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Human Services Contract Negotiations ACDS Negotiation Team - Issues and Concerns Tracker Elements that are underlined and in Red Font below, are substantive and viewed as “Critical Issues”. If these items continue to be unresolved, they will be formally presented in a position paper that will be shared with Service Providers and others in December. Until then it is hoped that through continued discussion, a final resolution will be achieved between ACDS and Human Services. Contract Category and Issues

Discussed

Resolved

Yes

No

6.1 – The elimination of the 30 year practice of service providers being paid a negotiated flat rate percentage for administration, combined with the right to expense and manage these administration funds at their sole discretion is not acceptable. Likewise, the requirement for service providers to utilize a complex and limiting matrix of “eligible and ineligible” expenditures, while the number of the expenditures that require prior Human Services approval is also unacceptable.

Yes

No

6.5 – The elimination of the 30 year practice of service providers being able to retain surplus funds annually and at the end of the contract term, is not acceptable. Likewise, the requirement for service providers to repay deemed surpluses at the end of the contract term is also unacceptable.

Yes

No

6.8 – Re-execution of services at contractor's expense is a significant issue! How would this be possible if the funds have already been expensed for manpower and material, properly invoiced, and payment has been received from the funder. How would the funder come to a determination of what services need to be re-executed. This could result in crippling financial exposure to many of the organizations. This item may be one of potential critical issues that will be addressed more fully by the service provider group in late October.

Yes

Yes Now only applies to individuals who received no services.

6.10 d – There needs to be a timeline inserted whereby Human Services will respond to a service provider’s request for additional funds in an extraordinary and urgent situation etc..

Yes

Yes Responses required in 5 business days

General – The contract’s intention is to establish and respect Service Providers as independent contractors. However, some of the disputed contract terms that are discussed in this tracker, support an “Agent” relationship between Human Services and Service Providers rather than “Independent Contractor” relationship. This relates to the excessive control that some clauses give to the funder. Payment and Finance

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6.10 continued Why would extraordinary funding be determined at the discretion of PDD, rather than through an immediate joint determination of the amount and terms of the additional funding for the urgent or extraordinary situation. The Province must also provide the reasons for its rejection of a contractor’s request for extraordinary funding.

Yes

S.Ps. have formal input upfront, but funder makes decision.

Yes

Yes

6.11 c – Reallocation of funds to “Ancillary” needs to extend beyond yearend to allow for a final determination of year-end financial positions of each category.

Yes

Yes 90 days after Year End.

6.14 (New Clause) – If during the term of the contract, the Ministry, or the Government of Alberta, imposes new expectations on service providers in the form of new standards, directives, statutory benefit increases, minimum wage increases, or any other requirements that financially impact the contractor, the Ministry needs to work with the contractor to offset the impact of these new expectations and requirements.

Yes

No to a new clause, but this will be discussed in the Q&A.

Yes

Yes if S.P. requests a wavier as per clause 25.4.

Yes

Yes Clause and Schedule D have been amended.

Yes

Yes Now only “Specialized Client Service Positions” recorded.

Records and Reporting 7.1 d – The 90 day term for Audited Statements is not realistic. It should be 120 days in light of the time required to close off the year end, compilation of initial statements and trial balances, undertaking the actual external audit, creation of the financial statements and auditor report, internal review of statements and applicable resolutions, Board review of statements, membership approval of statements at AGM, and final submission of statements to the funder. Original Notes 8.2 - When does the contractor return all of its original notes to the Province. Request that at any time during or after the expiry or termination of a contract, the Contractor should be allowed to request copies of Original Notes, and the Province should provide copies within 30 days of the Contractor’s written request. Key Personnel Replacement 10.1 – Requiring Provincial approval to fill certain vacant positions should not be in the contract. If it is necessary, the clause and related table in Schedule A should focus on “mutually agreed” specialized client service positions, and the required qualifications for the key position, rather than the name of the person filling the position.

