State Records Guideline No. 10

Outsourcing of Government Business – Recordkeeping Issues

Issued: 13 July 2005   (download the formal issued MS Word version 265KB)

Authority

This guideline is issued under the provisions of Section 10A of the Archives Act 1983. Guidelines issued by the State Archivist under this Section set standards, policy, and procedures relating to the making and keeping of State records. This section also requires all relevant authorities to take all reasonable steps to comply with these guidelines, and put them into effect.

Ian Pearce
State Archivist

Table of Contents

• 1 Purpose
• 2 Definitions
• 3 More than two parties to an outsourcing exercise
• 4 Acknowledgements
• 5 Controls over outsourcing
• 5.1 Principle 1 - Planning
• 5.2 Principle 2 - Ownership
• 5.3 Principle 3 - Control
• 5.4 Principle 4 - Disposal
• 5.5 Principle 5 - Access
• 5.6 Principle 6 - Storage
• 5.7 Principle 7 - Contract completion
• Appendix 1 - Checklist of minimum requirements

1 Purpose

This guideline provides a series of principles concerning recordkeeping issues inherent in exercises involving the outsourcing of government agencies, functions and activities.

The purpose of this guideline is to ensure that:

• records are adequately controlled for the duration of contracts or agreements controlling the outsourcing of government agencies, functions and activities
• records are disposed of legally during the outsourcing of government agencies, functions and activities
• access to records is regulated and controlled following the outsourcing of government agencies, functions and activities
• questions surrounding the storage of records are clarified during outsourcing exercises
• questions surrounding the ownership of records are clarified during the outsourcing of government agencies, functions and activities

2 Definitions

agency - is used in this guideline to refer to all agencies, authorities, statutory offices, departments, councils and other organisations that are subject to, and defined in, the Archives Act 1983.

disposal(records) - involves either the destruction of records; their transfer to the Archives Office for retention as part of the State archives; their transfer to another custodian; or some other process approved by the State Archivist which removes them from the custody of their creator or current keeper.

disposal schedule- a detailed inventory of records created and stored by an agency, listed by record classes and identifying the appropriate disposal action. These comprehensive documents are formally authorised by the State Archivist and the destruction periods identified in the schedule can be acted upon without further reference to the Archives Office. 

outsourcing - the process by which a third party entity performs a function or activity on behalf of an agency as regulated by a contract or agreement.

permanent value records - Records that must be transferred to the Archives Office 25 years after the date of creation for retention as State archives.

record- a document or an object that is, or has been, made or kept by reason of any information or matter that it contains or can be obtained from it or by reason of its connection with any event person, circumstance, or thing. A document includes any printed or written material and an object includes a sound recording, coded storage device, magnetic tape or disc, microfilm, photograph, film, map, plan, or model or painting or other pictorial or graphic work.

service provider - an organisation (or individual) engaged by an agency to provide a service where the facility and staff are not controlled or managed by that agency. These organisations could be private sector operations or other Federal, State or local government bodies.

State record - records of State government agencies/departments, State authorities, or local authorities. These public bodies are defined in Section 3 of the Archives Act 1983.

storage – the function of storing records for future retrieval and use.

temporary value records - records that can be destroyed under the authority of an authorised Disposal Schedule after a minimum retention period, or once certain requirements have been met.

third party entity - an organisation or individual with whom a responsible agency has contracted to perform a function or activity, or part thereof, or an organisation or individual to whom the agency, or part thereof, has been sold. The organisation may be a private or public entity.

transfer of custody - involves transferring the duty of care for the ongoing physical management of records from one custodian to another.

transfer of ownership - involves one party relinquishing physical, legal and, in certain instances, intellectual property rights over the record to another party.

3 More than two parties to an outsourcing exercise

With the increasing complexity of government business, it is likely that circumstances will arise where there are more than two parties to an outsourcing exercise.

This situation might arise when the administration of a database is shared between two government departments and a privatised organisation. In this case each government agency would need to ensure that the privatised organisation was aware of the recordkeeping issues that needed to be addressed.

While the language used in this document reflects one to one dealings, the principles can be scaled up to include more than two parties.

4 Acknowledgements

This guideline is based on a policy statement of the Council of Australasian Archives and Records Authorities (CAARA) which was developed with the assistance of member organisations including the Archives Office of Tasmania.  

5 Controls over outsourcing

An outsourcing exercise may be authorised by one of two means: through the use of a legislative instrument or through a contract with a third party entity.

The use of legislation – agencies participating in an outsourcing exercise should establish whether the outsourcing is taking place as a result of legislation. If so, agencies should check the legislation as it may contain some provisions relating to records. Such a set of provisions may specifically exempt or include certain categories of records as part of the outsourcing exercise. These provisions must be considered when developing the contract or agreement.

