FACT SHEET
Standard Funding Agreement – information for service providers
The aim of the Standard Funding Agreement (Standard Funding Agreement) is to eliminate a large
number of individual funding agreements being offered to service providers, by using a single set
of Terms and Conditions (T&Cs) that will be consistently used across the department.
Your organisation may have separate agreements with the Department of Health (Health, or the
department) using different funding agreement templates. When Health offers new funding to
your organisation you may be offered a new Standard Funding Agreement. All Divisions across the
department that may fund your organisation will move to using the new Standard Funding
Agreement as current funding agreements expire.
Elements of the new agreement – how does it work?
The Standard Funding Agreement consists of:
 a Cover Letter that explains how the Standard Funding Agreement works and how it should be
executed;
 Terms and Conditions (T&Cs) that set out the legal obligations relating to the funding and are
available for download as a Word document or PDF from the Department of Health website;
 a Schedule that includes the details of the activities you are required to undertake with the
funding;
 Supplementary Conditions which may be inserted into the Schedule and can modify the Terms
and Conditions if they are needed for a particular program; and
 any other documents or Attachments required under a Schedule or the Supplementary
Conditions.
Current at: June 2015
What is new about the Standard Funding Agreement?
You will enter into a separate funding agreement with a separate Schedule for each program
under which you are funded. However, where you conduct multiple activities for a particular
program they will be combined into the one funding agreement with one Schedule.
The new Standard Funding Agreement:
 is being used across the department thereby ensuring consistency for each program from
which you receive funding;
 implements a range of new policies to increase efficiency and reduce red tape for both your
organisation and the department; and
 is written in simpler language and has been reformatted and reordered to make it easier to
use.
The new Standard Funding Agreement is designed to operate with a new Electronic Grants
Management System that the department has rolled out to increase efficiencies for the
department. The development of the Standard Funding Agreement and the related policies should
reduce red tape encountered by many service providers when dealing with the department.
It is important to note that the only major difference between the Standard Funding Agreement
and most other Commonwealth funding agreements is that the Terms and Conditions are printed
separately rather than printed along with the Cover Letter and Schedule as a consolidated
document.
What are the benefits of the Standard Funding Agreement for service providers?
The Standard Funding Agreement is being used consistently across the department creating
efficiencies and reducing red tape because:
 your staff will not have to become familiar with multiple funding agreement templates;
 you won’t need to negotiate each funding agreement as you will use the same funding
agreement Terms and Conditions with the department;
 you will have fewer reporting obligations:
o instead of providing certain reports (such as Annual Reports) to a number of areas in the
department, some reporting obligations will only need to be fulfilled once as they can be
shared within the department using the Electronic Grants Management System;
 you will have fewer agreements with us:
o by combining multiple activities in the one funding agreement you will have fewer funding
agreements with the department; and
 response times from the department will be improved, including receiving payments on 30 day
terms.
What are Supplementary Conditions?
Supplementary Conditions are a list of additional conditions that can be selected as required.
Because the Supplementary Conditions override the T&Cs they allow the T&Cs to be modified
without actually changing the T&Cs themselves.
The Supplementary Conditions are attached at Annexure A of the Schedule and provide further
controls for the department depending on the nature of the grant (e.g. service delivery, research).
Current at: June 2015
How do Supplementary Conditions work?
The application of Supplementary Conditions is driven by the specific Program or grant
requirements. There are over 50 Supplementary Conditions and the department’s contract
manager will, with internal guidance, decide which ones should apply to a particular Funding
Agreement. However, not all Programs will require Supplementary Conditions, so your
organisation may not receive Supplementary Conditions for some Schedules.
Supplementary Conditions are divided into two broad categories:
 General Supplementary Conditions
 Activity Specific Supplementary Conditions.
General Supplementary Conditions apply to all Activities within the Schedule. Activity Specific
Supplementary Conditions only apply to particular Activities within the Schedule.
What has priority: T&Cs or Supplementary Conditions?
The Supplementary Conditions that have been attached in Annexure A of the Schedule, take
precedence over the Standard T&Cs should there be any conflict or inconsistencies between the
two.
Will my organisation still have other funding agreements with the department?
The Standard Funding Agreement will be the main agreement with the department. The
exceptions are where a service provider has a current agreement in place with the department.
What will happen to my existing agreements with the department?
The new Standard Funding Agreement will be introduced for new funding agreements only. Any
funding agreements that have already commenced will run their course. When these agreements
lapse, the new Standard Funding Agreement will be adopted for these grants.
As such, there will be a period of time where some service providers will have an existing funding
agreement and also be offered the new Standard Funding Agreement. This will occur until all
existing agreements expire.
What about multi-year agreements?
The new Standard Funding Agreement supports multi-year agreements. You may be offered a
funding agreement of up to three-years depending upon the program that you are funded under
and the grant’s risk rating.
What if I have a Capital Works Project?
A set of Supplementary Conditions have been developed for Capital Works.
