1. Rebecca Rhodes, Senior Associate, UVAC r.rhodes@bolton.ac.uk
The 2017 to SUBCONTRACTING RULES DEEP DIVE (using version 2 of the 2017 to 2018 Funding Rules)
Rebecca Rhodes, Senior Associate, UVAC

2. Agenda Subcontracting Purpose and Mindset Subcontracting Rules
Subcontractors
Subcontractor Management
Current Issues / Scenarios

3. Documentation (with hyperlink = Para 121 onwards )
Provider Agreement
Institution XYZ
&
Contract for Services
Institution XYZ
& SFA
Contract for Services
Institution XYZ
& Employer ABC

4. Mindset
SFA take particular concern over subcontracted delivery provision because it potentially adds risk to likelihood of delivery success:
Takes additional resource from the main provider to manage and monitor
Later identification of delivery issues
Underspend or over contracting
Main provider takes fees for their role, reducing the amount of funding going direct to the costs of training - possible impact on quality and viability as a result
SFA recognise the value that specialist providers offer to apprenticeship quality and capacity
Some have chosen via the ‘Supporting’ route on RoATP to specialise here – capped at £500k quantum
Some will not reach capacity to be on the RoATP k quantum
SFA therefore want to know whether you subcontract and if so with who and for how much
You must complete a Delivery Subcontractor Declaration as required - twice this year between 1 May 2017 and 31 March Dates will be published
Even if you don’t subcontract you MUST make a nil return
Late return or failure to submit = suspended payments

5. Mindset
You are always fully responsible for the actions of your subcontractor and for the quality of any outcomes
You cannot cede accountability for the employer relationship
There must always be a single provider chosen by the employer for all apprenticeship provision
You will probably subcontract for EPA as a minimum
You can only subcontract from your own budget lines
You can only subcontract if the employer requests this and it happens at the start of the apprenticeship
The main provider must deliver ‘some’ of the apprenticeship delivery in each employers apprentice programme which must have ‘some substance and not be just a brief input at the start or a small proportion of the total apprentice numbers’
You must have an external audit report to SFA specifications if your delivery subcontracts exceeds 100k in a financial year, to provide assurance about your arrangements to manage and control your deliver subcontractors. You must supply a certificate signed and authorised to the SFA.

6. Subcontracting – your accountabilities
If you fail to check, SFA will place restrictions on your future use of subcontractors
RoATP
Main
owning the employer relationship
Must conduct all or ‘some’ of the training
Supporting
Must not exceed £500,000 delivery each year*
Must not deliver 100% of the apprenticeship
Employer-Provider
Can only train their own staff (or connected company/charity)
Must evidence actual costs of delivery as main or subcontractor
Not on RoATP
Must not exceed £100,000 delivery each year*
*The first ‘year’ is 1 May 2017 – 31 March 2018

7. Points to Note
When you are part of a tendering for a public body bound by the Public Procurement Regulations
How you must tender for subcontractors e.g. open and competitive tendering

8. First Time Subcontractors
P 127. You must not agree to the use of delivery subcontractors with an employer if you do not have knowledge, skills and experience of contracting with, and managing, delivery subcontractors.
It appears that you can still seek written permission from the SFA. Existing guidance is still posted

9. Subcontractor Rules
Delivery subcontractors must meet one of the following criteria :
Be on RoATP for main or
supporting routes (capped at 500K)
The apprentice’s employer (or connected company) or charity and on RoATP having applied through employer provider route
Deliver less than 100k value of training and assessment quantum between May 2017 and March 2018
You must have a legally binding subcontract contract with the subcontractor (see Para 141 for detail)
Your employer agreement must set out how the delivery of the apprenticeship including the subcontracted elements will work (para 133 for detail)
You must act in an open and transparent way
any links between you and any subcontractors must be set out in the employer agreement
You are responsible for dispute resolution
Employer and Subcontractor Agreements need to be ultimately enforceable through the courts
Apprentice and employers must be told, by you, how to escalate concerns

10. Subcontracting Considerations - Your Checks
Who you subcontract with is evidence of your robust management processes
SFA specify that all of the following must be carried out and results available to them:
Seek legal advice about the Public Contracting Regulations on recruitment
Carry out Due Diligence checks
Have ‘robust’ procedures (e.g. in your due diligence) to ensure you don’t fund an extremist organisation
Don’t contract if you believe the organisation is not suitable - even if this loses you the contract with the employer
You must have an external audit report to SFA specifications if your delivery subcontracts exceeds 100k in a financial year
To provide assurance about your arrangements to manage and control your delivery subcontractors.
You must supply a signed and authorised certificate to the SFA. They may wish to see the whole report

