FE Colleges: updates to the new subcontracting requirements

As FE College managers and administrators will be aware, the Educating and Funding Schools Agency (EFSC) requirements for subcontracting and the audit process surrounding this have been significantly updated for the 2022-23 academic year.  

At Scrutton Bland, our auditors will endeavour to make this transition as smooth and easy as possible for everyone involved. Much of the information that is now required as evidence has changed. A full list of all information now necessary for these audits can be found on the government website.  

What has changed?  

The new auditing process is divided into ten categories, with various set requirements needing to be adopted to ensure compliance with the new standard. The overarching goal of the new requirements is to reduce subcontracting provision and ensure that any subcontracting which continues is subject to robust checks and oversight by the provider.  

The first of the ten categories for subcontracting is ‘pre-award activities.’ This establishes the foundation for any subcontracting which takes place. As with previous years a rationale is required to describe why the provider (the FE college) is seeking to subcontract and must include at least one of the specific aims listed by the ESFA. This could be to provide education to a marginalised group or to provide a required skill set which the local community needs, but which cannot be delivered by the main provider. This now also requires more of the activities to be evidenced than was previously mandatory, with the rationale now being broken down into detail, for example, pre-qualification questionnaires are not only required but also justification of the questions asked within it, and a management plan must be in place before contracts can be awarded.  

The contract award and the management, people, and administration categories all focus on the contract management team. While in previous years members of the team’s skill set may have been looked into, the recent updates require a focus not just on the staff having these skills but also how the team is run, what policies they have in place, and how they report and review them, as well as how they store and manage their information. This gives a clearer picture of the team’s regular activities rather than a brief overview of whether they are appropriate for the position.  

The ‘managing relationships’ and ‘managing performance’ subsections relate to how the subcontractor is monitored by the main provider. While in previous years this may have been required in a non-specific way, in the updated audit process this has been formalised to include agreed objectives which must be met and reported against.  

The new ‘payments and incentives’ category will now require providers to evidence the payment and budget process. Previously it was necessary to evidence that the costs of the subcontracting process were set and that these costs had been checked for value for money, but the latest update takes this further, needing costs to be continuously monitored and demonstrated against a set budget.  

Risk management has also seen an update. Previously, contingency plans were necessary to be in place if there were issues regarding the subcontractor. However, in the new update this requirement has been tightened, and now requires risk assessment for all risks to not only be identified but also monitored throughout the relationship. Contractual ‘non-performance’ issues also now need to be monitored by the contract manager, whereas previously it was the subcontractor who needed to inform the provider of any changes in these areas.  

Evidence and analysis 

The ESFA has always defined what elements should be covered within a subcontracting agreement. However it now requires the provider to also analyse their subcontracting activity, and to make and show evidence for moving towards reducing this within a 3-year period.  

While evidence of training and the sharing of documentation has been required in previous years, there is a new requirement for these activities to be formalised and to relate to specific goals, including wider governance initiatives.  

Overall, the new ESFA rules are geared towards a policy of a clear reduction of subcontracting for FE colleges, generally making sure that any which needs to remain is thoroughly monitored in a formal setting with much greater accountability put on the contract management team. This formal monitoring must be set up the subcontract, and also in the routine management and review of the process on a more detailed and oriented level. Many subcontracting elements remain the same in their foundation and will seem familiar to providers, but the new focus on accountability and reporting will mean much more detailed evidence may need to be viewed by the auditors with greater emphasis placed on a continuous formal review across the relationship.  

If you have any questions about the new EFSA rules and how they might affect your subcontracting requirements, please contact one of the Education team at hello@scruttonbland.co.uk or call 0330 058 6559.