A local authority [LA] is disbursing funds from central government - £400k approximately to childcare providers from the PVI sector. They have decided that the best way to do this is to pre select 4/5 suppliers and in a form of credits to the various childcare organisations allow the providers to purchase up to the pre set amounts [e.g. £2,500] from their chosen supplier the goods they require.

Thus the selected suppliers would need a contract for this arrangement. I realise that all template contracts would need adapting etc but would you have a template contract to cover supply of goods in this circumstance or indeed be able to point me in the right direction.

Also the issue of VAT - as this is in effect a grant form central government with no direct benefit for the LA would this be considered a business activity? How do we handle VAT in this case?