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Esfa Update Subcontracting


Sep 14, 2023

ESFA Update on Subcontracting: What You Need to Know

The Education and Skills Funding Agency (ESFA) has recently released an update on subcontracting rules and requirements for further education and training providers.

Subcontracting is when a provider outsources certain aspects of their provision to another provider. This can include the delivery of training, assessment, or administration.

Here are the key updates and information you need to know:

1. Subcontracting limit

The ESFA has set a limit on the amount of funding that a lead provider can subcontract out to other providers. From 1 August 2021, the maximum subcontracting limit will be set at 20% of a provider’s total ESFA funding.

This means that providers will have to deliver at least 80% of their provision themselves, rather than subcontracting it out.

2. Financial health check

Lead providers will now be required to conduct a financial health check on potential subcontractors before entering into a subcontracting agreement. This is to ensure the financial stability of the subcontractor and reduce the risk of financial failure.

If a subcontractor is found to be financially unstable, the lead provider will be required to take appropriate measures to mitigate the risk or terminate the subcontracting agreement.

3. Performance management

Lead providers will be responsible for monitoring the performance of their subcontractors and taking action if necessary. The ESFA has stated that a lack of effective performance management is a significant concern and can lead to poor outcomes for learners.

Lead providers must ensure that their subcontractors meet the same quality standards as they do, and take action if there are any concerns about the performance of the subcontractor.

4. ESFA funding

Subcontractors will receive ESFA funding directly from the ESFA, rather than through the lead provider. This means that subcontractors will be subject to the same rules and requirements as lead providers, including audit and compliance checks.

Lead providers will still be held responsible for ensuring that their subcontractors meet the ESFA’s requirements and are compliant with all funding rules.

Overall, these updates aim to improve the quality and accountability of subcontracting in the further education and training sector. As a provider, it is important to ensure that you are aware of these changes and that you are compliant with all ESFA requirements.

Effective subcontracting can be beneficial for both lead providers and subcontractors, but it is important to ensure that it is managed effectively and in accordance with all rules and regulations.

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