Third party arrangements

All third party arrangements must be in writing and include the minimum standard terms in Attachment 1 of the Third Party Arrangements Directive (PDF, 349KB).

The minimum standard terms essentially provide a pass through of your obligations to the organisations that you engage as a third party.

They ensure you:

• have undertaken appropriate due diligence
• do not engage businesses or personnel who
  • have had their contracts terminated for non-compliance or previous poor performance
  • or
  • have been convicted of a criminal offence
• have continued visibility on who you have engaged, preventing the third party from assigning or novating their obligations without the prior written consent of your organisation
• have the ability to terminate the arrangement on 30 days' notice if it isn't working for you.

When entering into a third party arrangement, you must conduct a formal compliance review on all the services delivered under the arrangement. Use the third party compliance review template (DOCX, 703KB) to undertake this activity.

For existing third party arrangements (not including schools), compliance reviews must be carried out:

• no later than 3 months after your SAS Agreement commences or is extended
• and
• every 6 months of the term of your SAS Agreement.

If your organisation enters into any new third party arrangements after commencement or extension of your SAS Agreement, or if the organisational structure within the third party has changed, you must undertake a third party compliance review no later than 1 month after this has occurred.

To be clear, you must conduct a third party compliance review against each entity with which you have a third party arrangement, at least twice within every calendar year, with the exception of schools.

If your third party is a school, a compliance review must be carried out at least once within the term of your arrangement.

Where your third party is delivering services other than training and assessment, you are still required to undertake a third party compliance review, completing the 'general' section only on the template.

You must not enter into a prohibited subcontract as defined in the SAS Agreement and Third Party Arrangements Directive. A prohibited subcontract is an arrangement whereby the supplier engages another entity or entities to:

• promote, market, or advertise their programs or status as a SAS
• engage in training or business development activities where the sole aim is to identify and recruit students into the SAS' subsidised programs
• deliver more than 50% of training and/or assessment services under their SAS Agreement at a qualification level
• recruit and enrol students into the SAS' funded qualifications.

The only exceptions in relation to recruitment and enrolment are:

• VET in Schools, where schools can recruit their own school students
• User Choice, where employers and group training organisations can refer under the Further Education and Training Act 2014 to a related SAS/supervising registered training organisation
• Skilling Queenslanders for Work, where the funded community-based organisation recruit participants for the project.

It is also prohibited for suppliers to subcontract or enter into a third party arrangement with a related party for the delivery of services under the SAS Agreement without the express written consent of the department. This includes any entity related to the supplier, its current or former officeholders, shareholders or relatives (including spouses).

Where a third party has been involved in the delivery of any component of the training and/or assessment for a student, the third party must be reported in your VET Activity data at a unit of competency level. Once the third party has been declared, SAS are issued with a Third Party Reporting Schedule that contains a unique code for each third party. This code consists of 3 characters and is to be reported in the 'purchasing contract schedule identifier' field, contained in the NAT120 file, located at position 137.

Read the third party delivery reference sheet (PDF, 318KB) for more information on how to correctly report the purchase contract schedule identifier for the third party arrangement.

Suppliers are prohibited from entering into third party arrangements where a third party will deliver more than 50% of training and/or assessment services at a qualification level.

We will not provide you with the allocated number of students that must be trained for each qualification as the programs operate under a demand-driven funding model. Given this, you must manage the limit yourself.

This can be achieved through:

• Student level method – where a supplier solely delivers at least 50% of training for each student.
  For example, the supplier engages a third party to deliver training and/or assessment services for CHC33021 (Certificate III in Individual Support) which has 15 units of competency. If this method is adopted, the supplier must deliver and assess at least 8 units of competency to the student themselves.
• Qualification level method – where a supplier solely delivers training and assessment to at least 50% of their students enrolled in each qualification.
  For example, the supplier engages a third party to deliver training and/or assessment services for an entire qualification to 30 students. If a supplier adopts this method, they must deliver and assess the entire qualification to a further 30 students or more themselves to meet the 50% delivery limit.

You can choose to use either method, or a combination of these methods.

We will review each supplier's data periodically to ensure that at least 50% of the total units of competency claimed in any qualification are being delivered by them.

The table below provides an example of how we monitor this requirement of the SAS Agreement:

• Row 2 – the total number of units of competency and percentage reported by a SAS for 3 qualifications (BSB30120, CHC33021 and TLI30321).
• Row 3  – the number of units of competency and percentage delivered by the SAS (with no purchasing contract schedule identifier reported for third party delivery).
• Row 4 – the number of units of competency and percentage delivered by Third Party 1 for each qualification.
• Row 5 – the number of units of competency and percentage delivered by Third Party 2 for each qualification.
• Row 6 – the number of units of competency and percentage delivered by Third Party 3 for each qualification.
• Row 7 - the total number of units of competency and percentage delivered by all 3 third parties for each qualification.

A comparison of rows 3 and 7 shows the total SAS delivery compared to the total third party delivery for each qualification. A review of this comparison shows:

• Qualification BSB30120 – third party delivery is within tolerance (20%) in qualification BSB30120.
• Qualification CHC33021 – third party delivery is not within tolerance (73%) in qualification CHC33021 at a point in time and consideration will need to be given as to how the SAS will rectify this. In this case, the data may be skewed due to the timing of third party delivery (if, for example, the third party is delivery the first 7 units of competency to students, and the SAS is delivering the last 8 units of competency in a qualification).
• Qualification TLI30321 – third party delivery is just within tolerance, but at risk of exceeding the 50% limit.

In summary, to meet the 50% third party delivery limit, you are required to report at least 50% of the total units of competency reported for each qualification without any involvement from a third party.