30 may 2012 - lsect | learning & skills · sfa funding subcontracting webinar 30 may 2012 ......
TRANSCRIPT
30/05/2012
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SFA funding subcontracting webinar
30 May 2012
Nick LinfordManaging Director of LsectManaging Editor of FE Week
Agenda
14.00 Webinar registration
14.05 Latest news on subcontracting policy and rules,
published by the Skills Funding Agency
14.45 Best practice for due diligence and contracting with
subcontractors
15.20 Best practice for audit and performance
management of subcontractors
15.40 Question and answer session
16.00 End
Slides will be emailed to you after the webinar
30/05/2012
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The history
Volume of franchising/ sub-contracting
2001/02 2004/05 2007/08 2011/12
Adult part-time courses
Train to Gain
MCLsEnd of 51% ruleUnspent funds
Risk or reward?
Academic year
Franchise ---> Subcontracting --->
The SFA allocations to prime contractors
SFA budget (England) 2011/12 allocations
16-18 Apprenticeships £808,368,199
Adult Skills Budget £2,604,934,310
Additional Learning Support £124,257,023
Adult Safeguard Learning £209,999,996
Total £3,747,559,529
£3.66bn£3.75bn
This year (as at April) Next year
2012/13 allocations Shift £ Shift %
£858,001,828 £49,633,628 6%
£2,476,287,813 -£128,646,498 -5%
£112,648,231 -£11,608,792 -9%
£210,746,999 £747,003 0%
£3,657,684,870 -£89,874,659 -2%
Also, prime SFA contracts fall 90 (8%), from 1115 to 1025
30/05/2012
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Funding Rules 2012/13
http://readingroom.skillsfundingagency.bis.gov.uk/sfa
/funding_rules_201213_-_published_3_april_2012.pdf
Published early April (95 pages)
Expect an audit update end May
No comment on what’s changed
Management fees and the contract
Making subcontractor declarations
Rules on subcontracting
Subcontracting (page 62)
“Subcontracting significant levels of provision can increase
levels of risk. The Chief Executive allows subcontracting to
one level. The Chief Executive reserves the right to refuse to
permit a lead Provider to subcontract; at all or to specific
subcontractors.”
“The lead Provider retains ultimate responsibility for all
aspects of the provision it has been contracted to deliver
including subcontracting. The lead Provider must have a
legally binding contract with each of its subcontractors. All
subcontracted provision is subject to the same rules as other
Agency-funded provision.”
“Lead Providers must ensure they retain evidence of these
contracts”
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Declaration of Subcontractors (page 63)
“It is a contractual requirement for lead Providers to complete
their Subcontractor Declaration Form. From 2012/13 it is a
contractual requirement for Providers to update the Agency in
August and April of every year. Failure to return the form will
result in the immediate suspension of payments. Lead Providers
who do not subcontract are required to make a nil return.”
“Lead Providers must ensure that they complete all of the
fields on the Declaration Form.”
“All lead Providers are required to notify the Chief Executive if
there is any change to their subcontractors. Lead Providers need
to advise their Agency Relationship Manager and complete an
updated Subcontractor Declaration form immediately
Subcontractors Declaration Form
Forms found here: http://skillsfundingagency.bis.gov.uk/providers/Subcontracting/
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Subcontractors Declaration Form Guidance
Info found here: http://skillsfundingagency.bis.gov.uk/providers/Subcontracting/
Note the inclusion of:
“What % of the funds that you draw down
from the Agency for this subcontracted
provision do you pass on to the
subcontractor through the contract?”
“Where the percentage of funding is
less than 85% please list the services
delivered on behalf of the
subcontractor”http://tinyurl.com/7mpf6sf
Funding rules 2012/13 (page 63)
“If there is any evidence of current or historic irregular
financial or delivery activity with any of the subcontractors
that a lead Provider is engaged with, the lead Provider must
undertake an investigation at their own cost. Lead Providers
must carry out any follow-up actions and this must be reported
to their Agency Relationship Manager within ten days.”