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Material Ownership 12. – Why do we even have a section on material ownership in the contract. The terms of the contract focus on funding for staffing costs to deliver services, and administration costs to support the delivery of services. The creation of intellectual property is not a function of, or envisioned funded element in the contract template. If a contractor creates their own unique systems, materials, and intellectual property (copyright, patent, trade secret, industrial design, or trade mark) unfunded by the Province, then these elements belong to the service provider. This is an example of the excessive control that some clauses give to the funder.

Yes

Schedule “A” will specify what elements of I.P. the funder is paying for and owns.

Yes

Q&A will address personal info and proprietary info.

Yes

Yes FOIP does not directly apply to S.Ps. Q&A will provide more details.

Yes

Yes Clause now amended

Yes

YES Add to Policy that “Both parties need to provide 90 days notice of non-renewing contracts”.

Non-disclosure of Information 13. – This clause is significantly over-stated. The contract wording as currently stated under article 14.2 could suffice if it were moved to this clause - “The Contractor shall not collect, use or disclose any Personal Information under this Contract except as reasonably required to fulfill its obligations under this Contract, or as otherwise expressly authorized in writing by the Province”. This is an example of the excessive control that some clauses give to the funder. Freedom of Information and Protection of Privacy 14.3 – This clause is contrary to the FOIP Act. The contractor must respond to all demands under FOIP, rather than referring the matter to the Province for their handling. However, it would be reasonable for the contractor to both inform the Province of any FOIP request, and to share its FOIP response with the Province. This is an example of the excessive control that some clauses give to the funder. Insurance 16.4 – Last sentence needs to be reworded about service providers insuring against workplace injuries when they are exempt from, and do not carry WCB. Termination 19.4 –Transition planning could require a significant process, cost, and time frame that could arise if a new service provider becomes involved either by a competitive RFP bidding process, or by the termination of the contract by either party during the term of the contract, or by the decision of either party not to renew. (Both parties need 90 days notice of non-renewing contracts.) Time is needed to tender the contract, for new contractor to arrange for facilities, for the guardians and individuals in service to actually choose who they want to receive their services from, and finally for the actual effective transition of the individuals to a “successful” alternate service provider. These issues are more significant for residential services. 3|Page

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Conflict of Interest 22.1 a – We need the past “Private Interest” definition that was negotiated with, and approved by the PCAC included in the contract.

Yes

Address in new policy and Q&A.

22.1 f – The reference to the lobbyist act is too vague and far reaching. What does Human Services want to prevent a service provider from doing. (The Lobbyist Act is currently under review with input being provided by non-profits and advocates. Perhaps this clause should be removed until after the review is completed.)

Yes

Address this matter in the Q&A.

22.2 – The contractor cannot stop delivering services after reporting a perceived conflict of interest as this would be incredibly destructive to individuals in service. The province should first attempt to work with the service provider to resolve the conflict of interest rather than unilaterally terminating the contract.

Address in new policy re: process to respond to conflict of interest.

Dispute Resolution 24.1 – Mediation is not addressed as a formal step, but only referenced in (a) while payment for Mediation is mentioned after the Minister's decision in (f). However, mediation must be included as a formal step in the process. (Refer to existing Fee For Service Contract wording re: Mediation).

Yes Mediation process is expanded in this clause.

24.1 (e) – The Minister should not be the final decision after mediation. Rather it should be an independent decision maker such as an arbitrator. Alberta Health Services contracts use arbitration, therefore the Arbitration Act should apply.

Yes S.Ps. could accept as is, if 24.3 resolved.

24.3 – Prohibiting disputes related to payments from being disputed takes away the ability of contractors to effective object to a full range of critical issues. It goes without saying that disputes about contract costs and payments would be the most frequent issues faced by a service provider.

Yes H.S. will allow all disputes if Minister is final step.

Issues with Schedules VI Contractor Key Personnel (Need to change the title) – Include the statement that only "positions with specialized skills or experience essential to perform client specific services" would require Human Services approval. Also needs to focus on the positions and qualifications rather than the names of individuals. 4|Page

Yes

Yes Final wording aligns with changes to Clause 10.

