Non-levy tender: It will take over 8 hours just to read the current ‘clarifications’

The ESFA’s latest attempt at a non-levy apprenticeships tender now has over 100,000 words of ‘final’ clarifications. FE Week’s editor Nick Linford explores some of the reasons and pitfalls ahead of this Friday’s deadline

The level of interest in the £650 million non-levy tender should come as no surprise. Around 800 colleges and providers will lose access to funding for new starts from January if they don’t successfully win some funding, while 800 more companies that are on the register of apprenticeship training providers have been given their first opportunity to earn a contract. So the Education and Skills Funding Agency can expect around 1,600 serious applications from organisations already permitted to receive levy funding. Failure to acquire cash means that over 98 percent of employers, those not paying the apprenticeship levy, will be out of reach, so the stakes are very high.

The first attempt at this tender was delayed and then scrapped, with the ESFA blaming over-subscription despite all the obvious warnings.

Several hundred more companies have since been added to the register, so demand will be even greater the second time around. In an effort to avoid its previous problems, the ESFA has included several new and significant barriers, to either prevent, restrict, deter or arguably even trip applicants up.

Preventing any funding awards

The tender specification explains that any applicant awarded less than £200,000 will in fact receive nothing at all. Combine this rule with the tender value cap calculation (see below) and any eligible company with a turnover in 2015/16 of under £160,000 need not apply. There are likely to be several hundred companies on the register in this position. In fact, the register contains 48 companies that at the time of applying were a “new organisation without financial track record”.

Even if you were to successfully apply for, say, £300,000, the ESFA reserves the right reduce this to below £200,000 via “modelling”, in cases where it wants to prioritise a region or sector area, or simply if it faces general over-subscription. In this example, the successful tender would exceed the minimum, but would still result in being awarded no funding.

In the words of the tender specification (click here), “if the award modelling results in a contract value of less than £200,000 for the initial contract period, then the agency will not make an award to the potential provider”.

Restricting the size of the funding awarded

Assuming a provider get parts the first hurdle, it must apply for no more than the “tender cap”. In the first attempt at the tender, this was a straightforward £5 million. This time however, the cap needs to be calculated by the applicant, by applying one of four potential calculations depending on its “provider class”. A “new provider” that has never delivered apprenticeships is limited to £750,000 or less. A “subcontractor” that has never had its own contract is capped at £1.5 million. An “existing apprenticeship provider with non-levy historical delivery at or below £1.5 million for 2015/16” is also limited to £1.5 million. In all three cases, the final sum could be less, depending on 2015/16 turnover, multiplied by 1.25. Finally, the forth provider class comprises “existing apprenticeship providers with non-levy historical delivery above £1.5 million for 2015/16”; these are restricted to 110 per cent of their non-levy historical delivery, multiplied by 1.25.

As if working out what the most you can apply for isn’t complicated enough, last week the ESFA “clarified” what it meant by “non-levy historical delivery”; it now only includes funding in 2015/16 for starters. For existing apprenticeship providers, this excludes funding for apprentices who started before 2015/16, and will typically half – or more – what they had believed their tender cap to be.

Deterring providers from applying at all

For no obvious reason, the ESFA has more than doubled the amount of information it requires from applicants in the specification questionnaire, significantly increasing the cost. Across 17 questions, the applicant is expected to write more than 10,000 words regardless of the size of the contract it is applying for. I spoke to one consultant who as a result of this extra work has doubled his bid-writing fee to £7,000.

The ESFA also wants providers to complete its “volumes and values” spreadsheet, which does not actually calculate funding. You have to do that yourself, and only for starts from January 2018 and payments up to March 2019. The spreadsheet also contains up to 2,400 cells to complete, which is frankly ridiculous.

Taking into account this size, cost and complexity, alongside multiple changes to the tender documents, some companies that were initially interested in making a bid have been utterly deterred. The tender comes with nine attachments, two of which, the specification questionnaire and the volumes and values spreadsheet, have been revised four times each before of the deadline of midday this Friday.