- substantiated non-delivery of training when funds have been paid
- sanctions imposed on the subcontractor by awarding organisations
- inadequate grade for the subcontractor by Ofsted
- serious complaints and/or allegations by individuals working for the subcontractor
and/or learners and/or other relevant parties.”
“Allegations of financial irregularity and fraud, or allegations
associated to delivery activity, could include but are not
restricted to:
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Distribution of Income between Lead
Providers and Subcontractors (page 63)
“The Chief Executive has a statutory duty to make best use of
resources when securing the provision of education and training
and will monitor the management fee charged and payment to
subcontractors to ensure there is sufficient funding being
allocated for the delivery of high-quality education and training”
“The funding provided must be used for the benefit of the
learners in supporting the delivery of the provision.”
“Any funding retained by the lead Provider must reasonably
reflect the actual costs incurred by each party in the delivery
of provision.”
“The Chief Executive reserves the right to move
subcontractors into a direct contractual relationship”
Due Diligence Process for Subcontractors (page 64)
“The lead Provider is responsible for taking suitable steps to
determine that its subcontractors have appropriate capacity and
capability. A subcontractor being on the Register of Providers is by
itself not sufficient to fulfil this responsibility. The lead Provider
must also have the processes and controls in place to enable it to
have proper oversight of its subcontractors’ provision.”
“All subcontractors who hold contracts with an aggregate value of
£500,000 or above per annum are also required to pass the Due
Diligence Assurance Gateway. This will be extended to all
subcontractors by December 2012”
“Lead Providers must satisfy themselves that the subcontractor
has been selected fairly and that they have sufficient capacity,
capability, quality, resource and business standing to deliver the
provision that is being Subcontracted”
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Due Diligence Process for Subcontractors (page 64)
“Engagement of subcontractors must be undertaken openly and
transparently in line with the relevant procurement legislation”
“The Chief Executive reserves the right to ask lead Providers
for evidence in support of their due diligence process.
The Chief Executive reserves the right to assess lead Providers’
arrangements for subcontracting before or after granting
permission to subcontract, or to require the lead Provider to
commission a report on these arrangements from a third party
such as the Provider’s external auditors”
http://www.ojec.com/Threshholds.aspx
Mandatory Contractual Terms for Lead Providers’ (page 64)
“The Chief Executive does not prescribe a recommended contract
template for subcontracts. It is a matter for the lead Provider to
take its own legal advice on the type of contract it issues to its
subcontractors”
“The Chief Executive reserves the right to have access to
subcontractor agreements”
“All lead Providers must ensure their subcontractors’ contracts
include the following clauses:- Subcontractors must comply with the Chief Executive’s Funding Rules
- If there is any evidence of current or historic irregular financial or delivery activity the
subcontractor must inform the lead Provider. Irregular financial activity could include but
is not restricted to:
- substantiated non-delivery of training when funds have been paid
- sanctions imposed on the subcontractor by the awarding organisations
- inadequate grade for the subcontractor by Ofsted
- serious complaints and/or allegations by individuals working for the
subcontractor and/or learners and/or relevant parties
- allegations of fraud
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Mandatory Contractual Terms for Lead Providers’ (page 66)
Subcontractors must allow the Chief Executive, his staff and any other
person nominated by him access to its premises and all documentation
related to the delivery of provision funded by the Chief Executive.
A clause imposing a requirement on the subcontractor to ensure
continuity of learning in the event that the subcontract is terminated
for any reason is required.
All new subcontract contracts must include reference to pay the valid
invoices of their subcontractors within 30 days of the invoice date.
The contract should explicitly state the basis for payment and the
evidence required in order to support those payments.
The lead Provider must ensure that data returns made to the Chief
Executive on the Individualised Learner Record (ILR) include its
subcontractors and accurately reflect their delivery information.
Mandatory Contractual Terms for Lead Providers’ (page 66)
Subcontractors must submit the data required by the Chief Executive on a timely
basis. Sub contractors need to supply the lead Provider with sufficient evidence to
allow the lead Provider to adequately assess the performance of their
subcontractors against Ofsted’s Common Inspection Framework. The evidence must
be included in the lead Providers’ self-assessment report and contribute to the
judgements and grades therein.
