Direct Funding Scheme - Phase 1 evaluation: Establishment and Initiation

The Tertiary Education Commission (the TEC) is evaluating the implementation of the Direct Funding Scheme (DFS). 

The evaluation to date has focused on the establishment and initiation of the DFS. The purpose of this evaluation is to support the implementation and to inform any future expansion of the DFS. Key findings are outlined on this page.

Read background information about the DFS.

The selection process

We held a two-stage tendering process to select organisations to participate in the initial phase of the DFS. We received 41 registrations of interest from employers, employer consortia and Modern Apprenticeship Coordinators (MACs). Of these, we invited 13 to submit a full application through the second stage request for proposal process.

We received six full applications. Five organisations met the DFS criteria. One organisation subsequently withdrew their proposal. We approved funding for four organisations, which are currently participating in the DFS.


We are evaluating the implementation of the DFS. The purpose of the evaluation is to support and assess the implementation of the scheme. The evaluation findings may also be used to help to determine the future expansion of the DFS.

The evaluation objectives are to:

  • assess the interest of employers, MACs and group training schemes in the DFS
  • identify what is working well (and why), and what is not working well (and why) with the implementation of the DFS
  • determine how well the DFS has been implemented
  • determine the extent to which the DFS is achieving its expected outcomes
  • provide recommendations for wider implementation of the DFS.

Phase 1 evaluation approach

A range of methods were used in the evaluation including interviews, observations of briefing workshops, assessment of panel briefings and a review of the DFS implementation documents.

All 62 organisations that responded to the DFS registration of interest were contacted to participate in the evaluation. Of these, 21 agreed to participate in an interview, including all those currently participating in the DFS.

Key findings from phase 1 evaluation

  • The TEC’s communication about the DFS reached those connected into tertiary education networks, rather than employer networks.
  • The application process was straightforward, but difficult for employers who were not familiar with the language and documentation required by the TEC.
  • The barriers to participation in the DFS included:

      -  A lack of tailored support from the TEC for employers through the application process

      -  A lack of flexibility around numbers of trainees and what funding can be used for

      -  The cost for participants to access the Industry Training Register and costs charged by the ITOs for materials and assessment

      -  Introducing the DFS within a competitive environment – some potential participants wanted to work in collaborative ways with ITOs but there were competitive and commercial tensions involved.

  • The DFS has generated interest with employers. Employers’ reasons for being interested in the DFS include concerns about service delivery from their ITO.
  • A number of employers expressed an interest in working with us to develop a more collaborative approach to the DFS.
  • MACs see the DFS as an opportunity to continue to be involved with industry training.

Evaluation recommendations

The evaluation identified the following areas where we could better support the implementation of the DFS. They include:

  • developing communications to ensure information about the DFS is more widely distributed and communicated, and in language that better suits employers
  • shifting the DFS emphasis from a purely competitive model to one that promotes choice. Employers could be directly funded to purchase services either through an ITO or any other training providers who have relevant accreditation from the New Zealand Qualifications Authority (NZQA)
  • making it easier for eligible employers to work with us to implement the DFS.

Next steps

Information from this evaluation is being used to improve the ongoing implementation of the DFS during 2015. 

As well as the four current DFS organisations we have also been working with a small group of employers who expressed an initial interest to work through the possible option of directly purchasing ITO services.

The final phase 2 of the evaluation began in early 2015 and looks at both the current DFS organisations and the wider small group of employers we are working with.


  • Last changed: 7 July 2015
  • Last verified: 7 July 2015