VAT and the DFE and a SAAS Software

We are a registered charity. We have purchased SAAS booking software from a Ltd company that is VAT registered. We are planning to pay for this SAAS software with grant funding from the DfE. The grant funding agreement contains this clause: The Grant Recipient acknowledges that the Funding is not consideration for any taxable supply for VAT purposes. You understand and acknowledge that the Department’s obligation does not extend to paying any amounts in respect of VAT in addition to the Funding. 12.2. The Funding has been made on the basis that the costs presented to the Department take account of all VAT liabilities. If it is later found that the costs increase because an error was made regarding VAT recovery, the Department will be under no obligation to increase the Funding to pay any VAT liability of the Grant Recipient. 12.3. You agree immediately to repay any VAT that is recovered whether by off-set, credit or repayment to the extent that any such VAT cost was included in the Funding. 12.4. The Grant Recipient may not charge VAT on expenses which are not chargeable to VAT. Am I obliged to pay the VAT that is presented on the invoice to me, the charity, from the supplier of the SAAS software?

Hi Antoinette Le Peuple,
You may want to confirm the position with the DfE.
However, I read this as DfE will fund the overall cost of the supply including the VAT charged on it as long as the funding request includes this amount of VAT to be charged for the supply.
If the amount requested doesn't include the VAT value charged on the supply then DfE will not be under any obligation to pay this to you as they deem this to be an error.
Thank you.