The allocation of liability between parties to a contract is an important part of many procurements and can often be the subject of extensive (and sometimes protracted) negotiations. In order to reduce the cost of tendering and the significant variations in liability and risk allocation ultimately agreed in Defence contracts, Defence established a joint Defence and Industry Liability Working Group to consider liability, insurance and risk allocation issues relevant to Defence projects.
The Working Group undertook a comprehensive review of the approach to liability and risk allocation under the ASDEFCON templates with the aim of ensuring contractual outcomes that reflect:
- a more efficient and appropriate commercial and legal risk allocation consistent with Commonwealth and Defence policy; and
- the commercial and legal risk positions considered and endorsed by Defence at a corporate level.
As part of the liability review, Defence developed a set of liability principles (the 'Defence Liability Principles') to guide and inform changes to the new liability provisions. The new liability provisions have been introduced into the ASDEFCON suite in the Strategic Materiel, Complex Materiel Volume 2 and Support templates, and will be rolled-out across the other ASDEFCON templates. The Defence Liability Principles and associated template drafting were refined through extensive consultation with Defence industry.
The following further guidance has been developed in support of the new liability provisions:
- The Liability Risk Assessment template V2.0 has been updated to reflect the new ASDEFCON liability provisions and sets out a standard process for use by Defence and industry when conducting a liability risk assessment; and
- The ASDEFCON Liability Regime slide presentation and accompanying slide presentation script are intended to familiarise users with the new ASDEFCON liability regime.