Rebecca Rhodes, Senior Associate, UVAC r.rhodes@bolton.ac.uk The 2017 to 2018 SUBCONTRACTING RULES DEEP DIVE (using version 3 of the 2017 to 2018 Funding Rules) Rebecca Rhodes, Senior Associate, UVAC r.rhodes@bolton.ac.uk

Agenda Subcontracting Purpose and Mindset Subcontracting Rules Subcontractor Agreement Template Subcontractor Management Commitment Statement Purpose and Use Commitment Statement Template

Documentation (with hyperlink = Para 121 onwards ) Contract for Services Institution XYZ & Employer ABC Applies only to delivery with non levy paying employers Provider Agreement Institution XYZ & ESFA Sub Contract for Services Institution XYZ & Provider 123

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 - 100k 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 2018. Dates will be published Even if you don’t subcontract you MUST make a nil return Late return or failure to submit = suspended payments

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.

Subcontracting Delivery – your accountabilities If you fail to check, SFA will place restrictions on your future use of subcontractors All funding is routed through 1 main provider (including English and Maths) RoATP Main owns the employer relationship Can be a subcontractor also 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

Points to Note Take advice about the impact of Public Contract Regulations 2015 - and make this available to ESFA or employers if requested How you must tender for subcontractors e.g. open and competitive tendering

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 Speak to your Provider Manager

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 / our template ) 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

Subcontracting Considerations - Your Checks Who you subcontract with is evidence of your robust management processes ESFA 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 of contractors 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 not agree to subcontract to a second level You must have an external audit report to ESFA 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

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 may be excluded permanently CHECK the list of Declared Subcontractors, for those on the supporting RoATP route Check the RoATP published list for status Require subcontractor to declare other contracts to you in signing your agreement

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

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

Subcontract Template Funding Rules / 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 your 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.

Subcontract Template Schedule Definitions and Interpretation Same document as is set out in Schedule 1 of the Employer Agreement Filled in for each apprenticeship programme and each costs schedule tailored appropriately. multiple programmes under the same contract needs multiple schedules The differences between this and the Training Provider/Employer template are: Employer name needs to be inserted If the Subcontractor is delivering functional skills training, this needs to be included in row 15 Costs schedule only includes Subcontractor Fees. Payment schedule on invoice as agreed between the parties   Definitions and Interpretation ESFA Contingencies Force Majeure Liabilities and Insurance Insurance Safeguarding Health and Safety Confidentiality Intellectual Property Data Protection and Freedom of Information Equality Legislation Contract Variation Change Protocol General

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

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

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

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.

Commitment statements AOC AELP Your Own Company’s Own The New Structure Employers pay Apprenticeship Levy to Skills Funding Agency (SFA) FE colleges become “Providers” of education services to Employers SFA pays Providers out of Levy funds Employers enter into a Contract for Services with Providers

At its most basic Sits alongside the employer contract significant status Key Element of the Evidence Pack – make sure dates match ILR Ready at the start, and for the entire length of, the apprenticeship Employer, Apprentice and Provider must all hold accurate and up to date signed copies, updated and redistributed as needed. Updated to include EPAO / Subcontractor details as soon as they have been confirmed. Includes provider’s process for resolving any queries or complaints and the escalation process to the ESFA through the apprenticeship helpline Provides a short summary (a ‘routemap’) of content, timing and delivery arrangements to include the following as a minimum:

Content Required: 1. APPRENTICESHIP CONTENT - Planned content and schedule for eligible training, start and end-dates and (where applicable) end-point assessment, and key milestones for mandatory or other qualification achievements 2. SUPPORT FOR THE APPRENTICE - what is expected and offered by the employer, main provider (and any delivery subcontractors) and the apprentice to achieve the apprenticeship 3. FUNDING - details on which elements are eligible for funding from the employer’s digital account or government-employer co-investment and necessary to meet any end-point assessment, those which are extra and not eligible for co-investment but will be fully funded by the employer, and those fully funded by the ESFA including English and maths

Content Required: 4. DELIVERY ORGANISATIONS - a list of all organisations delivering the training including English and maths and the apprentice assessment organisation (where applicable) 5. ROLES AND RESPONSIBILITIES - for the employer, provider and apprentice and arrangements for how the three parties will work together; including contact details the expected commitment from each party to ensure the smooth running and day-to-day delivery of the apprenticeship, including, e.g. • for an apprentice, attendance and study time • for an employer, commitment to wages and time off to study in the working day • for a provider, support and guidance available and how to access

UVAC commitment statement template Applies to Levy and Non-Levy funded Covers all the requirements set out in the Funding Rules (P 183-185) Intended as a working summary document for the apprentice Use in tri-partite reviews to check : progress against the schedule That responsibilities are being met Remind about others Reiterate that support is still there Address queries and issues Need to check employer is comfortable with cost breakdown Must update the commitment statement with EPAO etc if not ready at the start

Commitment Statement 4. roles and responsibilities 1.Summary Tripartite contact details Apprenticeship name Review schedule Key Advice / process / policies e.g. complaints, sickness, prevent 2. Delivery Summary Dates of modules, qualifications, exams, reviews 3. Funding Summary Allows initial assessment or other ‘free’ elements be listed (at £0 employer cost) 4. roles and responsibilities Either as a table under specific headings to contrast all three roles e.g. ‘support’ or a narrative list 5. Authorised signatories Can include declarations e.g. key apprentice declarations Signed by apprentice AND Guardian where needed

LET US KNOW WHAT ELSE YOU WOULD FIND USEFUL Questions Any further scenarios? - please email me r.rhodes@bolton.ac.uk LET US KNOW WHAT ELSE YOU WOULD FIND USEFUL