Due Diligence & Change Management

Entities should adopt a project management approach to managing MoG changes. Entities may wish to refer to the Common Tasks Tool for a listing of common tasks and activities associated with implementing MoG changes, available under Tools and templates.

Entities should review their delegation instruments and accountable authority instructions (AAIs) to ensure appropriate arrangements are in place. Where there is a timing difference between the MoG change date of effect and the date of transfer of employees and appropriations, interim delegations (for example, under the Public Service Act 1999 (PS Act) and the Public Governance, Performance and Accountability Act 2013 (PGPA Act)) and AAIs may need to be put in place.

Responsibility for the following activities transfers to the receiving entity on the MoG change date of effect:

• policy and/or administrative functions not supported by specific legislation. While in practice these may continue to be delivered by staff of the transferring entity (for example, under delegations or authorisations from the receiving entity), responsibility for the performance and delivery of those functions transfers to the receiving entity on the MoG change date of effect
• functions supported by specific legislation (for example, regulatory activities) 
• special appropriations in legislation
• special accounts established in Acts in accordance with section 80 of the PGPA Act
• special accounts established under section 78 of the PGPA Act, where the AAO clearly transfers responsibility for functions associated with the special accounts to another department
• revenues and expenses, which are collected or incurred under specific legislation.

Where entities are unsure of the date of effect for the transfer of appropriations, they should contact the Department of Finance (Finance) for further advice.

Entities must complete the following core activities by the MoG change completion date:

• transfer of annual appropriations, subject to minor balance adjustments which may be required as accounts are settled
• movement of employees under the PS Act
• transfer of assets and liabilities
• agreed reporting arrangements for the MoG change, including transitional arrangements
• development of a plan or strategy to resolve remaining matters, which could include employee integration into receiving entity culture, information technology, property, security clearances, and minor appropriation balances.

Where the MoG change is large and/or complex, a multi-disciplined, joint steering committee should be established within 3 to 5 business days of the announcement of the MoG change to oversee implementation and where required, to support an independent adviser. Such a committee would operate with:

• senior representatives from all affected entities—these may be managers from corporate or enabling services as well as program and policy areas, including at the SES level
• clear lines of responsibilities for individuals and groups
• governance mechanisms and protocols for recording key decisions and tracking progress
• regular reporting to the executives of all affected entities.

The steering committee may be assisted by smaller working groups or taskforces within the entities.

An independent adviser should be appointed by affected entities to manage the MoG process in circumstances where:

• the MoG change is large, sensitive and/or complex
• the affected entities are having difficulty in resolving issues.

Entities may consider appointing an independent adviser in other circumstances, where it would assist in managing the MoG change more efficiently.

Once MoG changes are announced, and depending on the scale of the MoG changes, Finance may contact entities to set milestones (for example, for large and/or complex MoG changes affecting many entities), or entities should establish contact with Finance, the Australian Public Service Commission (APSC) and other entities for timelines to be set. Where milestones are not being met and there is a risk that the completion date will not be achieved, an independent adviser is to be appointed.

The independent adviser’s role is to manage the process of information exchange between the transferring and receiving entities. This can involve:

• managing a detailed examination of all aspects of the function being transferred, including assets and liabilities and statutory, contractual and other arrangements, to identify any issues which may need to be addressed - see Due Diligence below
• assisting the transferring and receiving entities to resolve outstanding issues.

The independent adviser is not a decision maker, but may recommend accountable authorities of affected entities (or their delegates) agree on an equitable and fair transfer of resources to support the transferring functions as well as the functions that remain.

If outstanding issues are unable to be resolved, the independent adviser is to determine and recommend a position on the matter for escalation to a committee chaired by the Secretary of the Department of the Prime Minister & Cabinet (PM&C) and comprising the Secretary of Finance and the Commissioner (or their delegates) - see also Dispute resolution process.

An independent adviser will be required to make recommendations in a reasonably short timeframe to ensure the MoG change can be completed within 13 weeks of the commencement date. Accordingly, it would be appropriate for the independent adviser to have the following skills and experience:

• significant negotiation or dispute resolution experience
• recent substantial senior experience in, or working closely with, the APS entities
• experience in managing operations and budgets
• understanding of the Australian Government budget framework
• experience with implementing complex and/or sensitive MoG changes.

Finance can provide affected entities with advice around the appointment of independent advisers.

Affected entities should agree on an adviser and arrange their engagement.

The costs of engaging the services of an independent adviser are expected to be shared equally between the affected entities.