The use of a contract – agencies participating in an outsourcing exercise should examine the terms and definitions of a contract closely. Records may not be mentioned directly in the contract, but be intended by those drafting the contract to be included within the scope of the terms ‘assets’ ‘contract material’ or ‘Crown material’. Without precise clarification of what constitutes assets, contract material or Crown material the opportunity could arise for ambiguities over the treatment of records.

If those drafting the contract do not consider that records are assets, contract material or Crown material, then the agency must ensure that the contract clarifies the rights and responsibilities of parties to the contract with regard to records.

5.1 Principle 1 -Planning

The process of outsourcing an agency function or activity, or part thereof, is both complex and legally focused and is generally achieved through a contract or binding service agreement. These contracts and agreements can generally cover issues such as: service levels, performance benchmarks, costs and penalties. It is far less common to find that the agreements and contracts include the source of the information that will make it possible to measure compliance, or not, with the agreements and contracts - the records.

Agencies that do not ensure that records are included in the planning process, and in the agreements and contracts, may find it legally difficult, or impossible, to re-acquire records when needed. They may also find it difficult or impossible to access records when needed for administrative purposes or when required during litigation.

Accordingly, agencies must ensure that responsibilities for making, maintaining and disposing of records are included in the outsourcing planning process and in agreements and contracts.

Agencies should contact the Archives Office prior to the drafting of any outsourcing agreement or contract, for advice on recordkeeping issues for inclusion in the contract or agreement.

Agreements or contracts controlling the outsourcing should:

• identify classes of records and their owners
• bind the third party entity to follow records management controls set by the agency
• continue to bind the agency to records management standards in existence prior to the outsourcing
• bind the third party entity to abide by the legal disposal provisions in Section 20 of the Archives Act 1983,  including consideration of transfer of custody of the records
• establish an access regime to records held by the third party entity, addressing the interests of the agency, compliance authorities (including audit and ombudsman functions) and members of the public in accordance with the provisions of the Archives Act 1983.
• define record storage provisions in accordance with the State Records Guideline No 11, Physical Storage of State Records
• require that any sub-contractor engaged by the third party entity is subject to the same level of compliance with these requirements
• ensure that records are maintained, transferred and disposed of in a controlled manner following completion of the outsourcing contract or agreement

5.2 Principle 2 - Ownership

Failure to clarify issues surrounding the legal ownership of records, and the information they contain, in outsourcing agreements and contracts, can severely restrict the business capabilities of the third party entity and expose the agency to considerable risks.

The issue of ownership extends not only to records of the agency that may be transferred to the third party entity but also to records created by the third party entity during the life of the agreement or contract.

Agencies can not transfer their own records to a third party entity during an outsourcing exercise without the authorisation of the State Archivist.

5.3 Principle 3 -Control

Even though an agency, function or activity has been outsourced, it is likely that a controlling agency will retain some degree of responsibility for oversight and control over the function(s) performed by the third party. This control will be best supported by the controlling agency ensuring good recordkeeping practices are observed by the third party entity.

To make this possible the agency must require the third party entity to create or manage records in any manner specified by the agency. The agency may also require that the third party entity follow particular government policies and standards that were binding upon the agency prior to, or after, the outsourcing of the particular agency, function or activity.

5.4 Principle 4 - Disposal

Disposal includes the transfer of ownership or custody of records and is not limited to the physical destruction of records. Agencies must exercise equal control over such disposal activities as those that involve the physical destruction of records particularly in exercises where an agency function or activity is being outsourced, and the relevant records may move outside the custody of the originating agency.

5.5 Principle 5 - Access

Within government, records are not only retained for their administrative use, they are also retained to meet legal requirements and community expectations. This access is established in archival legislation.

This dual access role of records is easy to establish and maintain while the records remain in the custody of the creating agency. It is vital therefore, that agencies ensure that when an agency, function or activity is outsourced that issues of access to records held by the third party entity, are addressed.

Failure to do so will make it extremely difficult for the agency (or other compliance authorities with a legitimate interest) to inspect and validate the service delivery being performed by the relevant third party entity. It may also raise, or heighten, community concerns regarding the control of personal information outside government hands.

Public access should be no more or less than was previously available when the records were in the custody of the agency.

5.6 Principle 6 - Storage

Section 10 of the Archives Act 1983, requires agencies to preserve State records until they are dealt with by the Act. Agencies must ensure that the parties to the outsourcing arrangement conform to best practice in record storage and handling especially the storage principles specified in the State Records Guideline No. 11, Physical Storage of State Records.

Poor, or no decisions over the storage arrangements for records will result in the loss of records of evidential value. Agency staff and members of the public will lose confidence in the integrity of such records. Agencies must therefore ensure that storage arrangements are included in the agreements and contracts governing outsourcing exercises.

It is also vital that the agreements and contracts include arrangements for the storage of records at the expiry or termination of the agreement of contract. Failure to do so may result in records being destroyed through the perception that they are no longer the concern of the third party entity, or material being misplaced in the changed circumstances at the conclusion of the agreement or contract.

