B3 Format for Concept Note (CN)

Background

DFID formalises its approved project proposals to development partners (governments, international organisations, bilateral donors or civil society organisations) by setting out in writing the understanding reached on development objectives, respective obligations and how we will work together.

DFID provides development partners with Financial Aid or Technical Assistance (mainly in the form of personnel, research, training or goods and equipment) purchased by DFID.  Different options require different arrangements for accounting and audit (for more information see the Formal Exchanges Flowchart B4 and Text B5). Approved projects must be formalised using one of the appropriate non-legally binding exchanges. Staff must download the appropriate model document from office templates available on Word.

Memorandum of Understanding (MoU)

For all aid to a partner government the standard model, including conditionality and any specific conditions governing the funding must be used. For aid provided to bilateral donors/international organisations/Whitehall departments when there is no existing Framework Arrangement, standard MoUs can be used for each type of partner. When using a partner's alternative MoU format, the MoU must contain details of the financial contribution, tranching, reporting, management and audit arrangements.

Delegated Co-operation Arrangement

DFID Project Managers are encouraged to use this when co-financing with like-minded bilateral donors (see 'Working with Others' under Tools and Processes).

Frameworks

DFID has concluded Framework Arrangements with several international organisations (IADB, UNDP, UNIDO, UNICEF and WFP) and plans others. Where a Framework Arrangement is in place, there is no need for an individual MoU.  You should complete the standard 'Administration' or 'Contribution Arrangement'.

Grant Arrangements to Civil Society

There are two main types of grants given to civil society organisations/Non-Government Organisations or Not-for-profit organisations. These are strategic-type, high-level grants in the form of Partnership Programme Arrangements and Accountable Grants.

Contracts

DFID procurement should ensure value for money which is best assured by competition but can be achieved by other means. For more details on the competition thresholds, procurement procedures and the choice of contracts please see Blue Book Section D.

Official Letter

For low value projects to bilateral donors, international or other organisations there is no set format but essential information must be included (see Compliance Task 6). For funding of any size to a partner government you must use the MoU format.

• Staff must not formalise DFID support until financing authority has been obtained at the appropriate level of delegated authority.
  Task assigned to: All Staff, Head of Department, Project Staff
• Any subsequent changes to the approved spending proposal (for example, a change to the financial contribution or period of the arrangement) must be recorded in an Amendment Letter (the format of the Amendment Letter can be found in the Word directory as outlined above).

  Task assigned to: Head of Department, Project Staff

• Approved Business Case proposals and amendments must be formally recorded with partners in writing using the appropriate format. Copies of all formal exchanges and Amendment Letters must be recorded in Quest and the originals sent to Financial Accounting Group. 
  Task assigned to: Head of Department, Project Staff
• Any proposal to use an MoU/Official Letter drafted by a donor partner must be checked against the MoU explanatory note and checklist. Any amendments necessary to ensure that it meets DFID's mandatory requirements must be made. If there are any specific areas on which guidance or legal advice is required, email the FCPD Information Desk.
  Task assigned to: Project Staff
• All Financial Aid (including General and Sector Budget Support) paid directly to a partner government is channelled through Accounts Payable in the UK. Accounts Payable must be provided with copies of the signed MoU and of any subsequent Amendment Letters as they are agreed.
  Task assigned to: Project Staff
• Approved low value Business Case  proposals to bilateral donors or international organisations confirmed by means of an Official Letter must include the scope and extent of DFID funding and where appropriate the following:
• The purpose for which the funding will be used and any other specific requirements
• Procurement arrangements
• The responsibilities (that is, the obligations or contributions) of each participant
• Monitoring and reporting
• Accounting and Audit arrangements (See Blue Book template C4)
• Indemnity and Termination (see para 17 of International MoU)
• Arrangements for resolving any problems arising.

Task assigned to: Project Staff

• If any approved Business Case proposal is subsequently increased to £1m or above, an MoU is required and other project management disciplines, including managing portfolio performance, monitoring, reporting and review, must be applied.

Task assigned to: Head of Department, Project Staff

Risks of non-compliance:

• DFID funds could be used for purposes other than originally intended and lead to fraud or non-compliance with the International Development Act 2002 or the Human Rights Act 1998
• Confusion as to the responsibilities of DFID and the recipient
• Waste of resources negotiating MoUs when there are accepted templates available.