Looking at some common mistakes in the administration of grants is a useful reminder of what not to do.
The Commonwealth Grant Guidelines July 2009 (CGGs) have provided Australian Government agencies with a valuable resource to help them effectively manage grants programs. They set out the policy framework, mandatory requirements for grants administration, and the seven best practice principles which agencies should observe. In particular, the CGGs focus on transparent and accountable decision-making processes. Officials performing duties in relation to grant administration must act in accordance with the CGGs.
Ultimately, of course, the managers of grants programs are only human, and mistakes are made. Audits conducted by the Australian National Audit Office (ANAO) note improvements in agencies' practices and policies for grant administration, but also reveal some common mistakes, often caused by unforseen pressures on a program, such as changes to timeframes, policies, or structural changes to departments.
In this article we'll set out some of the more common mistakes in grants administration, and the best practice tips to help you avoid making them.
Best practice program guidelines
- Not having clear guidelines for grant award.
- Issuing multiple program guidance documents and developing internal program guidelines, particularly if important information regarding the assessment methodology is included only in the internal administrative arrangements. While problems can be mitigated if all such documents are made publicly available, using multiple documents introduces the risk of inconsistency and makes it more difficult for applicants to access the appropriate information and provide a considered response.
- Not giving applicants sufficient information in the guidelines, or not informing applicants of the importance of particular criteria, which will assist them in preparing their application.
- Not clearly identifying assessment criteria or how value for money will be taken into account in the assessment.
Best practice tips
- Establish clearly defined eligibility and merit criteria (and then use the criteria in the assessment process).
- Provide clear and detailed guidance in relation to the assessment and selection process, and ensure the process is appropriately documented prior to receiving applications and conducting the assessment.
- Where practical, develop a single reference point for policy guidance, administrative procedures, assessment criteria and evaluation strategies, noting that where more than one document is developed, all such documents will constitute program guidelines and therefore should be subject to appropriate approval.
Best practice assessment
- Deciding to accept incomplete applications, particularly where mandatory information was not provided, which ultimately led to a more challenging merit assessment process.
- Using broad eligibility criteria, which make it more difficult for applicants to respond and for the agency to properly assess eligibility.
- Approving applications for funding that have received relatively low scores against the merit criteria without explaining how those applications met the program's objectives and represented value for money.
- Putting too much focus in the merit assessment process on the level of detail provided by applicants and deficiencies in documentation, rather than the value for money offered by the applications.
Best practice tips
- While there is no requirement to notify applicants of weightings that apply to merit criteria, if there is a particular program objective of greater importance to others, provide applicants with an indication of importance of criteria, as this will help applicants to respond appropriately.
- Document assessments against eligibility and merit criteria and provide reasons for all decisions taken, and provide clear links between the assessment of applications against the published criteria, an overall value for money assessment and the recommendation to the decision makers. Similarly, keep accurate and detailed records of committee meetings.
Best practice probity arrangements
- Retaining insufficient documentation to record key aspects of the decision making process, such as decisions to rank or shortlist applicants, or where records have been maintained of the assessment process, those records not addressing the merit criteria.
- Records not indicating how declared conflicts of interest were considered and then managed, including whether committee members were involved in assessing applications for which they had declared a potential conflict.
- Not involving the program's probity adviser at relevant times, such as during the assessment of applications, or following important steps set out in the probity plan, and not having probity advice received in writing or documented.
Best practice tips
- Appropriately manage conflicts of interest, and maintain records of declared interests and their management strategies.
- Maintain detailed records of all communications with applicants.
- For high value and risk profile programs, the ANAO suggests that the appointment of an external probity adviser will provide agencies with greater assurance regarding the integrity of the assessment process for programs.
Other sources of scrutiny for grants administration
It is worth noting that, in addition to being audited by the ANAO, decisions in relation to the awarding of grants can be subject to external review, so agencies should ensure the usual rules of decision-making are also observed.
Decisions made under executive schemes can be reviewed by the Commonwealth Ombudsman. Although the Ombudsman cannot overturn a decision, the Ombudsman may make recommendations to the relevant agency or Minister and may publish a report on the findings.
Decisions made under legislation may be subject to judicial review (under the Administrative Decisions (Judicial Review) Act 1977), which would be a review of the decision-making processes (not the merits of the decision itself) to ensure the processes were fair.
Grants play an important role in the community – often part of achieving essential public policy objectives, providing financial benefits not otherwise available to recipients, and involving the use of significant amounts of public money. Maintaining a high standard of probity and transparency in grant administration benefits the applicants, the Government and the community.
Agencies should plan grant programs thoroughly to ensure the program will achieve desired objectives and to establish a fair and transparent process. Ultimately, this will assist in the smooth running of the grant program and will enable the agency to meet its overall objectives. A rushed program, on the other hand, where the process and criteria have not been thought out, may not meet program objectives and come back to bite the people who set it up.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.