Supply-chain fees and charges applicable to subcontractors


This policy covers details of the rationale, fees and charges applicable to subcontractors and set by The Isle of Wight College for 2023/24.


In line with the Subcontracting rules for ESFA funded post 16 provision and Apprenticeship Subcontracting, this policy applies to all courses offered by subcontractors.

Following consultation, the ESFA have set out a series of reforms in the form of a Subcontracting Standard which strengthens oversight of subcontracted provision. Subcontracting levels cannot exceed 25% of funding in any given funding stream in 23/24, unless an exemption is agreed. In accordance with the reforms, The Isle of Wight College reviews each subcontract annually, to determine if the educational rationale remains relevant and best supports students by filling gaps in niche and expert provision. An exemption case will be submitted to the ESFA where subcontracted provision is deemed appropriate but will account for more than 25% of funding in any given funding stream.

The Isle of Wight College acknowledges that it holds full accountability for the delivery of the contract and this cannot be assigned to subcontractors. Both the Isle of Wight College and its subcontractors refer to the ESFA documents and any future updates in all matters regarding the delivery of the contract.

Roles and responsibilities for The Isle of Wight College and the subcontractors are clearly defined from the outset of the partnership. All subcontractors are required to agree and sign a contract for the provision of training services with The Isle of Wight College.

The college acknowledges that it is required to meet the requirements of the new subcontracting standard and will engage internal auditors to review its subcontracting provision against established criteria. The outcome of the internal audit will be submitted to the ESFA for review by the required deadlines.

The college reports subcontract arrangements to ESFA as part of a Subcontract Declaration which is completed at least twice a year or if subcontracting arrangements change during a year, in according with ESFA subcontracting guidelines.

Responsibility for Implementation

The Corporation is required to agree the fees policy and sub-contract arrangements for The Isle of Wight College as part of its responsibilities for The College’s educational character. The Director of Finance & Capital is responsible for providing adequate advice as the basis for the setting of fees, course costing and other related issues. The Deputy Principal is responsible for providing adequate advice on the rationale for subcontracting arrangements and the for the performance of subcontractors. This policy and subcontracting rationale will be signed off annually by the Corporation and will be published on the college website by 31 October each year.

Policy Objectives

Our reasoning for subcontracting

The Isle of Wight College subcontracts for one or more of the following reasons:

  • To capacity build
  • To engage with new markets, enhancing opportunities available to learners
  • To ensure revenue/margin protection
  • To ensure greater cost efficiency
  • To maintain the delivery of niche provision

The key principles of selecting a new subcontracting partner are whether they:

  • Fit with the strategic objectives of the College
  • Bring positive local community benefits/widening participation (attracting learners who would not normally go to a FE college)
  • Add value to the work the College does
  • Complement but not compete with the existing product portfolio of the College
  • Are aligned to key sectors that the College or Government has prioritised
  • Have a track record of high achievement and/or progression rates
  • Are willing to engage in a mutually supportive relationship built on trust and respect
  • Have reputation and standing in the sector/market

In carrying out due diligence the College will ensure that it complies with current procurement regulations such as Public Contracts Regulations 2015.

The policy’s contribution to improving our and our subcontractor’s quality of teaching and learning

This policy ensures that there is openness and transparency in the fees and charges relating to subcontractors, so that when entering into a subcontracting relationship the potential partner is aware of the support services provided within the management fee. This allows the subcontractor to work with the College to improve the quality of teaching and learning.

Specific measures The College implements to ensure improving quality of teaching and learning include having sight of any quality assurance documentation, internal and external, and related action plans; lesson observations with course tutors and assessors; quality assurance monitoring visits to check course files, schemes of work etc.

The typical percentage range of fees retained to manage subcontractors, and how this range is calculated

The Isle of Wight College normally charges subcontractors a management fee for a standard subcontracting agreement.

The level of support required for each subcontractor will determine the percentage management fee but will generally not exceed 20%.

The fee is calculated to cover day-to-day management of subcontracted delivery, monitoring of learner progress, collecting and updating due diligence, ensuring audit compliance, dealing with partner queries, coordinating self-assessment processes, quality and compliance monitoring, as well as other similar services as needed.

The fee also includes administration support to process the data, ILR management, Middle and Senior Management support (working with national agencies, funding bodies, advice relating to policies, ESFA guidance, etc.), and management of funding and finances (preparation and processing of payments).

The reason for any differences in fees charged for or support provided to different subcontractors

The management fee is increased if:

  • The risk rating on a particular subcontractor is ‘medium’ or ‘high’ as a result of a College Risk Assessment.
  • If additional/exceptional services are provided to the subcontractor, there will be a separate fee agreed to be charged above the core management fee based on usage (such as internal verification, etc.).

Payment terms between the College and subcontractors

The payment terms are set out in detail in the subcontract agreement referred to above and available for potential subcontractors to view before entering into agreement with The Isle of Wight College.

In summary, subcontractors will be paid within 30 days of receipt of a valid invoice subject to meeting contractual requirements. Alternative payment conditions may operate, following discussions with the subcontractor, depending on the contract delivery model and contract delivery time.

All subcontractors will be set up as ‘suppliers’ on the College’s finance system. The payment will be made to the subcontractor via BACS.

How and when the policy is communicated to and discussed with current and potential subcontractors

This policy is discussed with potential subcontractors as part of the curriculum planning process on an annual basis prior to subcontracts being agreed.

In line with ESFA funding and performance rules, we will ensure all costs with a subcontracting agreement are individually itemised and how each cost supports the delivery of high-quality learning.

The supporting documentation can be found on the links below.

This policy will be subject to review annually.


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