The nationally procured adult education budget contracts with the Education and Skills Funding Agency come to an end in July this year, so a new £80 million procurement round will take place, as reported by FE Week in October.

On 16 December the ESFA published an early engagement notice on the Contract Finder website, “to notify the market of a forthcoming procurement opportunity for delivery of education and training to learners resident in non-devolved areas, through ESFA funded AEB contracts for services”.

The notice includes an interesting line, suggesting the FE white paper could signal the end of the procured AEB as we know it: “Dependent on the outcome of the further education reform white paper, the ESFA may include a right to extend the contract for a limited period.”

The notice also invited providers to join a webinar this week to find out more, so here are the highlights of what they were told (with some thoughts from me in italics):

  • Confirmation that the contract is only guaranteed for one year, for starts from 1 August 2021 to 31 July 2022. Remains to be seen how any carry-over funding would be paid of if the contracts might be extended. I suspect the plan is to role the national AEB into the National Skills Fund, but so far the FE White Paper and NSF consultation remains unpublished.

  • The AEB contract is from the ESFA so it will only fund learners that are residents of a shrinking number of non-devolved areas. Unfortunate postcode lottery with this contract and makes the ESFA attempt at coverage across England somewhat futile

  • Traineeships are excluded from this procurement. Only providers with an AEB grant allocation (such as colleges) and those part of the currently delayed traineeship procurement exercise will have access to traineeship funding in 2021/22. However, the ESFA has not ruled out a market entry exercise for 16 to 18 traineeships in the future. 

  • The ESFA has listed their priority courses for this AEB tender in the slide below. This list is as expected as it is everything AEB already funds but on the webinar the ESFA said they were particularly keen to see tenders with bids to deliver eligible first full level 3 qualifications for those aged 24 and over (see Lifetime Skills Guarantee below) and SWAPs. You can find out more about SWAPs here. It is also interesting that they have included a bullet point  in the slide below for basic digital skills, which is not a statutory entitlement but is something the ESFA now call a ‘digital entitlement’ to fully-funded (free) courses through the AEB, limited to the new Essential Digital Skills Qualifications (EDSQ).

  • The AEB tender would include funding from the National Skills Fund for the level 3 Lifetime Skills Guarantee which would be ring fenced. This means if a provider had a contract for £1m, then some of this (say £200k) could only be used for the level 3 Lifetime Skills Guarantee. If, for example they delivered £1m but only £50k was for the level 3 Lifetime Skills Guarantee then they would only be paid £850k, despite delivering £1m. Ring fencing this way is useful to try and make sure providers hit targets but can be controversial and complex as funding cannot be moved between the pots within the same contract. This unusual ring fence within an AEB contract has also probably come about owing to the Lifetime Skills Guarantee funding actually coming from Treasury via a National Skills Funding allocation. Was interesting that the ESFA, rightly, called it an extension to the existing AEB level 3 entitlement and do not actually refer to it as the “Lifetime Skills Guarantee” in their slide below.

  • Providers will need to be demonstrate a track record and ability to deliver online. This is perhaps an obvious requirement given the current circumstances but has not been used in past tenders and may cause concern from some providers. It also signals that a large online based provider could do well in this tender, delivering courses to residents in all the non-devolved areas of England

  • The ESFA says one of the “objectives” is to “reduce the number of direct contracts we fund”. It remains unclear why or how this will be done. All other things being equal we would expect there to be fewer contracts given pot has shrunk (devolved areas excluded and no traineeships – see below). But it could be that they are signalling a move to use a fairly high minimum contract level as part of the tender.

  • Subcontracting is allowed based on the rules at the time. Rules which may change. The ESFA has consulted on ways to limit and increase quality of subcontracting but as at today, not actually changed the rules. They have signalled in the AEB rules they want to see less of it even if the rules have not changed. It is expected the FE White Paper will say the same thing about the need to limit and increase quality of subcontracting, so changes appear to have been kicked into the long grass again via a second consultation in the form of the unpublished FE white paper.

  • The ESFA has not finalised how winning contract values will actually be calculated and have held some funding back in case they fail to achieve geographical coverage at the first attempt. Allocating from a small pot to lots of  procurement winners applying for large sums has been a controversial area in previous tenders and the ESFA has tried different approaches.

  • The procurement timeline has not been finalised in terms of exact dates, but the ESFA plan to publish the tender in “early February” and on the webinar they said it will be an extended application window of 6 weeks owing to the pressures on bidders that Covid has added. See ESFA slide below