Overview of Crown Funding Agreement variations

This section contains information for Ministry of Health variation owners on creating, managing and monitoring variations to the Crown Funding Agreement (CFA variations).

Updated 13 May 2021.

Variations to the Principle CFA

The principle CFA enables variations to the CFA to be made by written agreement of both the Ministry of Health and the DHB (see clause A.6.1). The principle CFA can be varied in July, October, February and May through the quarterly CFA variation process.

There are three main reasons to vary the principle CFA:

  • to devolve funding and responsibility of service planning and provision to the DHB
  • to release funding to the DHB for a new service or output
  • to maintain transparency when amending funding or service requirements to an existing serve or output.

Variations include, but are not limited to, new Government initiatives, pilot programmes, and changes to service coverage requirements. CFA variations are required even if the variation does not have a funding change, for example, changes to service coverage expectations or operational policy requirements. CFA variations in these cases ensure transparency and accountability.

CFA Variation or Direct Contract?

Contracting through Sector Operations, also referred to as direct contracting, allows the Ministry to directly contract with DHBs, primary health organisations (PHOs) or other health providers. In the CFA variation process, the Ministry is contracting with DHBs only, DHBs then may provide the service directly or act as a funder and contract the service to other health providers.

Generally, a direct contract is appropriate when:

  • the funding/service requirements are not likely to be devolved to the DHB within 3 years
  • the Ministry wishes to maintain key control of the service and use of funds
  • the Directorate requires the option of a unilateral exit of the service (as termination of a CFA variation requires the written agreement of both the Ministry and the DHB)
  • the funding is for operational costs rather than service provision
  • the funding is either one-off or long term (ie, no known end date to funding with no plan to devolve).

Generally, a CFA variation is appropriate when:

  • the Ministry/Directorate is ready to completely devolve the funding/service requirements within 3 years
  • there is an amendment to an existing CFA variation
  • some pilot and implementation programmes may also be most appropriately contracted through a CFA variation, particularly if it affects all 20 DHBs.

For more information on Direct Contracts please go to the following page: https://nsfl.health.govt.nz/contracting-support/contracting-support-documents

Basic Decision Tree

CFA Variation or Direct Contract basic decision tree flow chart