The general rule is that the length of awards should reflect that of the undertaking being funded. Nationally, the Government, covering all departments, agencies and non-departmental public bodies is committed to three-year financial agreements. This reflects the ongoing nature of services and the public sector strategic spending cycle. Locally, councils are committed to the same three years in respect of grants. But awards can be made for longer periods if that would provide good value for money, for example, because start-up costs or the level of capital investment required is significant. Longer awards may also increase the market and competition for a service.
A short term financial agreement (whether a grant agreement under grant or a contract under procurement) will be appropriate in cases where the outcome is also set to be met in the short term. For example, if you are giving a third sector organisation (TSO) the task of building a skateboard area in a park within four months, then a four-month award will be appropriate.
However, giving short-term awards for longer-term projects is likely to add to the burden of administration of the fund for public body and the TSO. This is unlikely to be cost-effective.
It is often sensible to build in review points during the period of an award. For example, a three-year award to a TSO – now common in the public sector – to increase the amount of exercise taken by a target population could be subject to annual review of performance and funding.