Contract Compliance

Many funding bodies provide copies of the contracts they require organisations to enter into if their funding application is successful.

These contracts are provided in advance of your application so you know what the funding body expects prior to developing your proposal, writing your application, and entering into a contract.

A contract often details:

  • The parties to the contract
  • Background to the agreement
  • An agreement
  • Defined terms (these are noted in the definition section and are capitalised throughout the contract)
  • Standard clauses (also known as boilerplate clauses)
  • Intellectual Property Rights to ownership of any products that are produced as a result of the program/service
  • A schedule.

Read through the contract and note down any clauses:

  1. Which you are uncertain about or which appear ambiguous
  2. You partially agree with
  3. You disagree with. 

When reading through the contract, consider the list of organisational needs that you developed in Building Relationships and note any deficiencies. Jot down potential remedies for each deficiency you identify.


Removing Uncertainty

If you are unsure about the meaning of any of the contract's clauses or if they appear ambiguous, contact the funding body to seek clarification and/or get legal advice. 

Do not attempt to negotiate the clause with the funding body at this stage. Simply, listen and learn about what the clause means and why it's included. If you partially agree or disagree with the clause, make a note of this in your contract compliance table (see the Activity below). 


Varying the Contract Terms

Check the funding guidelines with the funding body to see whether you may vary the contract clauses.

If contract clauses are able to be varied, construct a contract compliance table indicating the clauses with which you:

  • Partially agree
  • Agree
  • Disagree.

If you partially agree to some of the clauses, indicate exactly what changes you require.

Only seek to vary the clauses which would result in an unfair situation or onerous burden being placed on your organisation. For example, you may want to make sure that you are able to submit activity reports and financial statements at the same time thereby reducing the amount of time that you spend preparing and submitting reports.

If your application is successful, your contract compliance table will form the basis of your contract negotiations with the funding body. You may not be able to introduce new variations at the negotiation stage other than the ones flagged in your application. So make sure you raise all potential issues at the submission stage (see After Submission for more information about negotiating the contract terms). 


Risk Analysis

If the funding body does not permit applicant organisations to make any changes to the contract clauses, consider the contract carefully and make a note of any clauses which may result in an onerous burden being placed upon your organisation. Determine whether you wish to enter into a contract with the funding body by considering:

  • Your relationship with the funder
  • The potential benefits of the funding
  • The likelihood of the burden arising
  • Potential outcomes of the burden.

In the risk management section of your proposal, identify the risks in contract clauses, and the likelihood and potential outcomes of the risks eventuating.

Inform the funding body about how you will prevent such risks from eventuating (e.g., highlight the communication and/or project management strategy that you plan to implement to counteract such risk).


TIPS: Contract Compliance

  • Always speak with the funding body to clarify any ambiguous contract clauses or areas of concern and determine what contract clauses can be varied or deleted.
  • Ensure that you inform the funding body of the contract terms you want varied or deleted in your funding application. It may be too late to do this after your application is accepted.
  • Consider whether you can incorporate an amount in your budget for contract management services. This may be included as a stand alone consulting cost or as part of an infrastructure cost. Speak with a lawyer or project management firm to find out the costs for such services. Alternatively, liaise with a local government department to see if they can provide such a service or explore other pro bono options.

References & Resources

The websites and resources below may also be useful in explaining common contract terms and matters.

Australian National Audit Office (2007). Developing and Managing Contracts: Getting the Right Outcome, Paying the Right Price. Canberra: Department of Finance and Administration

For an overview of ambiguous contract terms, read:


Activities

Complete the activities below by en​tering text into the fields provided and/or completing the attached documents. If you download and complete an attached document, you will have to save this to your personal file.

You may also:

  • Export these answers: You may export your answers to the activities to a word document without saving to Your Funding Portfolio. Responses can then be saved in your personal files
  • Print this page: Users may print the page
  • Save and continue to next step: Users may save their responses to a secure server before continuing to another section of the resource. Users may then export and print all their saved responses from Your Funding Portfolio
  • Save progress: Users may save their responses as they work on the page.

Activity 8.6.1 Develop a Contract Compliance Matrix

Either create a word document or use the pdf attached to develop a contract compliance matrix.

Insert a table with three columns into your word document.

1. Name column one: Section or Clause #.

2. Name column two: Clause Description.

3. Name column three: PAD (partial agreement, agreement, disagreement).

Go through each section and clause of the contract and make a note in the PAD column about whether you partially agree, agree, or do not agree with each clause.

If you partially agree with a clause - make a note of the change that you would like to see included.

The attached document provides you with a template for a contract compliance matrix which you can adapt to suit your needs.

Section_8.6_Activities.pdf (100 KB)

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