Annex B - Supply Chain Definition
The WMCA considers the term 'supply chain delivery member' to encompass all third party arrangements you have with other organisations where they are managing and delivering a proportion of your WMCA delivery plan - this encompasses 'learner find' services, job placement services as well as the delivery of all or elements of the teaching, learning or assessment..
The WMCA defines a supply chain delivery member as a separate legal entity that has an agreement with you to deliver any provision or services that the WMCA funds for WMCA residents. For clarity, if you are using the funds that are paid to you by WMCA to pay for services relating to any aspect of the learner experience with you then this is part of your supply chain.
The term 'supply chain delivery member' will also apply to any partnership, associate, third party working relationships you have where your staff and/or provision is managed by another partner/ institution.
WMCA will consider all the above as a supply chain delivery arrangement, and as such will require all relevant detail on your 2021/22 Delivery Plan for appraisal by the WMCA, details will also be captured through the supply chain declaration. These arrangements must also be identified when completing the ILR using the Partner UKPRN Field.
This type of partnership working and its contribution to your Delivery Plan will be reviewed at the relevant Performance Review Meetings.
As part of the supply chain declaration providers will also set out any separate legal entity that provides support related to the delivery of the AB covering brokerage support including learner and employer find agents and teaching or specialist input such as coaching.
Future changes to supply chain rules paused due to current pandemic.
At present a single supply chain delivery member can work with a multiple number of direct providers, and the aggregate value of the provision that they are delivering under these supply chain arrangements can be significant. The WMCA believes that it should monitor and control the level of financial exposure to WMCA in such circumstances.
The WMCA view is that single delivery supply chains with multiple directly funded providers does not provide value for money through associated management fee costs. Therefore, the WMCA is proposing to limit the number of single supply chain delivery member agreements through either an aggregate value approach or geographic related to LEP area.
In addition, where the aggregate value of sub-contractor's delivery exceeds £500,000 then the WMCA proposes to make a referral to Ofsted for the supply chain delivery member to be subiect to a direct inspection.
Your policy for supply chain delivery members
You must take your own legal advice about the impact of Public Contracts Regulations 2015 on your recruitment of supply chain delivery members and have this advice available for inspection by us on request.
Your Governing Body or Board of Directors and your accounting officer (senior responsible person) must be satisfied that all supply chain delivery members meet your strategic aims and enhance the quality of your offer to learners. You must set out your intent for using a supply chain in your published supply chain fees and charges policy. You must be able to evidence this, such as minutes of meetings and written sign-off.
You must publish your policy for supply chain delivery on your website.
You must review your policy for supply chain delivery member annually. This policy must be signed by your governing body or board of directors and your accounting officer.
WMCA is particularly concerned about the use of third-party companies to ‘find’ learners, who often recruit, provide IAG and sign up learners on behalf of an organisation. WMCA will want to discuss with any providers the rationale for use of such services and why they are unable to attract learners to their provision themselves.
You must not subcontract for delivery to meet short-term funding objectives.
You must only use supply chain arrangements If you have the knowledge, skills and experience within
your organisation to:
- Competently procure and contract
- contract with and manage those supply chain delivery members
- can evidence this with the CVs of relevant staff
You are responsible for the actions of your supply chain delivery members connected to, or arising out of, the delivery of the services, which you subcontract.
Minimum content requirements for your policy for supply chain delivery member
As a minimum, you must include the following in your policy for supply chain delivery:
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your contribution to improving your and your supply chain delivery member’s quality of teaching and learning
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how you will identify the support required and associated costs for different supply chain delivery members
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how and when you communicate and discuss your policy for supply chain delivery members with potential supply chain delivery members, or current ones for new learner starts
for each supply chain delivery member, how you will determine a detailed list of your specific costs for managing them, specific costs for quality monitoring activities and specific costs for any other support activities offered by you to the supply chain delivery member
for each supply chain delivery member, how you will determine each cost is reasonable and proportionate to delivery of their teaching or learning and how each cost contributes to delivering high quality learning
how you will ensure you describe to each supply chain delivery member, before each supply chain delivery agreement relationship is agreed:
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your reason for supply chain delivery agreement
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the services you will provide when supply chain delivery agreement to them and the associated costs when doing so, including a list of specific costs for managing the supply chain delivery member, specific costs for quality monitoring activities and specific costs for any other support activities offered by you to the supply chain delivery member
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payment terms between you and your supply chain delivery members; the timing of payments in relation to delivery and timescale for paying invoices and claims for funding received
timing for review of your policy for supply chain delivery member
where you publish your policy for supply chain delivery member
Selection and procurement of your supply chain delivery members
If you have not previously subcontracted provision we fund, you must get our written approval before awarding a contract to a supply chain delivery member and keep evidence of this.
