FOI - Current subcontractors guidance [Oct 2022]

Your request

Could you please send me the subcontractors guidance you are using.

Our response

Paragraphs 34 – 60 are the Terms in The Mayor’s European Social Fund (ESF) 2019-23  Programme Contract and Conditions and in The Mayor’s ESF 2019-23 Programme Delivery Handbook for how the provider (prime) should manage subcontracting delivery. 

Subcontracting Delivery

34. You must take your own legal advice about the impact of Public Contracts
Regulations 2015 on your recruitment of Subcontractors and have this advice available
for inspection by us on request.

35. Your governing body or board of directors and your accounting officer (senior
responsible person) must be satisfied that all your delivery subcontracting meets your
strategic aims and enhances the quality of your offer to Participants.

36. You should only use Subcontractors:

36.1. if you have the knowledge, skills and experience within your organisation to
successfully procure, contract with and manage those Subcontractors and can evidence
this with the CVs of relevant staff;

36.2. which your governing body/board of directors and your accounting officer (senior
responsible person) determine as being of high quality and low risk, and provide written
evidence confirming this; and

36.3. if you have robust procedures to ensure subcontracting does not lead to the
inadvertent funding of extremist organisations.

37. You are responsible for all the actions of your Subcontractors connected to, or
arising out of, the delivery of the Project services which you subcontract.
Subcontractor selection and procurement

38. The delivery subcontracting arrangements approved in your Contract will form the
basis of the GLA-approved subcontracting plan. These arrangements were evaluated as
part of the evaluation of your tender submission and your Subcontractors were required
to pass the relevant selection criteria in the Standard Selection Questionnaire (SSQ).

39. Any proposed change to the subcontracting arrangements in your Contract must be
notified to the GLA and you must get our approval prior to implementing the change. In
these circumstances, the GLA reserves the right to revisit the selection criteria as
originally tested during procurement to confirm that these criteria would still be met in
light of the proposed change. You should speak to your GLA Provider Manager as soon
as possible if you are thinking of requesting a change to your subcontracting
arrangements and they will advise you of the process you need to follow.

40. For the avoidance of doubt, please note that if a Subcontractor which has not yet
been approved by the GLA enrols a Participant (or Beneficiary Organisation) that
Participant (or Beneficiary Organisation) will not be eligible for ESF Contract Funding as
a ‘starter’ and cannot be reported against your targets, and any subsequent Outputs
and Results for that Participant (or Beneficiary Organisation) will also be ineligible.

41. When appointing Subcontractors, you must avoid conflicts of interest and you must
write to us through your GLA Provider Manager about any circumstances which might
lead to an actual or perceived conflict of interest (for example, where you and your
proposed Subcontractor have common directors or ownership).

42. You must carry out your own due diligence checks when appointing Subcontractors
and have both the process and the results available for inspection by us.

Entering into a subcontract

43. You must not award a subcontract to any organisation if:

43.1. It has passed a resolution (or the court has made an order) to wind up or liquidate
the company, or administrators have been appointed; or

43.2. Its statutory accounts are overdue.

44. You must make sure that Participants or Beneficiary Organisations supported
through subcontracting arrangements know about both you and your Subcontractor’s
roles and responsibilities in providing the service.

45. You must have a legally binding contract with each Subcontractor that includes all
the terms set out in paragraph 48.

46. You must have a contingency plan in place for Participants and/or Beneficiary
Organisations in the event that:

46.1. You need to withdraw from a subcontracting arrangement;

46.2. A Subcontractor withdraws from the arrangement; or

46.3. A Subcontractor goes into liquidation or administration.

47. You must make sure that the terms of your subcontracts allow you to:

47.1. Monitor the Subcontractor’s activity;

47.2. Have control over your Subcontractor’s delivery; and

47.3. Monitor the quality of Project activities provided by your Subcontractors.
Terms that you must include in your contracts with Subcontractors

48. You must make sure that your Subcontractors:

48.1. Comply with the requirements set out in the Delivery Handbook and Evidence
Handbook and the national ESF guidance;

48.2. Provide you with data and management information related to the Participants or
Beneficiary Organisations receiving Project services so that your reporting to us
accurately reflects your Subcontractors’ delivery;

48.3. Give us, and any other person nominated by us, access to their premises and all
documents relating to the Project on the same terms as in your Contract with us;

48.4. Provide you with all necessary evidence to support your regular Project reports
and Invoices (claims) to us for ESF Contract Funding;

48.5. Always have suitably qualified staff delivering the Project services;

48.6. Co-operate with you to make sure there is continuity for the Participants or
Beneficiary Organisations if a subcontract ends for any reason;

48.7. Tell you immediately if evidence of any irregular financial or delivery activity
arises, which could include, but is not limited to:

48.7(i) Non-delivery of Project services, Outputs or Results for which ESF Contract
Funding has been claimed, including errors and inaccuracies in claims;

48.7(ii) Sanctions or restrictions imposed on the Subcontractor by an awarding
organisation;

48.7(iii) Complaints or allegations by Participants or Employer Beneficiaries, employees
or volunteers working for the Subcontractor, ESF Delivery Partners or other relevant
parties; and

48.7(iv) Allegations of fraud;

48.8. Are bound by clause 7 from your Contract which includes, but is not limited to,
ensuring that the GLA has the right to enforce the terms of the subcontract;

48.9. Do not use the ESF Contract Funding for the Project as match funding for other
ESF projects, or to make bids for, or claims from, any other European funding on their
own behalf or on our behalf.
Monitoring your Subcontractors

49. You must manage and monitor all of your Subcontractors to ensure that high quality
delivery is taking place that meets the Project objectives and the requirements of this
Delivery Handbook and the Evidence Handbook.

50. You must carry out a regular and substantial programme of assurance and
compliance checks on the Project services delivered by your Subcontractors.

51. The assurance programme must include:

51.1. Visits to venues where delivery takes place which are unannounced or at short
notice;

51.2. Checks to confirm that Participants or Beneficiary Organisations exist and are
eligible;

51.3. Checks to ensure compliance with the requirements of this Delivery Handbook,
the Evidence Handbook and national ESF requirements;

51.4. Direct observation of initial guidance, assessment, and delivery of other Project 
activities; and

51.5. Face-to-face interviews with Participants or Beneficiary Organisations, employees 
or volunteers working for the Subcontractor and ESF Delivery Partners.

52. The findings of your assurance checks should confirm that the Subcontractor is
delivering the Project as agreed in your subcontracting plan, and in accordance with any
data, management information or supporting evidence that the Subcontractor has
submitted to you. Where this is not the case you should take immediate actions to
ensure the issues identified are addressed.

53. The GLA may request to see evidence of your assurance programme, the findings
arising from this and any actions that you have agreed or taken to correct any issues
identified.

Requesting changes to subcontracting arrangements

54. Your GLA approved subcontracting plan must include:

54.1. The name of each of your Subcontractors;

54.2. The contract start and end date for each Subcontractor;

54.3. The Project activities that will be undertaken, and Outputs and Results that will be
delivered by each Subcontractor

54.4. The estimated proportion of ESF Contract Funding that will be paid to that
Subcontractor for delivery of the Project services

55. If you wish to change your Subcontractors after you have been awarded a Contract
you must get our prior written approval and follow the process set out in paragraphs 39
to 45 above.

Distributing ESF Contract Funding between you and your Subcontractors

56. The GLA will pay you ESF Contract Funding for delivery of Outputs and Results. If
your Subcontractors are delivering some of the Outputs and Results on your behalf, we
would normally expect you to pass the payments we make to you for these Outputs and
Results on to your Subcontractor.

57. You may retain some of the ESF Contract Funding that we pay you for these
Outputs and Results if you are providing services to support your Subcontractor with
administration and management, or other support to enable the Outputs and Results to
be delivered. If you intend to do this you must have a clear, published policy in relation
to funding retention or charges to Subcontractors, which your governing body or board
of directors must review. Your accounting officer must sign the policy.

58. You should be aware that if you charge your Subcontractors a fee for providing
them with support services, this service may be subject to VAT and recoverable VAT
cannot be included in your claim for ESF Contract Funding.

59. As a minimum, you must include the following in your subcontracting funding
retention and charges policy:

59.1. Your reason(s) for using Subcontractors;

59.2. A description of the support and management services you will provide to your
Subcontractors in return for the ESF Contract Funding you retain and how this
arrangement will improve your and your Subcontractors’ quality of delivery of the 
elements of the Project that will be subcontracted;

59.3. The percentage of ESF Contract Funding you will retain to support and manage 
your Subcontractors, and how you calculate this percentage, noting that ESF Contract 
Funding retained by you cannot be more than 10% of the ESF Contract Funding 
payable to the Subcontractors for the Outputs and Results delivered;

59.4. If appropriate, the reason for any differences in retention amounts or support 
provided to, and management and oversight of, different Subcontractors;

59.5. The payment terms that will apply between you and your Subcontractors, 
including the timing of payments in relation to delivery of Project activities, Outputs 
and Results, and your timescale for paying claims for ESF Contract Funding received 
from Subcontractors;

59.6. How and when you will communicate and discuss your policy with current and 
potential Subcontractors;

59.7. How and when the policy will be reviewed; and

59.8. Where you publish your policy.

60. You must also tell us the actual level of ESF Contract Funding paid and retained for
each of your Subcontractors in each financial year.

If you have any further questions relating to this matter, please contact us, quoting reference  MGLA300922-0267.