Promoting skills through public procurement – Frequently asked questions
General
Scope
Legal and contractual
Advice and guidance
Costs and funding
General
What proportion of the workforce employed on a public contract should receive skills or Apprenticeship training?
We are not mandating a percentage of skills or Apprenticeships that should be used in every procurement exercise. All skills and Apprenticeship requirements should be considered on a case-by-case basis and, where included, should be relevant and proportionate to the contract.
Examples of how skills and Apprenticeships might be included in a contract include:
- Successful contractors have a formal training plan in place for the development of their workforce;
- A specified proportion of the project workforce be trainees, Apprentices or long-term unemployed;
- A specified proportion of the hours worked in delivering the contract are undertaken by trainees, Apprentices or long-term unemployed
Although we cannot be prescriptive about the proportion of skills and apprenticeships used in the delivery of a contract, good practice suggests that 1 apprentice per £1m investment is a reasonable requirement. The Olympic Delivery Authority, by example, has committed to creating an additional 250 new apprenticeship places on the Olympic Park and Village, by requiring that 3% of the project workforce on new 2012 construction contracts are apprentices.
How do I convince potential suppliers who are not currently committed to skills and training of the benefits of this policy?
We know that businesses that do not train their staff are 2.5 times more likely to fail than those that do. We also know that companies that invest in skills improve their workforce’s productivity, adaptability and flexibility and are better able to respond to the challenges posed by ever-greater competition, technological change and new products. Apprentices, once trained, offer a high rate of return to any business. With Government support through the Train to Gain and Apprenticeships programmes, investment in skills is a cost-effective way for businesses who win public contracts to survive and prosper
^ Back to top
Scope
Why is Government committed to using its procurement to promote skills training and Apprenticeships?
In tough times like these it is vital that we continue to invest in our nation’s skills so that, as a nation, we emerge with a skilled and productive workforce ready to compete when the economy recovers. Government spends around £220bn annually on public procurement which gives them a unique opportunity to promote skills development, raise the skills levels of service providers’ employees, improve the quality of public service delivery and secure greater value for money. By investing in the skills and talents of our nation’s workforce we will help businesses survive and prosper in the global economy of the 21st century. This is a cornerstone of the active industrial policy set out in Building Britain’s Future: New Industry, New Jobs.
What is the scope of Government policy on procurement and skills?
In New Industry New Jobs published in April 2009, Government made the commitment to routinely consider skills issues and promote training through procurement across Government. That means using procurement to promote investment in skills both when letting new contracts and working on a voluntary basis with contractors on existing contracts. Within that overarching commitment Government has made a series of more specific commitments including:
- Through the Joint Statement ensuring people working on central Government contracts can access literacy and numeracy skills training if they need it;
- Considering making it a requirement that successful contractors have Apprentices as a proportion of the workforce whenever Department or Agencies let construction contracts;
- Government Chief Information Officers committed all Government departments and agencies to look at requiring successful IT contractors to have in place a development plan for their workforce.
The Houghton Review also called on Local Government, with an annual procurement spend of around £42 billion, to make greater use of their role as a procurer of goods and services in supporting apprenticeships and training opportunities.
We are also working with Asset Skills and departments and agencies to explore a similar commitment in the Facilities Management sector.
Does this policy apply to procurements conducted through the Private Finance Initiative model?
Yes, the Government’s commitments apply equally to PFI and non-PFI contracts. Significant government investment is made through PFI contracts and there is wide scope to promote skills through public procurement in a range of occupations.
When should I include skills and Apprenticeships as a requirement in my contracts?
For new contracts you should consider the need for skills and Apprenticeships as early in the procurement cycle as possible, ideally in identifying the business need. In preparing a business case public authorities have a duty to test the need with other stakeholders, and assess the value for money and affordability of the skills requirement in line with EU procurement rules.
For existing contracts you can work with contractors on a voluntary basis post contract-award to encourage and support development of workforce skills by the supplier. In regeneration projects this may include focusing on local training and employment.
What level of skills should we include in contracts?
The skills requirement depends upon the contract and may include full or part qualifications in any of the following:
- Basic Skills – functional skills training in literacy, language or numeracy;
- Level 2 Skills - either a vocational qualification such as NVQ Level 2 or the academic equivalent of 5 GCSEs at A-C grade;
- Level 3 Skills – either a vocational qualification such as NVQ Level 3 or the academic equivalent of 2 A Levels at A-D grade;
- Level 4+ skills – typically Higher Education (Degree) level.
If the requirement is for an Apprentice then you should bear in mind that an Apprenticeship is not a qualification in itself but a package of qualifications, containing both knowledge-based and competence-based assessments leading to a Technical Certificate and an NVQ. It also includes transferable key skills (literacy and numeracy) and a module on employment rights. A standard Apprenticeship is at Level 2 whilst an advanced Apprenticeship is at Level 3. More information about Apprenticeships can be found at www.apprenticeships.org.uk or by calling 08000 150 600.
^ Back to top
Legal and contractual
Is this even legal?
Yes, provided that the proper UK and EU procurement rules are followed and that value for money is the overriding objective. Skills and apprenticeship requirements may be included provided they are relevant to the subject of the contract, proportionate and do not discriminate against potential suppliers.
The joint BIS-OGC guidance, Promoting skills through public procurement published in April 2009, sets out the approach that public sector bodies can take.
Will all public contracts now include requirements that suppliers train their workforce or invest in Apprenticeships?
Skills will normally be a core requirement only where they are relevant to the subject matter of the procurement. Contracting authorities will need to assess on a case-by-case basis which requirements are core requirements. If skills are a core requirement it will be important that they are stated so that potential suppliers can offer suitable solutions.