5.7 Principle 7 - Contract completion

Just as agencies must ensure that the initial stages of a contract are well regulated and specified, they must also ensure that the completion, and post completion, stages of a contract are well regulated, monitored and specified. Failure to do so will result in lost information, increased risk of exposure to legal liabilities and wasted time and money.

It is unlikely that a third party entity will wish to devote time and effort to records of an activity or function which it is no longer performing for the government, unless there is an initially established contractual requirement for it to do so.

Agencies must therefore ensure that there is appropriate advanced planning for the management of recordkeeping issues ahead of the completion of an outsourcing contract or agreement. Where records are managed in a hurry, including boxing, listing, sentencing, transportation or migration, the risk of material of continuing value being lost or accidentally destroyed increases exponentially. An orderly end of contract or agreement process will result in good records management and fewer wasted resources, both by the third party entity and the agency. It will also substantially reduce both the agency and the third party entity’s exposure to risk.

Checklist of minimum requirements

1.	Planning Responsibilities for making, maintaining and disposing of records of outsourced functions and activities are included in the planning process and subsequent contracts and agreements.
1.1	Recordkeeping requirements are analysed and documented.	Yes	No
1.2	The Archives Office is contacted for advice on recordkeeping issues for inclusion in the contract or agreement.	Yes	No
1.3	Authorisation to transfer custody of records to a third party entity is sought from the State Archivist.	Yes	No
1.4	No existing agency records are transferred to the ownership of a third party entity.	Yes	No
1.5	Agreement is reached between the agency and the third party entity regarding ownership of the records created by the third party entity during the life of the contract.	Yes	No
1.6	Determine any interoperability requirements between the electronic document, information and/or records management systems used by the third party entity and any other systems used by the agency.	Yes	No
1.7	Record storage agreements are reached between the agency and the third party entity for records in the custody of the third party entity.	Yes	No
1.8	Access rules are established between the agency and third party entity concerning access to records. These rules should address: agency access public access access by other compliance authorities restrictions	Yes	No

2.	Contract or Agreement Responsibilities for the making, maintaining and disposing of records of outsourced functions and activities are included in contracts or agreements.
2.1	Existing agency records that will be transferred to the custody of the third party entity are specified in the contract or agreement.	Yes	No
2.2	The contract specifies that existing agency records transferred to the custody of the third party entityare State records covered by the Archives Act 1983 and binds the third party entity to comply with the Act.	Yes	No
2.3	The contract specifies who owns the records created by the third party entity during the life of the contract.	Yes	No
2.4	The contract or agreement specifies who owns the intellectual property in the records.	Yes	No
2.5	Record storage arrangements for records in the custody of the third party entityare specified in the contract or agreement and conform tothe storage principles specified in the State Records Guideline No. 11, Physical Storage of State Records.	Yes	No
2.6	Any recordkeeping requirements that must be followed to enable the agency and the third party entity to fulfil their statutory and service obligations relating to the management of the records are specified in the contract.	Yes	No
2.7	The contract or agreement specifies that State records held by the third party entity are only destroyed in accordance with a disposal authorisation issued by the State Archivist.	Yes	No
2.8	Any technical standards needed to ensure interoperability between the electronic document, information and/or records management systems used by the third party entity and any other systems specified by the agency are specified in the contract or agreement.	Yes	No
2.9	Access rules established between the agency and third party are specified in the agreement or contract.	Yes	No
2.10	Any restrictions on the third party entity using information from records for commercial profit and other purposes, during or upon completion of the project are stipulated in the contract.	Yes	No
2.11	The orderly transfer of records between entities when one third party entity is replaced by another is stipulated in the contract.	Yes	No
2.12	Recordkeeping issues to be addressed upon contract completion are stipulated in the contract. These include: storage of records records disposal transfer of records	Yes	No
2.13	The agreement or contract stipulates sufficient lead time for recordkeeping issues to be addressed during the final stages of a contract or agreement.	Yes	No
3.	Compliance Third party entities comply with the records management controls determined by the controlling agency.
3.1	Compliance with contractual arrangements is monitored including compliance with State records guidelines issued by the State Archivist.	Yes	No
3.2	The agency ensures that State records held by the third party entity are only destroyed in accordance with a disposal authorisation issued by the State Archivist.	Yes	No
3.3	Access rules established under the agreement or contract are equitably and consistently enforced.	Yes	No
3.4	The agency ensures that the third party conforms to best practice in record storage and handling especially the storage principles specified in the State Records Guideline No. 11, Physical Storage of State Records.	Yes	No
4.	Contract completion Recordkeeping issues are addressed upon completion of contracts or agreements.
4.1	Recordkeeping issues are well monitored during the final stages of an outsourcing contract or agreement.	Yes	No
4.2	There is appropriate sign off on reports of records management activities at the expiry or termination of an outsourcing contract or agreement.	Yes	No

 

 

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