Tripping applicants up

The ESFA has been at pains to stress that if you fail to understand the requirements, your application “may be rejected… and will not be evaluated”. In addition, the complex scoring matrix requires potential providers to “meet a threshold of 75 per cent of the total score (with no questions scoring below 50 per cent) in order to be eligible for an award. The necessary score is 1,275 out of the total of 1,700.”

What’s more, if any of the 17 questions score below 50 per cent, the ESFA “reserves the right not to complete the evaluation and to disqualify the potential provider”.

Now consider how complex the tender is, and the ensuing likelihood that a provider is tripped up by misunderstanding the requirements.

Yesterday the ESFA posted its final answers to clarification requests across three documents, which appeared after the deadline was delayed, which it blamed on the volume of clarifications it had to issue.

The “request for clarification document” (which is now on version five – click here) is a spreadsheet that contains an incredible 793 questions and answers, consisting of a staggering 97,566 words. Despite this, some answers are no more helpful than “See FAQ V2” – which forces providers to read an older version of the document! Many other answers are contradictory, for instance saying that you must and do not need to use the most recent version of the volumes and values spreadsheet. Others simply aren’t answers, stating “not confirmed”.

In addition to this clarification spreadsheet, there is a separate 13-page FAQ document in MS Word (click here), itself on its fourth version and updated as recently as yesterday. This runs to 4,019 words.

Combine the spreadsheet and the MS Word document and you have 101,585 words in the form of FAQs to read and cross-reference with other documents and versions. According to the all-knowing internet, the average reader will read 200 words per minute, which is 12,000 words per hour. So it would take eight and a half hours to read the current version of the FAQs alone, quite apart from the fact whether you are able to understand or interpret them correctly.

Will there be legal challenges once this mess of a tender is concluded? We only need one word to answer that: “yes”.

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  1. Exhausted

    Clarification responses have in cases, clearly been written by people who do not understand the operation & mangement of Apprenticeships or indeed the focus of the question that particular scoring elements, being queried by providers, relate to. Where these have been corrected, updates to the clarifications response sheet don’t acknlowledge the error, still include the erroneous statement and then add ‘EXPANDED’ when clearly the addition is a correction. Confusing to say the least as providers may attempt to lever both contexts into already restrictive character counts.
    Responses to clarifications are inequitable – in some cases, helpful guidance is provided where providers are unable to determine what information to provide; in others (eg a provider delivering subcontract only in 15-16 but with a direct contract in 16-17 who doesn’t know which figures to use) there’s an unhelpful point to the FAQs and no direct answer.
    Humble opinion: The eligibility for bidding is so vast and out of control that ESFA appear to have devised a process to artibtrarily reject providers of all types (good, bad & moderate), based on ability to understand their riddles. Scoring elements are not based on common sector terminology (by design?)and some terminology that by their own admission is erroneous (eg ‘cash value of your total apprenticeship delivery for 15-16’ is STILL in the FAQs (5 Sept version). A fair & equitable tender would have been all that would have been needed IF there had been proper scrutiny at the RoATP stage.

  2. naomi metcalfe

    From a relatively small training provider’s point of view this process seems rigged to close the market down rather than open it up for SMEs and micro businesses. I think everyone would agree that the process has to have rigour to protect public money but unless you are a national provider with high levels of delivery you are unlikely to get past the first hurdle, regional and sectors specialists are very likely to priced out via the tender cap,pro-rata allocations and over-subscriptions.

    Importantly this process will put training providers out of business because in many cases they will fail this ITT meaning that they can only work with levy payers or as a subcontractor to the new breed of primes but now that the funding values have changed and once the management fees are deducted, these contracts will become less and less commercially viable. Regional and sector specialist have been working and engaging with small employers for years, seeing starts up businesses grow and flourish but nowhere in this process is that recognised or valued by anything other than lip service.

