Alarm bells sound over college's last-minute £500K subcontracting tender

A college has put £500,000 out to tender in an attempt to achieve funding targets before August – despite rules that ban subcontracting to meet “short-term funding objectives”.

One provider membership organisation said the case has set “alarm bells ringing”, but the Education and Skills Funding Agency has refused to say whether it will take action over what appears to be a clear breach of funding rules.

According to a tender published on the government’s contracts finder website last month, Croydon College is after subcontractors to deliver half of its total ESFA adult education budget funding for five months.

As soon as this tender appeared alarm bells were ringing

The contract, worth £475,000, will run from February 28 to July 31 with “no scope to carry forward any funding to 2020/21”. Bids must be submitted by February 10.

The college, which will charge a 20 per cent management fee, also does not specify what type of provision it is looking for the subcontractor to deliver. It says only that the “delivery target group” is adults who live in non-devolved funding areas of England and within a 50-mile radius of the college’s main site.

This, together with the short duration and last minute nature of the tender, suggests it is a tactical move to use up unspent moneys from the adult education budget.

Funding rules state that providers “must not subcontract for delivery to meet short-term funding objectives” and an ESFA spokesperson said they should have “clear curriculum plans for the delivery of their subcontracted provision”.

The college did not deny that it was embarking on tactical subcontracting, but blamed the move on “unintended consequences of devolution on access to education and training for our local community” (see full response below).

The Greater London Authority took control of the AEB for providers in the capital in August 2019.

Croydon College received £3,350,056 from the GLA to deliver the provision in its local area this academic year, but also received a direct ESFA contract worth £936,000 for delivery of the provision outside London.

The college claims to have used up all of its GLA funding for the AEB, and has even requested more of it for this academic year. It is the out-of-area funding that the college is struggling to use up.

However, the college, which has a history of “distance learning” through subcontracting, would have known about its ESFA allocation since around this time last year. It refused to comment on why the procurement was so last minute.

Association of Employment and Learning Providers boss Mark Dawe told FE Week that as “soon as this tender appeared alarm bells were ringing”.

He said it is “finally time” for the government to “reallocate the tens of millions of grant money directly to those who do the work”.

“Let’s stop avoiding the elephant in the room and from August 2020 fund all subcontractors directly and ensure that all the money reaches the learner rather than brokers and spurious management fees,” Dawe added.

It comes amid a fresh crackdown on subcontracting by the government.

A consultation on radical rule changes was launched this week. It states that “entering into subcontracting arrangements for financial gain” would not be acceptable.

ESFA chief executive Eileen Milner sent a sector-wide letter on October 3 which said: “I am asking that you review your current subcontracting activity and satisfy yourself that it is purposeful, appropriate, and provides added value to learners. We must be confident that you are managing and overseeing it in line with our requirements.”

It went on to warn: “I want to make it clear that where poor subcontracting practice is evident to us we will act decisively.”

The ESFA said Croydon College had responded to Milner’s letter to state that they were complying with the rules.

The Department for Education told FE Week that it will take action against providers who are not compliant with funding rules, but stopped short of commenting directly on Croydon College’s case.

A spokesperson said: “We expect any college making subcontracting decisions to be able to evidence that the subcontracting is primarily for the benefit of students.

“All providers should have clear curriculum plans for the delivery of their subcontracted provision and these should fit with their overall curriculum strategy – we would expect to see this feature in their declarations to us. If there is a significant deviation from their declaration we would explore the reasons for that with the college.”

 

Croydon College’s response in full

“In January 2020 Croydon College commenced a procurement exercise for delivery of up to £475,000 of activity to learners who are not resident in any of the devolved areas of adult education budget funding within a 50-mile radius of the college.

The devolution of the AEB from 1 August 2019 used geographical delivery from the 2017/18 academic year as a basis for funding allocations. In the 2017/18 academic year, prior to the arrival of the new executive team at Croydon College, approximately 25 per cent of the AEB to the college was subcontracted.

In the 2018/19 academic year under the new leadership a key priority for the college was educating and training our community in Croydon where there is clear levels of demand and need. We were very successful in delivering this priority with an extra c£600,000 of education and training provided to our local community in Croydon. It is greatly disappointing to us that this change in delivery pattern has not been recognised in our 2019/20 GLA allocation, as the methodology for deciding the level of devolved allocation to the College was based on the 2017/18 academic year.

The college has written to the ESFA, the GLA, Croydon Council and its MP about the unintended consequences of devolution on access to education and training for our local community. In order to try and deliver the volume of education and training that we were able to for our local, close community the college has applied for and will hear at the end of February whether it has been successful in its bid for increased GLA funding for 2019/20 (maximum 10 per cent).

The college has commenced its own provision of distance learning and short courses during 2019/20 in order to deliver its non-GLA grant and is working hard to develop our capacity in nearby areas of Surrey, Sussex and Kent alongside high quality partners. This will be used to support our apprenticeship delivery. The college expects to be in a position meet the full level of our non-devolved GLA funding directly in future years once it has built its own capacity.”