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Schedule B – 3 Expenditures (Definitions and Categories) In spite of the “Critical Issue” related to administration funding as described in the response to article 6.1 above, the following feedback on the Eligible and Ineligible Matrix is being provided as an act of good faith in the hopes that the matter might be adequately resolved. Eligible Operating Expenses Information Technology – Should include eligible operating expenses such as individual hardware (Computers, printers, monitors) and software purchases / licences under $1000.00 as these are not capital assets. This would take these items out of the current ineligible category list.

Yes

Yes

Rent, lease, mortgage, amortization costs – should be better defined to include “costs of Contractor facilities, such as offices, program facilities, and consumer housing as approved by the Province for providing services”.

Yes

Yes

New Category Is Needed – Non-capitalized Repairs and Maintenance Cost of facilities as an eligible operating expense.

Yes

Yes

Yes

Yes Interest is now eligible under Overhead Category

Unexpended contingency funding and reserves – The time lines to use these funds needs to extend beyond the contract termination to support wind-up, termination, and transition costs.

Yes

Yes Negotiated at time of contract termination.

Finance Charges – Payment of interest and loans for using an operating line of credit (non-capital) should be included as an eligible operating expense.

Yes

Yes “as Overhead Cost”

Upgrades to Physical Infrastructure – What are the “Provincial Guidelines and Policies” that are referred to in this section of the schedule. (Also see same topic under “eligible Capital Expenses”)

Yes

Yes removed as Ineligible

Eligible Capital Expenses Upgrades to physical infrastructure – Should include interest on loans to accommodate these upgrades: Proposed Revision - “Expansion / renovation of existing facilities which are in accordance with Human Services Policies and Guidelines, and have been approved by the Province. Including related interest on loans and bank drafts for said Capital expense.” This is the same wording used for Office Equipment and Furnishings in this same schedule. Ineligible Expenses

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Guidance (ACDS to edit definitions of Front line, Supervisory, and Administration Staff positions - located at the end of Schedule B between the table of Ineligible Expenditures and the Referral Confirmation.)

Yes

Yes See New Definitions

Expenditures related to business functions of the organization including but not limited to Strategic Planning, Financial and Outcomes Reporting, Capacity Building, Service on Provincial Committees, etc.

Yes

Yes - As “Overhead Costs”

Costs associated with individuals who split their duties between Administration and Program Duties, but fall outside of a single classification as set forth in the “Guidance” section.

Yes

Yes Guidance redefined

Legal fees and other non-audit external professional fees.

Yes

Yes - As “Overhead Costs”

Third party consultants who are hired to support organization, Board, and program or systems development.

Yes

Yes - As “Overhead Costs”

Office equipment leases, and maintenance and repair of office equipment.

Yes

Yes – As maintenance & repair and as overhead for lease.

Business / property taxes related to organization facilities, if applicable.

Yes

Yes - As “Overhead Costs”

Employee Professional Memberships

Yes

Yes – As “Staff Professional Membership”.

Missing Administration Expense Categories

Organizational Memberships and Accreditation / Certification Fees including on-site accreditation reviews.

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Travel and mileage expenses for supervisory and administration staff.

Yes

Yes - As business travel and accommodation

Storage cost for files, consumer furnishings and belongings, and agency owned equipment.

Yes

Yes - As “Overhead Costs”

Safety expenses including first aid kits, fire extinguishers, alarm systems as required now or in the future.