If the contract has already been let then there is still a significant opportunity to address skills with the supplier, by working with them in a voluntary approach to promote skills and apprenticeships for the project workforce working on that contract.
But isn’t it discriminatory to give advantage to local, or even UK, workers?
It is discriminatory to act in such a way as to distort competition or discriminate against candidate suppliers from other EU member states. Care must be taken when drawing up the specification to ensure that it does not result in the unequal treatment of suppliers generally and does not disadvantage prospective contractors – whether directly or indirectly – from outside the UK. So for skills, non-UK equivalent qualifications must be recognised.
What if we have already let all of our contracts?
Once a supplier has been awarded a contract, the contracting authority is free to work with them in a voluntary way to promote and highlight the importance of the skills agenda and to help them address their workforce skills needs.
^ Back to top
Advice and guidance
Is there any guidance available explaining how this works?
BIS and the OGC jointly published new guidance in April 2009 called Promoting skills through public procurement which sets out how to embed skills and training in procurement. This can be accessed on:
www.ogc.gov.uk/documents/Promoting_skills_through_public_procurement.pdf
A number of case studies are also available at: www.bis.gov.uk/skillsprocurement
So what Government help is available for companies and individuals who are interested in the Apprenticeship scheme?
Apprenticeships are available across all sectors of the economy including private and public sectors. There are around 180 different frameworks across 80 different industry sectors. Government, via the LSC, provides funds to cover the training costs of the Apprenticeship, although not the wage costs. Funding rates vary depending on the type of Apprentice. In 2009/10 there will be £1bn available to fund Apprenticeships with no restriction on funding to young (16-18) people to start an Apprenticeship.
The National Apprenticeship Service has now been established as a single point of contact for employers and potential Apprentices. If you are interested in finding out more including a full list of available Apprenticeships visit www.apprenticeships.org.uk or call 08000 150 600.
How can Train to Gain help me?
Train to Gain is a service for employers which puts the buying power and information in their hands, giving them better access to a wider range of opportunities for improving the skills of their employees and the productivity of their business. Train to Gain is part of the Solutions for Business portfolio – a streamlined portfolio of government products for businesses accessible via Business Link. Government is committed to growing Train to Gain and by 2010-11 it will invest over £1bn in the service. Key benefits of the Train to Gain service include:
- Impartial advice from expert Skills Advisers to help identify the business’ skills needs at all levels and source high quality, vocational skills training, including apprenticeships, delivered at a time and place to suit the business;
- Full funding for basic skills, first full Level 2 qualifications and first Level 3 qualifications for 19-25 year olds;
- Shared funding support between Government and the employer for English for Speakers of Other Languages qualifications (ESOL) and Leadership and Management development for business with 10 to 250 employees;
- A range of other support including training for businesses with under 50 full time equivalent employees and also specific support packages for small and medium sized businesses.
- The National Employer Service (NES) provides an account management service, training support and facilitates public funding for employers with over 5,000 employees. It works directly with employers to evaluate their needs, and then commission, procure, promote and deliver training in a way that works best for their business
More information can be obtained at: www.businesslink.gov.uk/traintogain or call 0845 600 9006.
^ Back to top
Costs and funding
Won’t this policy disadvantage small and medium-sized enterprises (SMEs) seeking public contracts?
We recognise the cost of employing apprentices and are committed to assisting employers taking on Apprentices, which is why the cost of training 16-18 year olds is fully funded and provision for adult apprenticeships is partially funded.
Furthermore, in recognition that Apprentices are trainees and not immediately fully productive, 16-18 year-old Apprentices (and 19 year-olds in the first year of an Apprenticeship) are currently exempt from the national minimum wage.
The new National Apprenticeship Service now has responsibility for apprenticeships. This includes a number of specific initiatives designed to stimulate greater employer involvement. We have launched sector growth projects to trial a range of flexible support, including wage and training subsidies, encouraging both small and larger employers to bid for funding.
We have also provided an additional £7m to fund up to 10 new Apprenticeship Training Agencies (ATAs) this year, with the potential to deliver up to 15,000 Apprenticeship places per year by 2014/15. The funding will also be available to help develop and expand new or existing Group Training Associations (GTAs) for small businesses which might not have the capacity or resources to provide their own training.
These Training Associations will employ apprentices and hire them out to businesses. If the host business no longer requires the apprentice they return to the ATA and are re-assigned, providing more flexibility for the business and greater security for the apprentice. New or extended Group Training Associations will benefit business through economies of scale and increase the number of apprentices in under-represented sectors, producing longer term benefits in terms of skill levels.
SMEs are the top priority for Train to Gain funds including the £350m growth from 2008-09 to 2010-11. As part of this, employees of private sector and third sector SMEs are eligible for an increased offer of support to help them get through the economic downturn.
The key elements of the offer are available to all SMEs, including those with less than 5 employees:
- Funding for stand-alone accredited training modules, and part-qualifications or “thin” qualifications, in business-critical areas to raise productivity, including: business improvement, team working and communications, IT User, and risk management
- Fully funded Level 2 qualifications and subsidised level 3 qualifications, regardless of whether the employee already has a qualification at this level."
All this is wholly consistent with the principles set out in the Glover Report and does not increase the barriers small and medium sized enterprises face when competing for public sector contracts.
How do small businesses access Government contracts?
Government is committed to ensuring that its contracts remain accessible to small businesses including those owned and managed by women or ethnic minority groups, as well as people with disabilities. Government has made it easier for suppliers to find contracting opportunities for example from the Supply2.gov web portal www.supply2.gov.uk which provides business with easy access to lower value contracts (typically below £100k). In addition, funds have been made available through Train to Gain to support small employers in their training.
^ Back to top