If you intend to secure the services of providers to become part of your supply chain delivery members through a procurement exercise or a broker, then you must notify the WMCA in advance.
Prior to any contract award and starts, your supply chain declaration must be updated and approved by the WMCA. No starts will be accepted for any supply chain member who has not been approved through the supply chain declaration process.
Failure to act in line with paragraph 263 and 270 may result in reduction of maximum contract value in line with the proposed funding value to the new supply chain member.
When appointing supply chain delivery members, you must avoid conflicts of interest and you must:
- write to us about any circumstances (for example, where you and your proposed supply chain delivery member have common directors or ownership) which might lead to an actual or perceived conflict of interest and not award the contract without our written permission and
- keep as evidence both your request and our reply
You must carry out your own thorough due diligence checks when appointing supply chain delivery members and have both the detailed process and the results available for inspection by us.
You must not appoint a supply chain member to deliver training on your behalf where the most recent Ofsted full inspection outcome was inadequate or most recent Ofsted monitoring visit outcome is insufficient progress made. For supply chain members who fall into this category in year, no further starts will be accepted until either the re-inspection cycle is complete, or a monitoring visit concluded showing reasonable or significant progress
You must not enter new supply chain delivery agreement arrangements or increase the value of your existing arrangements if any of the following circumstances apply. These conditions will continue until we are satisfied that the concerns have been addressed and the circumstances below no longer apply if:
Ofsted has rated your leadership and management as inadequate
you do not meet our minimum standards
the outcome of your annual financial health assessment we carry out is inadequate, unless we have provided written permission in advance.
Entering into a supply chain delivery agreement
You must only award contracts for delivering ESFA funded AEB provision to legal entities. If the legal entity is a registered company, it must be recorded as ‘active’ on the Companies House database.
You must not award, or renew a subcontract to any organisation if:
- it has an above-average risk warning from a credit agency
- it has passed a resolution (or the court has made an order) to wind up or liquidate the company, or administrators have been appointed
- its statutory accounts are overdue
You must make sure that learners supported through supply chain delivery agreement arrangements know about you and your supply chain delivery member’s roles and responsibilities in providing the learning.
You must have a legally binding contract with each supply chain delivery member that includes all the terms set out in paragraph 287
- you need to withdraw from a subcontract arrangement
- a supply chain delivery member withdraws from the arrangement
- a supply chain delivery member goes into liquidation or administration
You must make sure that the terms of your supply chain delivery agreement allow you to:
- monitor the supply chain delivery member’s activity
- have control over your supply chain delivery members
- monitor the quality of education and training provided by supply chain delivery members
You must obtain an annual report from an external auditor if the WMCA funded AEB contracts with your supply chain delivery members will exceed £100,000 in anyone funding year.
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the report must provide assurance on the arrangements to manage and control your supply chain delivery members
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comply with any guidance issued by us
You must also supply us with a certificate signed by the external auditor and an authorised signatory to confirm you have received a report that provides satisfactory assurance. You must forward this report to your WMCA Skills Delivery officer.
