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Service Agreement Information Kit for Funded Organisations

3.4.1 Payment and use of funding

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The department will fund an organisation if it meets its obligations under the agreement and delivers the services as described in the Schedules to the agreement. The funding to be paid to an organisation is set out in schedule 2.

The Organisation is to use the funding provided by the department only for the delivery of services specified under the agreement. The funding will include direct service costs and the cost of overheads that the department considers inherent in the delivery of the services.

The organisation should ensure that all payments made from the funding are correctly made and properly authorised, including payments made to subcontractors. Organisations should also maintain proper and careful control over the incurring of liabilities.

The funding must not be used for donations to members of the State or Commonwealth Parliament or Political parties.

Without the Department's written consent, the organisation should not use the following as any security for any loan, credit, payment or other interest:

  • funding provided under the Service Agreement
  • the Service Agreement including any right, title or interest created under it
  • any asset that has a service life greater than one year and is purchased or created (in full or in part) with funding provided by the department under the Service Agreement
  • intellectual property (purchased or created by the organisation under Service Agreement).

If an organisation has an asset that has been created or otherwise brought into existence with funding under a separate agreement, such as a capital facility that is funded via a separate capital facility agreement and not through the service agreement, the terms of the separate agreement will apply to determine if the asset can be used as security for any loan, credit payment or interest.

Unspent funding

There may be times when an organisation does not spend all the funding provided by the department. Where the department is satisfied that all services have been delivered as described under the agreement and the organisation has some funding left over, this funding may be retained by the organisation and used for ongoing service provision unless otherwise advised by the department.

There are some services that are funded on an estimate of the volume of service. When the actual volume of service is known, funding will be adjusted up or down to reflect the actual service delivery volume. For these services unspent funds may not be retained.

Funding and compliance with the Service Agreement

Where an organisation meets its obligations under the Service Agreement, the department will fund the organisation. If, in the reasonable opinion of the department, an organisation:

(a) does not comply with the Service Agreement; or
(b) does not deliver the services to the department's reasonable satisfaction; or
(c) has used, spent or committed all or part of the funding other than in accordance with the Service Agreement;

the department can:

  • write to an organisation and require an organisation to repay that part of the funding within thirty days, or such other time period as agreed; or
  • renegotiate the delivery of services by the organisation; for example the department may agree with the organisation that the organisation will deliver additional services in the next quarter to make up for services that not delivered in the previous quarter.

The department, when determining a course of action, will act reasonably and will notify the organisation of the organisation's non-compliance with the service agreement before taking action. The organisation is entitled to trigger the dispute resolution process (clause 11) if it is not satisfied with the department's decision.