Caretaker provisions limit Council’s ability to contract

Without proper preparation, recent amendments to the Local Government (Elections) Act 1999 (SA) (the Act) could cause a potential election nightmare for Councils.

Section 91A of the Act now requires Councils to implement a Caretaker Policy by 21 June 2010 to govern the conduct of council and council staff during election periods. Most importantly for Councils, the policy must prohibit the making of a ‘designated decision’ during an election period.  

Section 91A(8) comprehensively defines ‘designated decision’ as a decision:

• relating to the employment or remuneration of a Chief Executive Officer (other than appointing an ‘acting’ person to the position); or
• to terminate the appointment of a Chief Executive Officer; or
• to enter a contract, arrangement or understanding (other than a prescribed contract) of which the total value is in excess of either $100,000 or 1% of the Council’s revenue from rates in the preceding year, whichever is greatest; or
• allowing a particular candidate or group of candidates to use council resources to their advantage.

At this stage, only ‘road construction or maintenance’ and ‘drainage works’ contracts are ‘prescribed contracts’. While the Act also provides for the exclusion of certain decisions by regulation, no decisions are listed in the Regulations at the time of writing.

Councils should also be aware that the Minister for State/Local Government Relations may grant an exemption from the operation of the Section in ‘extraordinary’ circumstances.

The need to be organised

There could be significant consequences for Councils who do not properly prepare and implement their Caretaker Policy.

First, any designated decision made whilst in caretaker mode will be invalid and compensation may be payable to persons who, in good faith, act on the invalid decision (see s 91A(6)). 

Of more immediate concern is the restriction on a Council’s ability to perform its routine duties whilst the caretaker period is in effect.  This is of particular relevance to the commencement of processes or actions that require later decisions to be given practical effect.  

An example of the potential for Section 91A of the Act adversely affecting a routine Council process is with procurement and tender processes. 

The calling of tenders or other approach to market is the beginning of an often-lengthy process that may not be finalised for some time.  If the caretaker period begins, and the decision required to finalise the procurement is a ‘designated decision’, the Council may not be able to be enter into a contract with the successful tenderer. 

Councils should be aware that matters that cannot be immediately settled, or require lengthy lead times, such as tender processes, need to be organised and implemented in a timely manner so that they are not affected, disrupted, or potentially abandoned on account of the caretaker provisions.

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When does the election period commence?

A Council’s caretaker period will commence no later than the beginning of the ‘election period’ or at an earlier date if specified in the Council’s Caretaker Policy.  

The Act defines the date for commencement of the ‘election period’ as the date of the Close of Nominations - 21 September 2010 for the upcoming election. 

Using the latest possible date of 21 September 2010 as a guide, Council’s should seek to make all designated decisions in advance of that date, unless an earlier date is prescribed in the Council’s Caretaker Policy. 

If you have any questions the procurement aspect of this Briefly, or more generally about procurement, please contact Mary-Alice Paton by email at mpaton@normans.com.au or by phone on 8210 1206 (direct line), or any other member of the Property, Infrastructure and Development Team. 

If you have any questions is about the development and implementation of Council’s Caretaker Policy, please contact Felice D’Agostino by email at fdagostino@normans.com.au or by phone on 8210 1202 (direct line), or any other member of the Local Government Advisory Team.

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