Transferring entities are to provide receiving entities with due diligence information within 10 business days of the announcement of the MoG change or being advised of the Government’s decision.

Receiving entities should also:

• establish measures of success or key performance indicators for the implementation of the MoG change and adherence to the 13 week or specified completion timeframes
• establish measures of success or key performance indicators for the achievement of the MoG purpose
• review any materials prepared during previous MoG changes, particularly tactical materials and lessons learnt, to assist with planning for the implementation of the current MoG changes.

Organisational and workplace change can be challenging, and if not managed well, can affect morale and engagement.

Section 47 of the Work Health and Safety Act 2011 requires that a business consults - so far as is reasonably practicable - with employees who are (or are likely to be) directly affected by health and safety matters.

Entities should, at a minimum, ensure they meet consultation requirements set out in their industrial instruments and internal policies.

During a MoG change, entities should conduct ongoing communication and consultation with employees about their transition to new work arrangements. Transferring entities are also encouraged to provide receiving entities with direct access to all transferring employees, as it is important to communicate with affected employees early in the process to explain:

A joint communications strategy should be developed by entities to ensure consistent advice and messaging to employees. Entities may also decide to appoint a Communications Manager in each affected entity.

By 4 weeks after the MoG change date of effect, lead contacts and/or entity Chief Financial Officers (CFOs) must advise PM&C, Finance and the APSC of their progress towards meeting the completion date including:

progress against key milestones,

the status of negotiations, 

the existence of any contested issues, and

engagement with staff and stakeholders.

If any matters in dispute cannot be resolved at the working level, accountable authorities and Secretaries of the respective portfolio departments are expected to reach a resolution.

If at any stage it becomes clear that key milestones are not likely to be met, the entities must:

• advise PM&C, Finance and the APSC
• appoint an independent adviser to assist in finalising negotiations and resolving contested issues. This process involves:
  • the affected entities providing the independent adviser with information supporting their respective positions
  • the affected entities meeting jointly with the independent adviser to discuss outstanding issues
  • the independent adviser working with the affected entities to reach agreement.

After conducting an analysis of the information provided by the affected entities and potentially discussing contentious issues with representatives from the affected entities, the independent adviser may support one of the positions or provide a third position for agreement.

If appropriate, Finance may be able to support the independent adviser to assist the affected entities to resolve outstanding issues relating to financial matters. The APSC can provide advice on the requirements of the PS Act and the Government’s applicable workplace relations policy.

If any matters remain unresolved and meeting the completion date looks in doubt, a recommended position by the independent adviser on the matter must be escalated to a Committee, chaired by the Secretary of PM&C and comprising the Secretary of Finance and the Commissioner, or their delegates, for their consideration and final decision on the matter. In the unlikely event that PM&C, Finance or the APSC are parties to the dispute to be resolved, the relevant Secretary or the Commissioner will excuse themselves from the Committee.

The Chair of the Committee (the Secretary of PM&C, where PM&C is not a party to the dispute) will advise the relevant accountable authorities and/or portfolio Secretaries of the decision in writing.

If necessary, the Finance Minister (or delegate) may transfer funds and the Commissioner (or delegate) may transfer employees without the agreement of entities.

Where entities have not completed a MoG change by the set completion date, the Secretaries of the respective portfolio departments are to write to the Secretary of PM&C, the Secretary of Finance and the Commissioner to advise them of the reason(s) for the delay, work being undertaken to address the delay, and advise of the expected completion date.

It is possible that the Prime Minister, and relevant Ministers, may be briefed when accountable authorities and Secretaries of the respective portfolio departments cannot reach a resolution of dispute related to a MoG change. Briefing may also need to occur when there is a delay to implementing a MoG change.

The undertaking and process, including governance and timing, may also be the subject of external scrutiny including by the Auditor-General in the Auditor-General’s annual report to Parliament on the consolidated financial statements.

Entities should consider conducting a post-completion evaluation to identify lessons learnt from the implementation process, as well as to identify any outstanding or longer-term implementation challenges. PM&C may direct entities to conduct a post-implementation review.

Such an evaluation could include feedback from employees, corporate and enabling services teams and the steering committee.

The evaluation should be shared with the senior leadership groups of the affected entities, to help inform strategic planning and form part of the due diligence materials for future MoG changes. The evaluation, or relevant extracts from the evaluation, are to be shared with PM&C, Finance and the APSC to enable lessons learnt to be considered in future MoG changes, beyond the affected entities.