The Skills Funding Agency (SFA) has new powers allowing them to take personal assets which belong to the directors and senior management of fraudulent, unproven providers.
A spokesperson from the SFA told FE Week: “Contracts between the Chief Executive of Skills Funding and lead providers, which started on the 1 August 2011, contain a clause that allows the Chief Executive to require contractors to provide a guarantee of their liabilities under the contract.”
This means the Chief Executive can take action to recover funding from a training provider that has been proven to be in breach of its contract.
The spokesperson from the SFA added that they consider an unproven provider to be one ‘without a track record of delivering education and training funded by the Agency’.
The SFA has also extended the Agency’s Approved College and Training Organisation Register (ACTOR), a database of colleges and training organisations that are eligible to be considered for funding from the SFA.
The new SFA powers are in response to a growing number of allegations being investigated by the Agency in relation to fraud.”
ACTOR now applies to all providers that choose to subcontract for Agency funds.
The spokesperson from the SFA said: “All organisations that wish to be considered for funding via the SFA must be registered on ACTOR.
“Lead providers retain ultimate responsibility for all aspects of the provision that it is contracted to deliver, including any elements that it chooses to sub-contract.”
Organisations wishing to be registered with ACTOR and use subcontractors must pass a number of appropriate due diligence checks which look at the quality, financial health and management needed to deliver a publicly funded contract.
The increased measures mean any provider which is funded by the SFA, regardless of whether they are using a direct or subcontract agreement, will be subject to rigorous checks.
The new SFA powers are in response to a growing number of allegations being investigated by the Agency in relation to fraud.
A letter leaked to FE Week shows that the agency had 55 ‘live’ cases relating to fraud or misuse at the end of the last financial year and a record high of 88 new allegations during 2010-2011.
It also shows that the Agency is at risk of losing £11 million during 2010-11.
The communications obtained between John Hayes, Minister of State for FE, Skills and Lifelong Learning and Geoff Russell, Chief Executive of the SFA show that they are concerned with the rising number of sub-contractors involved with fraud or misuse of public money.
Geoff Russell suggests in the letter the risk of misuse or fraud is likely to increase in the future due to the state of the economy and the growing trend towards subcontracting.
He says: “All our existing and planned controls are designed to prevent, deter and detect instances of misuse and fraud.
“I can give you (John) my assurance that we will continue to be as robust as is practically possible.”
Other new controls outlined in the letter include improving the Agency’s intelligence on sub-contractors’ operations, their owners and directors.
Related FE Week articles: