Supply Chain and Fees

  • Supply Chain and Fees

The policy applies to all supply chain activity supported with funds supplied by the Skills Funding Agency, the Education Funding Agency or any successor organisations.


The policy is now a mandatory requirement that must be in place prior to participating in any sub-contracting activity from 1 August 2015.

Overarching Principle

The College will use its supply chains to optimise the impact and effectiveness of service delivery to the end user. The College will therefore ensure that:

  1. Supply chain management activities comply with the principles of best practice in the skills sector. In particular they will be guided by the principles given in the LSIS publication “Supply Chain Management – a good practice guide for the post-16 skills sector” (January 2013).
  2. The College will negotiate with existing partners, or at all other times, undertake fair and transparent procurement activities, conducting robust due diligence procedures on potential subcontractors to ensure compliance with the funding rules and to ensure the highest quality of learning delivery is made available, demonstrating value for money and a positive impact on learner lives.
  3. The funding that is retained by the College will be related to the costs and overheads of the direct services provided by the College, and for quality and contract management purposes.  These services, and the levels of funding being retained for them, will be clearly documented and agreed by all parties. The rates of such retained funding will be commercially viable for both sides and will be negotiated and agreed in a fair and transparent manner. They will be proportionate to the actual services being provided.
  4. Where disputes between supply chain partners cannot be resolved through mutually agreed internal resolution procedures, the College will submit to independent outside arbitration or mediation and abide by its findings. Contract documents will require both parties to agree that the achievements of supply chains are attained through adherence to both the letter and spirit of contracts or partnerships. Signatories therefore commit that all discussions, communications, negotiations and actions undertaken to build, maintain and develop supply chains will be conducted in good faith in accordance with the overarching principle.

Support for Sub-Contractors

The management fee retained for each subcontractor will be used by the College to provide a comprehensive and thorough programme of monitoring, support and improvement measures. Subcontractors can expect to receive the following, as a minimum;

  • Data input and analysis
  • Data reporting
  • Review of self-assessment report and quality assurance processes
  • Review of EQA reports
  • Review of learner paperwork
  • Monitoring and review meetings
  • Teaching and learning observations
  • Equality & Diversity support
  • Safeguarding support which includes PREVENT
  • Organisation policy and procedure updating, where required
  • Funding and provision updating
  • Collaborative tendering opportunities
  • Staff development opportunities

Rationale for Sub-Contracting

The College will only engage with sub-contractors to better meet customer needs. Reasons are varied but could be:

  • To provide immediate provision whilst expanding its own direct capacity. This might include working with sub-contractors to explore and learn about new frameworks or sectors prior to investment in resources
  • Providing access to, or engagement with, a new range of customers
  • To support another provider to develop capacity/quality
  • To provide niche delivery where the cost of developing direct delivery would be inappropriate.
  • To support employers with a wide geographic requirement

Quality Assurance

Sub contracted activity is a fundamental part of the College’s provision. The quality of the provision will be monitored and managed alongside the College’s own provision, using the existing College quality processes and procedures.

This policy positions sub-contracted provision as a core part of college activity to enable continuous improvements in the quality of teaching, learning and assessment for both the College and its subcontractors. This will be achieved through the sharing of effective practice across the supply chain, for example through the self-assessment process.

All new sub-contractors will be subject to a rigorous due diligence exercise. This includes, but is not limited to:

  • Financial health
  • Track record of the delivery of comparable provision
  • Quality data including Ofsted and QAA inspection judgements, if applicable
  • Staff qualifications and experience
  • Relevant policies and procedures

The college has responsibility for all the actions of its sub-contractors, either for programme delivery or Services.

Publication of Information Relating to Sub-Contracting

In compliance with Skills Funding Agency and other agency funding rules that apply, the College will publish its sub-contracting fees and charges policy and actual end-of-year sub-contracting fees and charges on its website before the start of each academic year (and in the case of actual end of year data, as required by SFA). This will only relate to ‘provision subcontracting’ i.e. subcontracted delivery of full programmes or frameworks. It will therefore not include activity or service that forms only part of the delivery of a specified programme (for example, buying the delivery of part of an Apprenticeship framework or outreach support).

The College will ensure all actual and potential subcontractors have sight of this policy and any other relevant documents.

Fees and Payment Terms

Management fees will be deducted at source. The subcontractor will be allocated a maximum contract value which will reflect the target number of learners to recruit, and the management fee will be deducted prior to this allocation. The College will issue the subcontractor with a monthly invoice instruction, subject to contractual evidence and data requirements being met, and following successful ILR data validation.  Any amendments to payments will be made in accordance with the current version of the SFA or EFA Funding Rules.

Where full programmes or frameworks are sub-contracted the typical percentage retained to manage the process is between 20%and 30% with the balance payable to the sub contract partner.

Standard college management fee is 20% of all funding drawn down against the provision to be delivered. This figure represents the total cost that the College incurs in effectively identifying, selecting and managing all sub-contracted provision. This covers the cost to the College of any additional support that the College deems necessary to ensure the quality of teaching and learning and the success rates of any sub contracted provision. 

The higher percentage management fee may be used for new sub-contractors which reflects the additional quality assurance activities undertaken by the College.

The College will also promote sharing of good practice across the partnership and help improve delivery to our customers. Monthly action points will be corresponded to the sub contract partner to cover performance, payments, and quality assurance matters. Regular reviews meetings will be conducted to cover the action points monitoring.

Payment terms between the College and subcontractors will be detailed in the agreement but will not exceed 30 days following receiving the approved invoice from the sub contract partner or in accordance with an agreed payment profile.

Roles and Responsibilities

Finance and Resources Committee: To approve this policy, and review in accordance with the review schedule.

Senior Leadership Team (SLT)  : To regularly monitor the Colleges sub-contracting arrangements and either recommend the renewal of existing arrangements or proposal of new arrangements.

Next due for review: March 2020

Click here to read the sub contract income and expenditure statement from 2017/18

Click here to read the sub contract income and expenditure statement from 2016/17

Click here to read the sub contract income and expenditure statement from 2015/16

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