Extending functional leadership to Crown entities

Decision & resolution processJune 2014

Background Section 107 directions under the Crown Entities

Act can be issued by the Ministers of State Services and Finance to apply a whole of government approach for the following purposes:

to improve (directly or indirectly) public services to secure economies or efficiencies to develop expertise and capability to ensure business continuity to manage risks to the Government's financial position

Extending Procurement, ICT and Property functional leadership beyond core Public Service departments to Crown entities is consistent with these purposes

Definitions of terms “Requirement” means a requirement specified within a section

107 direction to apply a whole of government approach to particular entities. A direction may have one or more requirements (Examples: requirement to seek agreement of the GCIO to ICT strategic plans and investment intentions; requirement to apply the Government Rules of Sourcing)

“Escalation” means a stepped process of engagement to reach agreement on how a particular Crown entity is to comply with a requirement specified in a section 107 direction

“Disapply” means rescinding one or more of the requirements specified in a direction, or the whole direction, after they have been confirmed by Ministers. This can occur only through the issuing of a new or amended direction by the Ministers of State Services and of Finance to 3 or more entities

Decision processes

Applying new requirements: A CEA s107 direction process is required before the Ministers of State Services and Finance issue new requirements, in addition to any existing requirements, in a direction applied to Crown entities

Disapplying existing requirements: A CEA s107 direction process is also required before the Ministers of State Services and Finance disapply any existing requirements (meaning the Crown entities no longer have to comply with them)

Any direction to apply a new requirement, or disapply an existing requirement, must be applicable to no fewer than 3 Crown entities

Substantive changes to the content of existing requirements may be made by agreement of the Ministers of State Services and Finance, in consultation with relevant responsible Ministers

Administrative changes to existing requirements of a process or technical nature, which do not substantively change the intent or impact of those requirements, can be made by the Functional Leader

Who is responsible for what?Ministers of State Services & Finance

Responsible Minister for entity

Responsible Minister for Functional Leader

Answerable to the House for the overarching mandate for Functional Leadership as it applies to Crown entities

Answerable to House for the performance of the entity in complying with requirements specified in a section 107 direction

Answerable to House for the performance of the Functional Leader, eg in leading the application of specified FL requirements

SSC and Treasury Entity Board Functional Leader

Responsible for quality of advice on the overall mandate for Functional Leadership as it applies to Crown entities

Responsible for the performance of entity in complying with the specified requirements

Responsible for leading the application of the specified requirements Responsible for advice on FL requirements within a section 107 direction

Resolution process

Central agency officials

Entity function

team

FL team

Entity chief

executive

FunctionalLeader

HoSS

Who?

Entity Board

Ministers of State Services & Finance

Area of concern

FunctionalLeader

EntityResponsible

Minister

FL Responsible

Minister Advice

• The FL and CE of the entity have joint responsibility for resolving concerns about how directions are being applied at the lowest decision-making level possible. Central agencies may assist.

• Resolution is by consensus, or other mutually agreed process. The expectation is that this process of engagement should suffice in almost every case.

• Escalation to the next level only occurs in exceptional cases, when other avenues have been exhausted. Both the FL and the entity should be parties to any escalation.

• If required, the HoSS, or delegated agent with relevant expertise, may be called on to help resolve any dispute between the FL and entity before escalation to Ministers. (Payment for any external expertise is by whoever asks for it).

• Disputes must be escalated to the Ministers of State Services & Finance if changes to the direction are envisaged (& a new direction process, if warranted).

How?

Factors for consideration

Functional Leader perspective Entity perspective

Impact on the delivery of services and results for the system, eg:• Scale of entity may bring cost benefits

to all participating agencies• Standardisation may support citizen-

centric service design across agencies• Investment alignment may enable new

common capabilities to be developed faster

• Security capability uplift may improve system level public confidence

Impact on delivery of entity services and results, eg:•Fit with business strategy and investment plans•Impacts on operational effectiveness•Timing, eg for current contracts and replacement of capabilities etc

Fiscal implications across government, including contribution of entity to system-wide benefits and savings targets

Financial implications for the entity, including compliance and other costs compared with benefits

Consistency with FL mandate and decision-making approach across system. Adequacy of engagement with entity on decisions

Fit with board duties, responsibilities and decision-making. Adequacy of engagement with FL on decisions