Yes

Yes - As “Overhead Costs”

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Current Eligible and Ineligible Expenditures – Draft Contract November 16, 2016 Version (Additional revisions expected based on November 24th discussions)

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CRITICAL ISSUES – DRAFT POSITION PAPER

Background: During the 1980’s the provincial government introduced an individualized funding model to support adults with developmental disabilities. This model was an extension of Social Services’ Income Support Program. This new individualized funding element was called “Special Needs Social Allowance” (SNSA). Over the ensuing 30 years, individualized funding evolved along with several program name changes. These programs were also delivered under the authority of a variety of government departments. The evolving individual funding models included “Personal Support Services” (PSS), “Individualized Funding” (IF), the “Units of Service Model”, and finally the current “Fee for Service” funding model. During the 30 year evolution of individual funding, two standard practices have always been in place. The first practice was that agencies were provided with a flat rate administration funding base, and they had significant freedom to expend funds as they saw fit (little or no detailed accounting and reporting was required). The second common practice was that agencies were empowered to retain, in one form or another, all surplus funds that accrued during the course of the contract year. In early 2016, Human Services introduced a new contract template to the disability services field that was met with a lot of opposition on the part of service providers. At the time there were a host of issues that, when combined, could result in a crippling financial impact on service providers. In March of 2016, Minister Irfan Sabir initiated a contract review table comprised of officials from Human Services, and contract agency representatives from the Alberta Council on Disability Services. This table was tasked with a review of the service provider issues, and the modification of the new contract template. The group met numerous times since April 2016, and the ACDS representatives acknowledge that the discussions have been very frank. Both parties approached the task with an open mind, and as a result, a large number of changes and edits have been made to the contract template. The ACDS representatives also appreciate the commitment of both Minister Sabir and the Human Services officials to maintain a primary program focus on supporting positive outcomes for adults with disabilities, while supporting and sustaining the network of high quality community service providers. However, as we approach the end of the current contract review process, there are two critical issues which remain unresolved. Critical Issues: The following presents the major concerns that the ACDS negotiating team sees as being unresolved critical issues with the new Disability Services contract template. For the time being, these issues are being presented for a preliminary review by the ACDS Board and Human Services’ senior officials. Hopefully, these issues will be mutually resolved by the end of November or early December, 2016. However, if either issue remains unresolved, it will need to be examined in greater detail by ACDS to establish a formal position paper for the service delivery field. The key question that individual service providers will need to address is “will either of these issues, as they relate to organization viability and integrity of services, have sufficient impact that they could cause significant hardship to the agency. 11 | P a g e

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It is imperative that Human Services officials understand the depth of our concerns. As previously mentioned, a full position paper will be developed in the future to communicate our concerns to various parties who are external to the contract table. These parties would include Minister Sabir and other MLAs, senior government officials (both inside and outside of Human Services), service providers, guardians, and individuals in service. The final position paper will present these issues by focusing on the following elements: 1. Clear statements of the issues written from the perspective of service providers; 2. A list of rationale and arguments that support the service provider position on each issue; 3. A counter contract clause that represents the service provider resolution to each issue. For the time being this draft document is being limited to clearly defining the critical issues and presenting some of the key rationale and arguments that support service provider positions. Counter contract clauses will be developed later based on the initial response of Human Services to this draft document.

1. SURPLUS RETENTION Critical Issue: Service providers want to continue the 30 year practice of retaining final year-end PDD contract surpluses that could arise within any of the funding categories, as opposed to the proposed claw back of any and all surpluses that might arise.

Rationale: The new contracting model, as amended, introduces new elements that recognize funding for non-staff consumer supports, and predictability through multi-year agreements. These and other elements appropriately fund consumer services. However, the contract should also provide a means for service providers to retain a reasonable amount of surplus or reserve funds (for example an amount not to exceed 2% of the agency’s total annual contract funding). Agencies need to maintain flexible use of surplus funds both during and after the contract term. These funds would support current and future non-staff related consumer supports, while insuring the ongoing health and sustainability of community service providers. Key considerations in reviewing this Critical Issue include the following: 

It is unrealistic to assume that service providers will enter into multi-million dollar contracts to deliver consumer services with the expectation that there would be absolutely no opportunity to retain any surplus or reserve funds. This requirement is contrary to long term GOA approved PDD contracting practices.



The Financial Accountability Act has not been amended to prevent surplus retention, but rather a different interpretation of the act now effectively removes a positive practice that has existed for 30 years. This change may ignore the principles of procedural and administrative fairness.

