A spreadsheet published by the Skills Funding Agency (SFA) has revealed how much money lead providers are handing over to subcontractors.

The data shows a wide range of ‘top-slice’ amounts taken by prime contractors, ranging from 99 per cent to minus 185 per cent.

The SFA said the figures detail the costs and responsibilities taken on by a lead provider, rather than an administrative fee.

“The data collected has identified a diverse range of costs recorded and reported by lead providers,” a spokesperson for the SFA said.

“When reviewing this information it is clear that the amount retained reflects the direct costs incurred by lead providers.

“Examples include where lead providers retain responsibility for assessor support, collection and processing of data, quality assurance, and registration.

“These costs do not appear to be simply a management fee retained by the lead provider.”

The head of a subcontractor told FE Week how the management fees used by some FE colleges were a “rip off”.

It follows a 30 per cent management fee advertised by City of Bristol College for adult apprenticeships.

The spreadsheet was created using the 2011/12 Declaration of Subcontractors forms submitted by lead providers.

The SFA said they were working with the External Advisory Group, as well as the Association of Employment and Learning Providers (AELP) and Association of Colleges (AoC) to develop a more accurate way of reporting how funding is being used in the sector.

(Are  you concerned about the management fees used by some prime/lead providers? Comment on the article below, or email your thoughts to nick.summers@feweek.co.uk)

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  1. I am a subcontractor and believe that there should be a standard rate for management fees set by SFA. The Lead providers all have to do the same amount of work and therefore they should all be forced to take the same percentage. I feel the management fee should be set at 10% when the lead only has to upload ILR data and pull down monthly funding. If they have involvement in the delivery them 15%.

  2. Come on do your sums this assumes that all the subcontractors deliver their fully allocation which I suspect if not the case.

    Some of the rate on the SFA are incorrect anyway(too high).

  3. Regulate the management fee, what in the same way that sub contractors regulate dividends and salary packages. Can you put a price/value on Risk Management? You do this and all that will happen is colleges and lead providers will find ways around it….. I have heard of colleges giving all the funding to the sub contractor and then charging a consultancy fee which equated to 40%, then there are the colleges that pay sub contractors a set fee for the NVQ, another for the Keys Skills and deliver the tech cert themselves, thus skimming a nice and healthy (stealth) management fee. If you don’t like the management fee then go elsewhere and if you come up against a college/lead provider that is insular in contract awards, then there is always the Competition Commission…. Why should’nt a college that is grade one OFSTED, above national averages for success rates, have untold years of Zero rated PFA audits not charge higher management fees?