11. Subcontracting Considerations - Your Checks
Who you subcontract with is evidence of your robust management processes
You MUST ensure that a ‘supporting’ RoATP registered subcontractor does not have contracts that exceed £500 k in total or 100k if not on RoATP)
Impact of failure to comply are significant :
your subcontracting will be restricted
the subcontractor excluded permanently
CHECK the list of Declared Subcontractors, for those on the supporting RoATP route
Require subcontractor to declare other contracts to you in signing your agreement

12. List of Declared Subcontractors
Use the published list to check BEFORE you subcontract

13. Subcontractor Fees and Payments
Employer-Providers
If you subcontract to an employer to deliver part of the apprenticeship , they must be on the employer-provider route of the RoATP
They can only deliver to their employees/connected company employees
Can only charge the actual costs of delivery and must provide evidence of this
Your Fees
You must set out your fees for monitoring and managing the subcontract in the employer agreement and the subcontractor contract
You must set out what support you provide for these fees
And specify how you will monitor quality
And how you will mange the subcontractor

14. Subcontractor Contract Terms
Must specify the following (para 142)
They must keep to the funding rules.
They must provide you with ILR data so that your data returns accurately reflect delivery information.
They must give SFA and any other person nominated by SFA access to their premises and to all documents related to their delivery of apprenticeships.
They must give you sufficient evidence to allow you to:
assess their performance against the requirements of the QAA Quality Code
incorporate the evidence they provide into your self–assessment report
guide the judgements and grades within your self-assessment report
They must always have suitably qualified staff available to provide apprenticeship training and/or on-programme assessment.
They must co-operate with you to ensure that there is continuity of learning for apprentices if the subcontract ends for any reason.
They must tell you if evidence of irregular financial or delivery issues arises. e.g. sanctions imposed by an awarding organisation, not meeting relevant QAA Quality Code indicators, allegations or complaints by apprentices, employers, staff members or other relevant parties.
They must not use our funding to make bids for, or claims from, any European funding on their own behalf or on our behalf or use payments made as match funding for ESF projects.

15. Subcontract Monitoring
You must carryout a regular and substantial programme of QA checks visits at short notice
You must manage and monitor to ensure high quality delivery that meets the SFA funding rules
You must report any instances to us where your findings don’t match records
You cannot transfer the employer relationship lead
You are responsible for the quality of delivery by your subcontractors
include whether the apprentices exist and are eligible – i.e. are meeting Funding Rules
observation of initial guidance, assessment and delivery of training and/or on-programme assessment

16. Managing Subcontractors In Practice
Regular (monthly) reviews
review of forecast volumes, ILR data returns, progress
You must make sure these meetings and reviews take place
Document actions, circulate and follow up
Check paperwork matches ILR - conduct a sample file review
check dates, values, eligibility, incl employer provider/ connected company
Check that ILR returns are made on time, funding is claimed (and paid to subcontractors) on time
Termly visits to observe delivery across the portfolio of delivery:
Quality of guidance, teaching and learning
Embedding of safeguarding and PREVENT
This all applies to employer providers - you are still responsible and accountable

17. Due Diligence & Managing Supply Chains
REMEMBER - these need updating to comply with currrent policy and rules
Due Diligence Checks ( see examples )

18. Scenarios Scenario Fundable ? 1
HEI intends to subcontract delivery to the employer for 3 modules totalling 4 months of a 12 month programme for all 20 apprentices
YES Delivering 30+ % passes the ‘some’ test and delivering core content is integral to the apprenticeship and more than ‘ a token’ 2
HEI intends to subcontract out all of the delivery of an integrated degree apprenticeship but is the degree awarding body
? NO
Main provider must retain the employer relationship
Owning the quality process does not count as ‘some’ training or assessment 3
HE staff are used by the EPA as assessors for the HE’s own apprentices
Training provider cannot carry out the end point assessment 4
The main provider is subcontracting back to the employer’s training team who are a commercial function so charge this rate for their delivery.
NO Delivery to an employer’s own staff by their own training team must be at cost.

19. LET US KNOW WHAT YOU WOULD FIND USEFUL
Questions
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Any further scenarios? - please me
Other webinars are available in the UVAC future webinar programme:
Topics include:
The ILR and Data
On programme assessment and review
LET US KNOW WHAT YOU WOULD FIND USEFUL