Extending functional leadership to Crown entities

1. Extending functional leadership to Crown entities Decision & resolution process June 2014

2. 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

3. Definitions of terms • “Requirement” meansa 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

4. 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

5. Who is responsible for what?

6. Resolution process How? Who? • 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). Ministers of State Services & Finance FL Responsible Minister Entity Responsible Minister Advice Entity Board Functional Leader HoSS Central agency officials Entity chief executive Functional Leader Area of concern Entity function team FL team

7. Factors for consideration