Education and Skills Funding Agency
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The Agency Response to 'Ensuring quality in Apprenticeships - A survey of subcontracted provision'

The Skills Funding Agency and National Apprenticeship Service responds to the Ofsted report released yesterday 'Ensuring quality in Apprenticeships - A survey of subcontracted provision'.

Skills Funding Agency statement:

“The Agency will look in detail at the Ofsted report published today entitled, ‘Ensuring quality in Apprenticeships - A survey of subcontracted provision’ and will consider, with the sector, the recommendations in the report.

“As part of the Agency’s ongoing risk management process and our commitment to safeguard public funds, the Agency continues to work with the sector to support and guide on subcontracting, including where additional controls may be needed. 

“The engagement and management of subcontractors are the legal and contractual responsibility of lead providers. They have the freedom and flexibility to determine the mix of provision they deliver to meet the needs of learners and employers, including how they use other organisations to help them do this. The Agency has very clear rules and expectations on how lead providers must assure themselves that they use sub contracting appropriately and we intervene, through the lead provider (who the Agency has the contractual relationship with), where it identifies that public funds and/or learners are at risk. 

“The Agency’s Funding Rules 2012/13* sets out the Agency’s requirements in relation to subcontracting.  The Funding Rules state that lead providers must undertake the necessary due diligence checks and demonstrate they have appropriately assured their subcontractors and subcontracting provision.  This includes evidence which supports the process of procurement of subcontractors; how their capacity and capability is tested; what contract management of subcontractors takes place and how the quality of a subcontractor’s delivery is maintained.  In addition, lead providers also have to complete the section on sub-contracting in their annual self-declarations** and complete the ‘Declaration of Sub-contractors’ form on a bi-annual basis.  The Agency will withhold payments to any lead provider that fails to submit their declarations.

“For any new lead provider wanting to subcontract provision for the first time, the Agency has stipulated in its Funding Rules that the lead provider will need to submit, to the Agency, their external auditors report giving assurance that they have in place the necessary processes and controls to effectively manage subcontractors.  They will also need the consent, in writing, of the Agency’s Chief Executive before entering into any new subcontracting agreement.”

Notes to Editors

* The Agency’s Funding Rules are a condition of Funding.  They are the mandatory requirement for Providers in order that their use of public funding is safeguarded in a proportionate way. It remains the responsibility of the Provider to ensure the highest standards of teaching and learning and to focus on how their curriculums offer best supports employers and their local communities.
** Self Declarations are part of the Financial Management Control Evaluation which the Agency requires all providers to self-assess, evaluate and grade their financial management and control arrangements.

The Agency continues to support and guide on subcontracting examples include:

The Agency will publish a list of subcontractors who fail to pass the Agency’s Due Diligence Assurance Gateway.  Any existing lead providers who hold a contract with any subcontractor published on this list are required to end that sub-contractual arrangement within 3 months of being notified of the sub-contractor’s failure to pass the register. Where a subcontractor has been identified as a High Risk Provider under the terms of the Agency’s Funding Higher-risk Providers and Subcontractors policy, a list will be published and lead providers will be required to terminate any existing sub-contractual arrangements.
The Agency publishes a list of all known subcontractors (and their relationships) declared, with an aggregate contract value of £100k and over, to support the sector in its decision making process and appropriate due diligence. The Agency also requires all sub-contractors with aggregate contract values of more than £100k to pass the same Due Diligence Assurance Gateway as lead contractors, and is in discussions with the sector about the possibility, in the future, of all subcontractors completing the Due Diligence Assurance Gateway regardless of contract size. 
The Agency has also conducted a pilot to test the appetite of subcontracting organisations (who had an aggregate subcontract value of over a £0.5 million) to move to a direct contract relationship with the Skills Funding Agency.  Its intention is to introduce new entrants to the education and training market and provides the Agency with access to additional capacity to deliver high quality learning opportunities to communities and businesses across the country. 

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