When the Department for Business Innovation and Skills published its annual funding letter in February, it outlined concerns with the rise of sub-contracting. Nick Linford takes a look, in the context of the college area reviews, at whether more can be done to lift the lid on this murky world.

Let’s start by looking at how much Skills Funding Agency (SFA) funded sub-contracting takes place.

The latest list of self-declared sub-contracting arrangements (dated May) is for 2014/15 and has 573 lead providers sub-contracting £967m in 4,290 contracts to 1,555 sub-contractors.

To put £967m in context, the SFA allocations (dated April) shows £3.7bn for providers last year, which would mean about a third was self-declared as to be used for sub-contracting.

Beyond the well-trodden debates about the percentage some top-slice, much of this delivery will be taking place well out of the area of the lead provider.

It is something that the SFA reflected on in its 2015/16 funding rules, stating the reassurance that what its wants is ‘strategic’.

Local enterprise partnerships should also take a keen interest as part of college area reviews.

The guidance document on college area reviews does mention sub-contracting once, saying it will take it into account because so many of the precious apprenticeship starts come from colleges sub-contracting to independent providers across England.

Given the scale and complexity of the provision a thorough data driven review should be undertaken and published, lifting the lid for the area review boards on who, what and where there is duplication.

In addition, five quick sub-contracting wins would be to:

1. Limit the size of individual sub-contracts

There were 134 individual self-declared contracts last year worth £1m or more, with the largest for a college being over £6m with a private company based in London whose website is ‘under construction’. Large contracts are often delivered across England, hundreds of miles from the college. They are also high risk given the level of public funding exposure and number of on-programme learners that would be affected if the lead provider or sub-contractor ended the relationship.

2. Publish standardised year-end delivery figures for sub-contracting

At present, the SFA publishes self-declared contract values and, as reported last week in FE Week, is requiring greater compliance with the rule that lead providers publish delivery values. Is it not odd that while the SFA has standardised the collection of self-declared sub-contracting contract values into a single spreadsheet that they publish, they are allowing providers to self-publish delivery values, in different formats and scattered across over 500 websites? Far better the SFA take the existing ILR data and publish lead provider sub-contracting delivery values alongside details of the contract, provision and success rates.

3. Publish success rates for sub-contracted apprenticeship provision

Unlike classroom provision, the SFA does not produce sub-contractor qualification success rate reports for apprenticeships. It means that it’s very difficult for Ofsted and those involved in area reviews to see what and where the sub-contracted apprenticeship delivery is, or the percentage of apprentices succeeding. The reason for the omission is that apprenticeships are made up of several qualifications, not all of which will be delivered by one provider. This anomaly can be easily rectified by simply recording a single provider against the programme aim in the ILR.

4. Align EFA sub-contracting policies with the SFA

College’s 16 to 18 year-old funding will be considered as part of area reviews yet the EFA only recently began collecting sub-contracting data via the Individualised Learner Record. They do not collect sub-contracting arrangement information and they recently removed the requirement to request permission to sub-contract, although they have tightened up the audit requirements.

5. Ban some 16 to 18-year-old sub-contracting

In addition to taking the same reporting approach as the SFA, the EFA should ban part-time (non-traineeship) and weekend sub-contracted provision as it is often delivered out of the local area. Audits have shown it is highly likely a 16 or 17 year-old learner is already being funded full time at school, college or if 18-years-old, at university.

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  1. I also am surprised that there is no standard method for collecting the subcontracting “actuals”. As you say, another spreadsheet would be a simple method. SFA auditors can then compare this to the figures from the ILR data. The data can be published in much the same way as the “list of subcontractors”.

    I see a problem with the SFA only using the ILR data. This will give the value per subcontractor, but not the top slice charged.

    And will the SFA enforce this? Providers were required to publish this information last year,; how many did?

  2. Perhaps colleges wouldn’t subcontract if they were able to deliver the provision themselves, many subcontractors provide specialist subjects that the contract holder can’t or won’t. It should not be assumed that the subcontractor is always ‘the problem’ what of the subcontractor element achieving an outstanding which brought the level of the college up to ‘good’ and whilst talking about ‘spreadsheets’ and recording appropriate data. I know of sub-contractors having to abandon their Learner Management Systems which produce real-time data, to conform with the paper based methods of Learning Providers. I don’t see the use of everyday technology mentioned in the Area Reviews either. Hence spreadsheets and inadequate information on which to judge.

  3. @DP40days

    £967million is a VERY big number. Think local area planning and reviews will need proper reporting of figures and financial/quality analysis of subcontracting delivered in-area but through out-of-area providers (who presumably wouldn’t normally be engaged in the review?) Though the 967m figure suggests otherwise it’s hard to understand from both a staff utilisation and contribution to overhead perspective why colleges would subcontract anything other than niche specialist provision, or provision to very-hard-to-reach clients.

  4. The scaling up of sub-contracting was largely driven by the LSC (SFA) wishing to reduce the number of primes they were dealing with. Smaller providers were therefore forced to sub-contract. The above comments appear to avoid how this issue would now be dealt with going forward !

  5. This is simply a consequence of reduction in the number of primes. Either open up apprenticeship prime contracts to providers who can work with multi -site employers across the UK or lose the apprenticeship numbers across the board.

  6. Hello Nick

    Subcontracting is an important way for third sector providers to remain involved in skills and learning and we would want to see it continue in an appropriate and proportionate way. I do agree with the general drift of your article however. We hold a sub-million SFA direct contract and are subject to scrutiny across all aspects of our operations. On the other hand there are organisations with multi-million SFA funding whose leadership, quality etc are never reviewed in a coherent and coordinated manner.

    However your comment about part-time EFA funding is concerning. I am not aware of the problems you have identified but some of this provision is legitimate engagement/progression programmes run by third sector organisations targeting the most disadvantaged. A blanket ban would be most disadvantageous to very vulnerable young people.

    Tim Ward Chair Third Sector National Learning Alliance