Subcontractors must have suitably qualified staff to deliver the provision and
subcontractors must comply with the appropriate retention of documentation rules.
The lead Provider must ensure that it has clauses in its subcontracts to
enable it to monitor the activities of the subcontractor, exercising control
over, and making appropriate arrangements for, the quality assurance of
all provision.
For Apprenticeships the lead Provider must ensure the quality of delivery satisfies
the standards of the relevant Apprenticeship framework. The information on
Apprenticeship frameworks can be found on the Apprenticeships website.
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Subcontracting ~ do your homework
~ Allocations spreadsheetshttp://skillsfundingagency.bis.gov.uk/providers/programmes/
~ FE Choiceshttp://fechoices.skillsfundingagency.bis.gov.uk/Pages/home.aspx
~ Ofsted www.ofsted.gov.uk
~ UK Register of Learning Providers www.ukrlp.co.uk
~ Companies Housewww.companieshouse.gov.uk
~ Register of Training Organisations http://skillsfundingagency.bis.gov.uk/providers/programmes/register/
~ Subcontracting registerhttp://skillsfundingagency.bis.gov.uk/providers/Subcontracting/
New subcontractors register
http://readingroom.lsc.gov.uk/SFA/Subcontractors_that_have_been_declared_10_Jan_12_list.pdf
Really helpful to know partners and who to
get references from
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Excellent
for getting
contact
details
www.ukrlp.co.uk
UKPRN website
The contract – example chapters
1. Agreement date and parties
2. Definitions
3. Duration of agreement
4. Payment terms
5. Price (Distribution of Income)
6. Funding compliance
7. Records and information
8. Control of the Programme(s)
9. Enrolment
10. Delivery of provision, assessment
and achievement
11. Equal Opportunities
12. Monitoring and Compliance
13. Health and Safety Liability
14. Insurance
15. Co-operation and reputation
16. Learners with Additional Support
Requirements
17. Termination
18. Employer and learner fees, taxation
and other payments
19. Confidentiality
20. Other
Here is what a leading law firm said at an Lsect conference…
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Managing New Relationships
• The importance of getting it right
• Due diligence
• Formation of the contract:
– contract management and control
– quality
– payment
– information
– disputes, termination and consequences thereof
• Pro-active Contract Management
• Later: Audits & Dealing with Disputes
Managing New Relationships
• Contract Management & Control
– Compliance with instructions:
• Enrolment
• Provision
• Assessment
• Additional Services
– Make it clear who is responsible for contract management
Formation of the Contract: Key Areas (1)
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Managing New Relationships
Formation of the Contract: Key Areas (2)
• Monitoring and Quality
– Clear quality standards & performance levels
• link to published prospectus / information
– Audit & inspection rights
• lead provider, appointed auditors and SFA
– Contract/performance review meetings
Managing New Relationships
Formation of the Contract: Key Areas (3)
• Payment Provisions
– Clear payment amounts (or formulae) and details of payment dates
– Clear invoicing requirements
– How to deal with disputed invoices
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Managing New Relationships
Formation of the Contract: Key Areas (4)
• Information Provisions
– Creation and maintenance of records required
• Enrolment, Attendance, Achievement
– Oblige provision of information
• Avoid simple rights to request
– Provide specific details of the information required (what, when and how frequently)
Managing New Relationships
Formation of the Contract: Key Areas (5)
• Dispute Resolution
– Set out how disputes should be resolved
– Ensure reporting requirements provide enough information to spot areas of concern
– Importance of ADR pre-termination
• follow any escalation procedures first
• More details on disputes later
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Managing New Relationships
Formation of the Contract: Key Areas (6)
• Duration and Termination Provisions
– Duration a critical issue for sub-contractors
– Termination:
• Is it necessary? Can you resolve dispute?
• Significant changes in funding requirements
• “Material breach” & “Persistent breach”
• Right to remedy?
