Subcontractors – so costly to manage?

The subject of subcontracting and the management fees charged by lead providers made the news again this week which was bound to catch my attention especially with the headline of: ‘National Audit Office to examine provider topslicing scandal’.

And as usual there are the claims to justify administration fees of up to 35% as in one example the college is reported to have said “The weighting we give to management fees reflects the increasing costs of administration associated with sub-contracting – the closer involvement and the increased demand on resources – required by all colleges with sub-contracted provision”.

Yeah right – and I would have left it there, looking forward with tongue in cheek to the further reported statement that: ‘The National Audit Office has said it will “look into” the issue of lead providers skimming outrageous management fees from subcontractors’. Had it not been for a comment posted to the article, the only one of 3 published at the time of me writing this and the reason I have written this because it seems to epitomise the ‘who is doing what for whom debate’ and the power of ‘one off’ statements. The comment posted is:

I think it amazing that no one has mentioned quality issues in subcontracting. What does Ofqual say about responsibility for assessing students on subcontracted courses? I think it remains with the lead contractor. How does the awarding body keep track of these students? Who does it deal with? How does Ofsted inspect subcontracted courses, which may be ndndreds of miles from the lead contractor? If the lead contractor remains publicly accountable for quality, 20% seems positively reasonable.

My comment and response which is still awaiting moderation is:

Quality issues in subcontracting of course but what of the quality of the lead provider, is their costly administration process fit for purpose? I know of subcontractors having to abandon or parallel it’s LMS with paper documents, spreadsheets and emails to comply with the requirements of a lead contractor which still use methods designed in the ’80’s, rather than systems fit for 2016. little wonder that some learning providers need 20% to cover additional administration, in such cases it probably warrants more.

Whereas hundreds of learning providers use learner management systems which track every element of the student assessment process so that all key stakeholders are able to monitor progression and quality in ‘real time’. Including Ofsted and awarding bodies some of which expect to be able to access learner information on line 24/7 and one of the reasons is that it is obviously much ‘cheaper’ for all concerned but also ‘transparent’. It’s using everyday technology and what all manner of business and the rest of us experience daily, not rocket science.

So when the NAO ‘look into this issue further’ I would suggest they ask how the lead or subcontractor tracks progression, gathers and verifies data, particularly for apprenticeships etc. and if they are still primarily paper based, as more than 60% are believed to be, simply ask why?

When it comes to managing subcontracted courses, geographic distance between parties should mean nothing at all in the 21st century, just that some organisations choose to travel 100 miles to manage a subcontractor. I am hardly unique in choosing to hold three face to face meetings this morning, two with colleagues some distance away, the other was abroad and I haven’t travelled anywhere. But perhaps with some lead contractors, ‘that’s’ the way they have always done it.’

And of course the subject is much wider and the high charges may be unrelated to using up- to-date administration or communication methods. But we know that there are many lead providers that manage and administer their subcontractors for less than 20% fees for providing what I believe to be similar courses. At the same time I also know that the vast majority of learning providers use paper based methods to manage apprenticeships which if nothing else is already proven by many learning providers to be costly, inefficient and opaque and therefore not easily accessible by key stakeholders. I am equally sure that business’s in the ‘real world’ don’t need to travel 100 miles on a day to day basis, to find out what’s going on in their subsidiary offices, factories, shops or subcontractors. The information required to run an efficient business is provided in ‘real time’, otherwise they wouldn’t be in business. But it is equally clear that many colleges and other learning providers are finding that out.

This is not the place for a one sided debate on what is a complex subject and there is more than one source of guidance on due diligence and funding arrangements, not least of which is the SFA, no guesswork necessary and certainly not  ‘throw away lines‘ which rarely tell the whole story. But I would hope that in this instance, the National Audit Office ‘digs a little deeper‘.

Colin Gallacher
Learning Technology Consultant


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