The government has had to pump an extra £16 million into the adult education budget to appease a group of training providers who threatened legal action over last year’s controversial tender.

The original procurement had total pot of around £110 million to use this academic year.

The process culminated in widespread fury when the results were released in August, as many providers unexpectedly lost out on huge sums due to the sheer volume of applicants.

But things changed on September 29, after a coalition of furious providers threatened court action and caused a change in the rules.

The Education and Skills Funding Agency chief executive at the time, Peter Lauener (pictured) promptly found extra cash to bring most AEB contract values for 2017/18 up to 75 per cent of previous allocations.

New figures, obtained via a Freedom of Information request, shows this extra funding amounted to £16 million, which was shared between 96 successful providers.

A Department for Education spokesperson told FE Week at the time it was always “our priority” to act in the best interests of learner.

That was why “we have confirmed additional funds to support providers in delivering quality adult education across the country”.

In the ESFA’s original policy, published in January 2017, providers which did not bid or were unsuccessful were to be offered a contract worth no more than £589,148.

But the ESFA wrote to those providers on September 5, telling them that they would now receive 75 per cent of the value of their previous contract to use in 2017/18.

Many believe this U-turn came as a result of the special treatment offered to Learndirect, which withdrew its tender bid earlier in the year.

The nation’s biggest FE provider had a contract worth £60 million last year, but received roughly £45 million to recruit and train adult learners until July 2018, even though it was slapped with an ‘inadequate’ rating from Ofsted in August – a situation which usually causes the DfE to terminate a provider’s funding.

Andy Palmer

Learndirect’s boss Andy Palmer even admitted he was “surprised” by this large allocation after his provider’s tactical withdrawal during a recent Public Accounts Committee hearing.

At this point, other providers that had been successful in the tender had seen their AEBs slashed.

For example Somerset Skills & Learning, a provider rated ‘good’ by Ofsted a history of more than 100 years, was awarded a contract worth just three per cent of its previous budget. It later lobbied with MPs to overturn the decision.

Other providers rallied together and geared up for collective action against the government.

This coalition claimed it had suffered financial loss and damage as a result of the tender – and believed it had sufficient grounds to launch a judicial review against then education secretary Justine Greening, or even appeal to the EU Commission.

They alleged that the ESFA was negligent of – or even complicit in – corrupt practice under the Public Procurement Act 2015, which states that a procurement must not be interfered with once underway.

They argued that had they known the ESFA would change its rules and reduce allocations by just 25 per cent for those that did not participate, many would have ignored the bidding round to secure sufficient funding to survive.

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