Why are some kickbacks to procurement registers permitted by the ESFA?

Public sector procurement can sometimes be a tricky beast and I don’t envy local authority officers in their job of navigating the do’s and don’ts of procurement rules & laws.

Because of this there is an increasing tendency for public sector bodies to outsource their procurement, which is all good and well, until it directly contravenes another set of rules.

In this case the Apprenticeship Funding Rules.

A couple of years ago the YPO launched their Apprenticeship and Associated Training framework, on the face of it a great way for public sector bodies to procure their Apprenticeship provision.

Using their existing customer base YPO estimated that the Apprenticeship Levy they could be procuring for customers was £8Bn over 4 years.

Not bad money to get a slice of for anyone on the Register of Apprenticeship Training Providers.

Here’s where the procurement starts rubbing up against the funding rules.

Successful providers have to pay YPO a ‘rebate’ (not a fee) for the privilege of delivering Apprenticeships to their customers. The tender particulars note that;

“The rebate on the framework is 1% of the spend through each individual provider. The rebate is payable by the provider and not the contracting authority.”

1% of £8Bn over 4 years = £20 million per year to YPO

But in the Apprenticeship funding rules it states that ineligible costs include;

P105.18 – Specific services not related to the delivery and administration of the apprenticeship. This includes the recruitment and continuing professional development of staff involved in apprenticeships, company inductions managing agents, brokerage services (to an employer or main provider) and the costs of memberships or other costs paid to employers, or their representatives, associated with procurement registers or opportunities to secure business.

YPO operate a procurement register so if you pay them directly from your Apprenticeship income, don’t forget the ‘rebate’ is calculated from your Apprenticeship income, then you’ll be breaking the rules.

You could pay this out of your profits from other activities I suppose, but what if you only deliver Apprenticeships?

This sort of procurement practice must come to an end, it takes money directly from Apprenticeship funding and isn’t in the spirit of the funding rules.

Plenty of local authorities have efficient and sustainable Apprenticeship procurement systems and other frameworks charge the employer to manage them not the Apprenticeship provider.

James Hart, Director, The Education and Skills Consultancy Ltd

About the author: James and his team are experts in tender writing, quality assurance and building team performance and can support FE organisations no matter what stage of their journey they are on.