  3. Since its release this has taken over not only our working lives but our home lives. The ITT was so badly written it was a guessing game as to what the questions were actually asking. With 122 scoring criteria and 90 of them being clarified with a week to go and some after the original end date has created chaos within the industry, with rewriting taking place on bids that we thought were fit for purpose. Having scored 600/600 in the AEB bid we are not naïve and can answer questions if it is clear to what they actually mean. It has turned into a fiasco and feels like a battle to survive.

  4. I think one must conclude that this exercise is fundamentally flawed, unfair and aimed at excluding smaller providers. Given that most primes subcontract a large part of their provision I am at a loss to understand how, once successful, they will provide the numbers they are predicting – especially since they will be required to deliver a “substantial amount”. The outcome is that they will have to subcontract – and the skimming will continue, standards will remain where they are etc.

    The obvious tactic is for colleges and larger providers to “bid high” thereby removing smaller suppliers under the £200K cap rule – thereby making the cake bigger for themselves – I can’t imagine how many potential legal actions will result from this. I can see how this breaks the letter, never mind, the spirit of the Governments own rules – it is a blatantly skewed procurement.

    • Although most big providers cannot ‘bid high’ as the funding formula will result in them being capped at probably half of what they actually require (so smaller providers falling under the £200k can probably forget subcontracting too) – and that assumes we just deliver what we did last year (probably mostly frameworks). The whole process does not even take the value of standards versus frameworks into account – providers delivering standards will actually only be able to fund maybe a third of the learner volume they did when delivering frameworks, even if allocations remained the same as last year – which they wont.

      Surely they could have simply looked at what we did last year (they have this already) + asked for a forecast + achievement rates (which they have already) + Ofsted Grade + + learner and employer feedback (which they have already) + maybe quality standards achieved and pretty much arrived at a better and more informed judgement than asking the questions they are! Then just applied a formula to arrive at allocations within their overall budget?

  5. I truly believe that the ESFA have under estimated the affect of the ITT on the smaller provider, we have produced quality outcomes for years for the Prime’s through the contracts being devalued in previous years, i used to work for a small provider, with a Grade 1 Ofsted, that had to basically take the funding to a larger Prime, because the funding rules changed. This has never improved since.
    Now working on the third draft of this overly complicated ITT. The documents supplied not fit for purpose, i had to request for updated versions, through the portal, all taking valuable time and resources.
    The Volumes & Values spreadsheet is typical, last minute change and more details to complete.
    I think the process will result in more delays and contracts in January not being issued.

  6. Crusader

    My comments usually don’t get past the moderators. But as a company with a £10m Turnover and £300k non-levy delivery for 2015/16 we are capped at £1.5m.

    That means we can apply for some serious growth…..go figure

    Do not be surprised if the ESFA comes back after this whole tender process and only give providers x1.25 of their actual Non-Levy delivery (as per the recent letter received through Bravo) and nothing like their ‘Maximum Tender Cap’

    Good luck to those with no delivery in 2015/16 or with a Turnover of that just meets the £220k threshold – have a plan b, c and d in place!

  7. It would be interesting to know the background of those who write such tender requirements.
    – Are they CIPS trained/qualified?
    – What is their knowledge of the sector?
    – Is there a clear strategic plan they are working toward?
    – Have they themselves completed the tender documents, or had a sector expert/representative, to test the process?
    ….the list goes on…

    • Sadly I think the answers are….



      Of course – we have a clear plan that we need to issue some contracts for some money at some point and are sort of on-track to do this. (tick!)

      Good grief no! We wouldn’t know where to start! I’ve written a few inspired responses to clarifications though (only to have my colleagues but in days later and give different advice, which was a little annoying).

  8. It is a shame to see this unfold, I hope some one can sort this total shambles out eventually. What benefit does it bring to the economy by putting sound reputable providers out of business and their dedicated staff out of employment. At least David Cameron is doing well and has bought a new shed where he can listen to Supertramp and smoke his woodbines in.

  9. And people are surprised because????? This shower have a long and dishonourable track record of incompetence and idiocy. Add to this the disappearance of most of the people who had half a clue as to what they were doing, and you have the vital ingredients for the fiasco that we are seeing.