MHA | ESFA Subcontracting Standard

ESFA Subcontracting Standard

Posted on: February 8th 2024 · read

FE Digest Jan 5 789x443

Following consultation in 2020, the ESFA launched the sub-contracting standard and it was introduced from the funding year 2022 to 2023. The standard effectively acts as a license to subcontract. The standard is a requirement for any provider who subcontracts £100,000 or more of their delivery, across all ESFA funding streams. The standard sets out, in 10 sections, the requirements of the lead provider; in total there are 91 separate points.

Pre-award activities13
Contract award and management11
Managing relationships9
Managing performance10
Payments and incentives5
Risk management10
Contract development and/or termination12
Provider development8

The plan was that an external independent auditor would assess a provider’s adherence to the standard and would then report back to the ESFA in the form of an assurance report. Upon receipt of the assurance report the ESFA would then review the report’s findings, together with other relevant information, including locally held intelligence, to determine whether the provider has achieved the standard or not. More specifically, the auditor would report back whether the provider had:

  1. achieved the standard
  2. not achieved the standard, but would be able to do so if a series of identified actions, which would demonstrate compliance with the standard are completed. In this scenario the provider will be advised of the timeframe to demonstrate completion of the actions by the ESFA
  3. not achieved the standard and are required to cease subcontracting activities, until the ESFA is satisfied that the standard has been reached
  4. not achieved the standard and due to significant concerns identified either by the reporting auditors or by the ESFA results in a permanent cessation of subcontracting

The subcontracting reports were due to be provided to the ESFA by 31 July 2023 and it was hoped that the ESFA would be able to issue their responses to the reports 12 weeks later. However, this has been a huge challenge for the ESFA and in their December bulletin they issued an apology to say that there had been significant delays in the moderation process. The complexity of the standard and the varying audit report findings has made their task quite onerous. It is hoped that this might lead to a simplification of the standard going forward. We will update you in due course!

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This insight was previously published in our FE & HE Digest Spring 2024

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