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

Surplus or reserve funds support continued improvement and sophistication of organizations and their services, and these funds could be used to address emerging risks. Examples of the historic and current use of surplus or reserve funds include the following: o

Acquisition, maintenance and repair of accessible transportation, particularly when other options are limited or non-existent in the community;

o

Acquisition, maintenance and repair of consumer housing, particularly when typical landlords refuse to develop and rent appropriate homes to higher needs individuals who tend to be very hard on property;

o

The purchase and provision of specialized medical equipment and assistive technology which other funders are not willing to support;

o

Legal defense against a host of actions including wrongful dismissal, unfounded human rights and labour claims, fatality inquiries, direct and third party civil actions, and any uninsured judgements or costs related to these actions;

o

Excessive operating fund requirements related to funder delays or failure to manage and pay service provider invoices in a timely manner;

o

The ability to respond to some of the initial financial impacts of new service standards and contracting expectations as they emerge;

o

Capital to develop, acquire, or introduce new administrative technology, information management systems, and specialized IT or office equipment, all of which support the improvement and effective operation of community service providers;

o

The ability to cover annual deficits and shortfalls that arise in service delivery related to increased service delivery costs that are not recognized or assumed by the funder;

o

The cost of major accreditation reviews and responses to deficiencies. This includes the substantial cost related to preparations, staff training and system development, which are in addition to the actual cost of the audit and annual fees to maintain accreditation.



Currently there is no contingency for unexpected cost other than wrap-up or transition costs. This makes agencies vulnerable to future unanticipated and / or unusual staffing and operating costs such as unfunded increases to minimum wages, sick pay for pandemic situations, and yearend financial deficits related to unanticipated service delivery and operational expenses.



Innovation and creative solutions on the part of service providers continually contributed to high quality services. Likewise, community and consumer services have evolved through the initiative of community service providers and families, far more than the initiative of government. The elimination of surplus retention could prevent and destroy this initiative, and it is a disservice to the communities and families who have invested many decades in creating a highly effective community-based service delivery system.

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2. ADMINISTRATION FUNDING Critical Issue: Service providers want to continue a 30 year practice of flat-rate administration funding (for example 12% or more if negotiated), combined with the freedom to determine all expenditure priorities; as opposed to the use of a complex matrix of eligible and ineligible administrative expenses, which are combined with new requirements for funder authorizations, and the claw back of both deemed ineligible expenditures (that have already been paid) and year-end administration surpluses.

Rationale: The introduction of Ancillary Program Costs, and the ability to transfer between funding categories are both positive benefits of the new contract template. However the template must also continue to respect the service provider as independent contractor, which includes the authority of agency Boards to unilaterally manage their administration funding priorities. While it is mutually agreed that increased accountability and financial reporting is important, this can be achieved without unnecessary financial and administrative burdens and controls being placed on service providers. Key considerations in reviewing this Critical Issue include the following: 

Service providers must have the ability to use administration funding as needed, to provide quality services to individuals and manage their community organizations, without restrictions being placed on that usage.

The use of a flat rate or fixed dollar administration funding to support the delivery of community based human services, combined with service provider Board control over their administration expenditures, is a very common practice in many jurisdictions including the Government of Canada, the Government of Alberta (as practiced for the past 30 years under virtually all individualized funding contract models) and the Governments of the Nunavut and Northwest Territories. In most cases, service providers do not report the itemized use of administration funds, and they can retain all administration surplus amounts if these should arise.

The vast majority of ACDS service providers are local community based charities and non-profits. Therefore there is no profit motive or opportunity for personal gain related to surplus retention, only reinvestment into sustainable and innovative community organizations and service delivery systems.

Micro-management by government bureaucracy through demanding the use of complex eligible and ineligible expenditure matrixes, combined with new requirements for pre-authorization in some key expenditure categories; is not a reasonable substitute for the decades of good will, innovation and Community Board authority that have been the tangible outcomes of both past and current flexible administration funding models.

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PDD contract issues tracker Nov 28 2016  
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