• Insolvency
Managing New Relationships
Formation of the Contract: Key Areas (7)
• Consequences of Termination
– Time of termination
– Continuation of delivery
– Maintaining quality
– Recovery of materials and learner data
• Enrolment, Attendance, Achievement
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Audit
Here is what a leading audit firm said at an Lsect conference…
• Do you have a signed and dated contract in place before
provision commences?
• Do you know what, where and who is delivering the provision?
• Do you know who is accrediting the provision (indicator of
something going wrong is continual changes in awarding body)
• Have you set out all the documentary requirements e.g.
enrolment forms and registers before provision commences?
Firstly, the basics:
And then there is regular internal audit
What should you be doing
• Spot visits both announced and more importantly unannounced
• Have a timetable set up of when you’re going – ideally each partner
should be visited once a term
• Is the class running as planned?
• Check the register has been completed when you arrive
• Check if the attendance pattern is reflected by what you see e.g.
always 10-12 learners on the register but only 5 when you visit
• Get every learner in the class you attend to provide their name, date
of birth and signature
• Check that the resources in the room are reasonable i.e. enough
chairs in the room for every learner on the register
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Spot visits
• Talk to the tutor, is it the one you were expecting to see, if not why
and is it one covered by your contract?
• Talk to the learners – do they know what course they’re on and that
they are part of your College?
• Get the curriculum involved to check the quality of the provision
• If it’s provision that you don’t offer you need to engage someone to
review it for you (and don’t use the sub-contractors staff – they may
be slightly biased)
• And whatever checks you do make sure you document them
Where and when provision takes place
• Where your partners operate at large distances from the prime contractor then go and visit
• Where it’s delivered on evenings and weekends then go and visit
• Experience has found that provision that is far away or at times outside of the normal working day don’t get looked at
• So if you don’t want to travel or work late don’t allow provision that is geographically remote or at a time you’re not willing to visit – get this in your contract
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Data issues
• Do you check all your enrolment forms carefully?
• Incomplete forms form partners should be returned without processing –don’t try to second guess what the form should say
• How active is MIS/CIS in the set up and monitoring of courses especially where the work is Employer Responsive?
• Once input, does the data make sense? Remember provision can start only once a signed contract is in place
• Do you use DSATs including Employer Responsive?
• We see many strange things from the data5
• Do you check that the location of the learner and the delivery postcode make sense?
• Sample audit your records at least once a month from partners to ensure records are valid but also credible i.e. the story they present makes sense
Lead College Arrangements
• Who else is your sub-contractor working with?
• Do you talk to the other providers?
• Do you exchange data to ensure that no double funding is taking place?
• The provider with the largest contract is the Lead and has a responsibility to work with all the other prime contractors to determine if double funding is taking place
• Does your sub-contractor have a contract of their own?
• What controls have they got to ensure duplication does not take place?
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At the end of the course
• Once a course has finished don’t forget to get all original
documentation in from the sub-contractor
• It is a requirement of the funding guidance that all
relevant documentation is held by the prime contractor
• Where photo copies are retained, funds can be
considered to be ‘at risk’5
Profiling and monthly performance review
£100
£200
£300
£400
£500
£0
Feb Mar Apr May Jun Jul Aug
Monthly instalments
Cumulative instalments
£0
£400
£800
£1,200
£1,600
£2,000
Feb Mar Apr May Jun Jul Aug
Example single qual profile
New academic year
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Sub-contracting resources from LSIS
http://www.excellencegateway.org.uk/node/2945
Sub-contracting toolkit (Dec 2010)
Download at www.lsect.co.uk/toolkit.asp
~ New policy context
~ Implications
~ Risk and Reward
~ Working principles
~ Handy guides(funding, data, performance)
~ Contract contents
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Date: Friday 1st June 2012 : 11am
Topic: Summer funding briefing for governors
Date: Thursday 7th June 2012 : 11am
Topic: Summer funding briefing for governors
Date: Saturday 9th June 2012 : 11am
Topic: Introduction to FE and Funding for governors1