Standard Commonwealth grant agreements

Background

Traditionally, recipients of Commonwealth grants, particularly in the charity sector, have had to deal with a range of different grant agreements depending on the government department involved. Terms of agreements have varied reflecting different approaches to such provisions as the right to sub-contract services, ownership or licensing of intellectual property, the ability of the Commonwealth to terminate an agreement for convenience and so on.

Commencing in early 2017, the federal government has streamlined grants administration by standardising how grants are designed, established and managed across government for the benefit of stakeholders and the community at large. The Streamlining Government Grants Administration (SGGA) program initiative (led by the Department of Finance) was instrumental in the consolidation and standardisation of grant services into 2 centres of excellence to create a common business and IT services platform called GrantConnect.  The aim is to improve user experience generally through standardisation, centralisation and efficiency improvements and generally enable better policy development through data analytics.

The 2 centres of excellence known as “hubs” are the business grants hub within the Department of Industry, Innovation & Science which provides program design and delivery services and a community grants hub within the Department of Social Services which provides grant administration services to Australian Government client agencies and organisations primarily responsible for delivering grant programs to individuals and the community sector.

GrantConnect

GrantConnect, a web-based online platform, was established to provide access to a range of information about Commonwealth grants including the advertising of grants. It operates as the new whole-of-government grants information system where all Australian government grants are advertised in respect of those agencies using one of the 2 hubs referred to.  Capital grants and research grants are not covered by GrantConnect.

Grant awards

Stage 2 of the project commenced from July 2017 on a phase-in basis. Under this stage, grants awarded are reported on the GrantConnect website. It means that all awarded grants are brought to a single location, in a consistent format which promotes the effective and transparent reporting of the results of Australian Government grant rounds.

Grant acquittal obligations

The requirements for grant acquittals will depend on the specific grant. There is no plan in place for all acquittals to be made via the GrantConnect website.  In particular, the Australian Government is precluded from requiring, in grant acquittals, information from grant applicants that has already been provided to an Australian government entity and which is available to officials.  This is a red-tape reduction initiative.  Further information is available here.

Standard grant agreement template suite

Running hand-in-hand with the GrantConnect project has been the updating and standardisation of a suite of Commonwealth grant agreement templates.

The Australian Government Solicitor had consulted with users as part of the process and noted a range of issues with the old forms of alternative government grant agreements, particularly around the areas of:

• IP ownership;
• termination for convenience provisions;
• sub-contracting;
• contract variation; and
• insurance provisions.

To its credit, the Australian Government Solicitor took on the concerns of industry when new template documents were published and made available on an all-of-government basis at the end of 2018.

Essentially the template suite comprises 3 alternatives; namely:

• letter of agreement template: to be used for single or milestone payment grants to an individual or organisation; it has particular application for low value, high volume one-off or ad hoc grants (ideally up to a grant level of 100K);
• simple Commonwealth grant agreement: a low risk grant agreement template using general standard conditions suitable for grants with 1-3 activities and able to be used for single or multi-year agreements (ideally for grants less than $5M); and
• the standard Commonwealth agreement template: using general standard conditions and a “clause bank” of optional clauses. This form of agreement is suitable for grant payments where the agreement requires clauses not contained in the simple Commonwealth grant agreement – generally of greater complexity.

Examples of the drafting used in the simple agreement template provide that:

• ownership of intellectual property rights developed during the course of the grant (including reporting material) vests in the grantee with the grantee giving the Commonwealth a non-exclusive, irrevocable, royalty-free licence to use reporting material for Commonwealth purposes;
• an ability for the grantee to sub-contract on the basis that full responsibility for obligation performance remains with the grantee; and
• cancellation for convenience provisions apply in the event of a change in government policy or change in control of the grantee which the Commonwealth believes will negatively impact on the grantee’s ability to comply. In this instance the Commonwealth will pay all grant monies owing to the time of termination and reimburse reasonable expenses incurred as a consequence of cancellation but on the basis that the grantee is not entitled to compensation for loss of profits or benefits that would have been conferred on the grantee had the grant not been terminated.

Bespoke agreements

Whilst the government is keen to ensure standardisation as much as possible across all departments, there is a recognition that tailored bespoke agreements will always be required for complex grants.

Summary

The new suite of documents available as templates is a big improvement on the complex agreements previously used by the government which were unashamedly overly-favourable to the Commonwealth Government. Contracting risk is now more even between government and grant recipient and, with the use of standardised agreements, the contracting process will be a simple, quicker and less expensive one.