Third Sector National Learning Alliance chief executive Tim Ward, wrote the following open letter to outgoing Institute for Apprenticeships and Education and Skills Funding Agency boss Peter Lauener. He expresses below grave concerns about the adult education budget procurement process, which he warns is likely to reduce the number of directly contracted third sector providers.


Dear Peter,

You will recall that I raised concerns about the AEB procurement exercise and its potential impact on the small number of third sector providers who still have direct contracts with the ESFA. These are concerns which I had been expressing for some time and which regrettably have proved to be valid.

It seems likely that this will lead to a further erosion of the number of direct contracted third sector providers depriving local disadvantaged communities of opportunities to develop the confidence and skills to progress into further learning and employment.

There are a number of specific points that I wish to raise, but firstly I would like to reiterate the key point I made that a national procurement exercise would lack the granularity to identify provision which was addressing the needs of the most disadvantaged and excluded in local communities and making a real contribution to economic and social well-being.

In my judgement, this has proved to be the case. As an example, I have been contacted by third sector providers who cannot understand why they have been praised by Ofsted for their work with disadvantaged learners but were not awarded contracts.

Tim Ward

While I recognise the difficulties in involving outside organisations in a competitive procurement exercise, I think that it would be productive to try at least to find ways to engage sector representatives in a dialogue on the broad principles of such a procurement exercise. This could improve the impact of the procurement in terms of ensuring high quality provision is retained or secured. It might also avoid some of the problems that seem to have affected this and earlier procurements.

Our specific concerns are as below and I would be grateful for your response to these issues:

  1. I do not understand why smaller providers were engaged in the procurement. In early presentations from  ESFA staff we were given to understand that the EU requirements only applied to contracts above a threshold of £589,148. It is not clear therefore why all providers were informed that they would need to bid if they wanted to be considered for a contract beyond 17/18.
  2. It does appear that in the short-term at least that this was a race where losing was often a better outcome than winning. I have heard from providers who have had an allocation which represents a very large cut compared to their previous AEB allocation. Yet they have not been able to benefit from the transitional support offered to unsuccessful bidders. I am therefore asking that consideration be given to providing additional transitional support to those successful bidders who have had cuts larger than the 29% applied across the board, given that the delays in the procurement mean that they face massive in-year cuts.
  3. A small number of third sector providers had a historical allocation of non-formula ACL funding which was included in their 16/17 AEB allocation. As I understand it, the policy priorities and focus for this funding are different from those of mainstream AEB and accommodate wider issues such as family learning, health and communities as well as preparation for work and basic skills. Did the procurement process take account of this allocation? Specifically did the evaluation of bids from providers with such an allocation take account of the additional priorities or were only the mainstream priorities applied? If the latter then we would ask that you consider how providers who have effectively lost their non-formula funding can have this restored.
  4. The final issue that has affected a small number of third sector providers is that they were excluded from the concession of lower contract thresholds for third sector providers. I understand that this was because they failed to identify themselves as third sector on the register. I don’t have access to the RoTo questions for the AEB but assume that the third sector question is the same as for the apprenticeship RoTo. The definition used in the relevant question differs from the more widely used definition as adopted originally by Government.  The providers I have heard from are registered charities and patently fall within the definition. Can we ask that any such cases be reviewed and action taken as appropriate please?

One of the outcomes from this procurement will be more third sector providers having to seek subcontracts thus effectively reducing the funding available to be spent directly on the most vulnerable and disadvantaged learners. (As an aside one provider who lost their contract has been approached by a college, who were successful in the procurement, offering a subcontract from their increased AEB allocation. I am sure this was not what ESFA intended!).

Third sector providers in devolution areas may well have the opportunity to bid for new direct contracts in future years. Given the problems we and others have identified with the current procurement exercise it would be very helpful if those outside the devolution areas who have lost their contracts had the opportunity to bid for new contracts for 18/19.

Finally, a common response to these type of requests is that it is not possible because of the need for consistency in the treatment of providers. However, if press reports regarding a very large provider are correct, a precedent is likely to be set in terms of allocation of AEB for 17/18. I would therefore ask that you treat our requests on their merits and consider the impact of losing high quality provision for the most disadvantaged learners.

I look forward to your response

Kind regards

Tim Ward
Third Sector National Learning Alliance

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