Current at: June 2015
Department-wide policies
A number of department-wide policies have been developed and are reflected in the Standard
Funding Agreement. The key policies are listed below.
Recipient Created Tax Invoices (RCTIs)
 A Recipient Created Tax Invoice (RCTI) is created by the department as ‘recipient’ of the goods
or services and sent to the service provider. It is a mechanism endorsed by the Australian
Taxation Office (ATO) for use in specific business circumstances, which replaces the need for
service providers to issue invoices to the department, thereby streamlining this step for both
parties.
 The new Standard Funding Agreement requires service providers to accept RCTIs as one of its
standard T&Cs in instances where the agreement is managed by the department’s new
Electronic Grants Management System (called FOFMS). The use of an RCTI requires the service
provider to be registered for GST.
o There will be some exceptions, for example where the service provider is not registered
for GST.
Bank accounts
 The new policy no longer requires you to hold separate bank accounts for each funding
agreement.
 There may be exceptions where a grant is assessed as high risk and the requirement for a
separate bank account assists in the tracking of funds.
Interest earned on funding
 Any interest earned on funding is not defined as funding. Therefore, any interest earned on
funding does not need to be spent, acquitted, recovered, or accounted for in any way.
 However, the exception to this is on grants with a value of more than $1million per annum.
For these grants, one of the following will apply:
o A value for money outcome will be negotiated up front to account for the likely amount of
interest to be generated on the funding. We will do this by either agreeing more to be
delivered with the funds, or discounting the amount provided to you. We will have set
means of calculating the amount of interest to be generated to ensure that neither party is
disadvantaged.
o An interest recovery clause will be inserted as a Supplementary condition in the Schedule
of the Funding Agreement. This is essentially the same as the interest recovery clause that
appears in most funding agreements now.
Payment milestones and frequency
 The timing and structure of payments to service providers will reflect the cash flow required to
undertake the funded activity.
 Some payments may be structured after other milestones are met (for example, delivery of a
performance report), to provide evidence of delivery of services in accordance with the
funding agreement. Other payments will be date based and automatically released, to reduce
administrative burden on both parties (e.g. ongoing service delivery).
Current at: June 2015
Assets and depreciation
 The department’s preferred option is to lease assets with funding, rather than purchase assets
with funding. Exceptions will be made where this is impractical.
 The threshold in the definition of an asset has been changed from $5,000 (incl. GST) to $10,000
(incl. GST).
 The department will no longer fund depreciation of assets.
Inclusion of a budget in the funding agreement
 There are three options regarding whether to include a budget in the funding agreement:
o not including a budget in the funding agreement;
o having a budget as a milestone – that is, a deliverable that, for example, must be provided
shortly after the execution of the contract; or
o stipulating the budget in the schedule.
 There will be greater consistency across the department as to when an option will apply.
Generally speaking, more stringent requirements will apply to higher value grants with higher
risk service providers.
Withholding / reducing payments
 Payments will be withheld in instances of major non-compliance where continuation of service
is not critical.
 Payments will be reduced for actual or anticipated underspends, involving discussion with
service providers.
Unspent funds
 Within the term of the agreement, the most appropriate treatment of unspent funds will be
determined in conjunction with the service provider, but will ultimately be at the department’s
discretion to either:
o reduce future payments;
o vary the agreement to extend the delivery of services or include additional services if
within scope of the original agreement; or
o recover the unspent funds.
 At the conclusion of an agreement, the only option to manage unspent funds will be to recover
them.
Indexation
 The policy provides a standard approach and calculation method to applying indexation to
multi-year agreements where the program was announced (in the Portfolio Budget
Statements) as having indexation applied.
Insurance
 For low and moderate risk service providers, the department will neither dictate levels of
insurance, nor sight insurance certificates. Nonetheless, appropriate levels of insurance should
be held.
 For high and extreme risk service providers, the department will take a more active role in
stipulating appropriate levels of insurance and sighting certificates.
Payment terms
 The payment terms for new contracts will be 30 days.
 With RCTIs, payment will be processed immediately after the milestone has been accepted and
paid in the next available payment run.
Current at: June 2015
When was the Standard Funding Agreement implemented?
The first version of the Standard Funding Agreement was implemented in October 2012. A new
version of the Standard Funding Agreement was released in May 2015 and is being applied as
existing funding agreements lapse.
What does my organisation need to do?
Your organisation is not required to do anything.
When you apply for your next funding program the department will provide your organisation
with a copy of the new Standard Funding Agreement for your information. Should you be
successful in your application for funding, a detailed schedule will be negotiated between yourself
and the department.
In the case of recurrent funding, the Standard Funding Agreement will be introduced when
existing agreements expire.
Will the Standard Funding Agreement ever change or be updated?
We will continue to review and improve the Standard Funding Agreement in light of future
requirements and you will be notified of any amendments. However, if you have an agreement in
place, those Terms and Conditions that you signed up to will remain in place for those existing
Schedules.
Where can I get more information?
For more information you can email GSDenquiries@health.gov.au
Current at: June 2015