Terms that you must include in your contracts with supply chain delivery members
You must make sure your supply chain delivery members:
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meet the requirements set out in these funding rules
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provide you with ILR data so your data returns to us accurately reflect your supply chain delivery member’s delivery information
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give us, and any other person nominated by us, access to their premises and all documents relating to WMCA funded AEB provision
give you sufficient evidence to allow you to:
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assess their performance against Ofsted’s Education Inspection Framework
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incorporate the evidence they provide into your self-assessment report
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guide the judgements and grades within your self-assessment report
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always have suitably qualified staff available to provide the education and training we fund through WMCA funded AEB
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co-operate with you to make sure there is continuity of learning if the subcontract ends for any reason
Supply chain delivery members must also tell you if evidence of any irregular financial or delivery
activity arises; irregular activity could include, but is not limited to:
- non-delivery of training when funds have been paid
- sanctions imposed on the supply chain delivery member by an awarding organisation
- an inadequate Ofsted grade
- complaints or allegations by learners, people working for the supply chain delivery member or other relevant parties
- allegations of fraud
You should also ensure that supply chain members are:
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bound by European Social Fund (ESF) clauses from your funding agreement being then included in the subcontract, even if the provision being subcontracted is not funded by the ESF
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do not use our funding to make bids for, or claims from, any European funding on their own behalf or on our behalf
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do not use payments made as match funding for ESF co-financing projects
287. You must include in your contract with each supply chain delivery member:
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reference to your supply chain delivery policy and where it can be found on your website
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your reason for supply chain delivery agreement with them
a list of all services you will provide to them and the associated costs for doing so. This must include:
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a list of individually itemised, specific costs for managing the supply chain delivery member
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specific costs for quality monitoring activities and specific costs for any other support activities offered by you to the supply chain delivery member
a description of how:
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each specific cost is reasonable and proportionate to delivery of the subcontracted teaching or learning
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each cost contributes to delivering high quality learning
Monitoring of your supply chain delivery members and subcontracted provision
You must manage and monitor all your supply chain delivery members to ensure that high-quality delivery is taking place that meets these funding rules.
You must carry out a regular and substantial programme of quality-assurance checks on the education and training provided by supply chain delivery members, including visits at short notice and face-to-face interviews with staff and learners. The programme must:
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include whether the learners exist and are eligible
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involve direct observation of initial guidance, assessment, and delivery of learning programmes
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The findings of your assurance checks must be consistent with your expectations and the supply chain delivery member’s records.
Second level supply chain delivery member
You must not agree the use of any supply chain delivery member where this would require you to deliver WMCA funded AEB provision to a second level. All your supply chain delivery members must be contracted directly by you and you may have more than one supply chain delivery member. The restriction on the level of supply chain delivery agreement is in place to ensure:
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that lead providers retain clear and transparent accountability for the quality of training provision
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that proper and appropriate controls are in place to manage the resident experience; and
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that value for money is achieved by mitigating funding being utilised for multiple tiers of supply chain delivery member management
Reporting your supply chain arrangements
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You must provide a fully completed supply chain declaration by the dates we will give you. This will be at least twice during the 2020 to 2021 funding year. If you do not make the declaration on time, we will suspend your payments. If you do not use supply chain delivery members, you must still provide a nil return to confirm this.
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Within your declaration you will asked to provide detail on your intent related to using supply chain members to undertake delivery, the value of the agreement, where the delivery will take place and the course portfolio to be provided.
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For other supply chain services outside of delivery we expect you to confirm the service that will be provided and the cost of that service. We expect that these services would cover brokerage support including learner and employer find agents and teaching or specialist input such as coaching. We have taken this step following concerns related to the use of WMCA funds, and the need for greater transparency to reduce the risk of funds not been used as intended.
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You must also update your supply chain declaration if, and when any of your supply chain delivery agreement arrangements change during the year. This must be approved before any award of contract.
- You must report to us the actual level of funding paid and retained for each of your supply chain delivery members in 2020 to 2021. You must email this information to your WMCA Skills Delivery officer using a template which we will supply to you. We will let you know the date by when you must do this.
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You must include the following on the template for WMCA funded AEB delivery:
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name of each supply chain delivery member
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the UK Provider Reference Number (UKPRN) of each supply chain delivery member
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contract start and end date for each supply chain delivery member
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funding we have paid to you for WMCA funded AEB delivery by each supply chain delivery member in that funding year
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funding you have paid to each supply chain delivery member for WMCA funded AEB delivery in that funding year
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details of the funding you have retained in relation to each supply chain delivery member’s WMCA funded AEB delivery for that funding year
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if appropriate, funding each supply chain delivery member has paid to you for services or support you have provided in connection with the supply chain delivery