential and not shared with any other party; and 

• clearly scoping the requirement to ensure information privacy and data. 

State agencies should take care to ensure that any sensitive information, both electronic and physical files, deemed inappropriate for contractors to have access to is securely stored. This may include limiting consultant access to specific files, and not discussing sensitive matters in meetings or situations where consultants are present. 

Contract terms and conditions should require confidential information be safely returned, collected or destroyed at the end of an engagement.

Consultant contracts need to be effectively managed to achieve value for money outcomes. Effective management of consultant contracts should include the following:

• Nominating a contract manager, or project group, with a clearly defined role who the consultant reports to. The contract manager should have full oversight over the work being completed by the consultant and be responsible for reviewing and endorsing payments.

• The payment schedule should be agreed to as part of the contract, with progress payments being linked to key milestones. The milestones should represent quantifiable achievements.

• Payment of invoices should not occur unless the contract manager is satisfied that work has been completed to the standard required in the contract.

• Making sure all parties agree to on any reporting, meeting and milestone requirements under the contract, to ensure performance expectations are clear. Regular communication between the parties is critical to maximise the chances of the project being kept on track and that the consultant is delivering on what has been agreed. 

• Maintaining adequate records of any correspondence that occurs as part of the consultant’s work.  

• Undertaking appropriate due diligence appropriate to the risk profile of the contract.

• Reinforce conflict and confidentiality obligations to consultants throughout the term of engagement to ensure it is understood and no new conflict needs to be managed.

Under Premier’s Circular 2021/17 – Report on Consultants Engaged by Government, State agencies are to prepare and submit details of all consultants engaged on contracts for services.