The future of the Skills Funding Agency’s minimum contract level policy has been called into question after it emerged 50 providers have been given allocations of less than £500,000.

More than £7m could be paid out by the agency on contracts below its minimum level.

The smallest of these is for £11,274 and the biggest £414,832. They appear on the agency’s website under its outcome of quarter two review for 2012/13.

Paul Warner, Association of Employment and Learning Providers director of employment and skills, said: “The large number of new providers on the latest allocations list has to prompt the question of whether the minimum contract policy has been abandoned.

“We are increasingly taking the view that any good quality provider who wants a direct contract should have one.”

The total amount allocated to the 50 providers is £7,312,834. Included in the figure is funding for 16 to 18 apprenticeships, which the agency has said also falls under the minimum contract level rule. But, despite the number of allocations below the minimum level, an agency spokesperson said the policy was still in place.

“We continue to apply the principles of minimum contract values,” she said.

“The level at which these are set for individual procurement exercises is driven by the ability of providers to meet the needs of their communities and the provision procured.

“Investment in apprenticeships continues to be a priority for the agency.

“To ensure we continue to meet the needs of employers, in 2012/13 the agency invited new organisations on the Register of Training Organisations to submit plans to deliver new high quality apprenticeships.”

The minimum contract policy of £500,000 came into place for the 2011/12 academic year. The agency claims it has “allowed efficiencies to be realised within the sector through a reduced agency role; economies of scale and more opportunities for shared services between training organisations”.

It is understood that more than 200 providers lost their agency business when the policy was introduced because they were unable or unwilling to increase their contracts to the £500,000 mark.

“If the goalposts have now been moved, we need to have a discussion with the agency about it and perhaps have a review for the good quality providers who lost their contracts when minimum contract was first introduced,” said Mr Warner.

Lindsay McCurdy, chief executive of Apprenticeships4England, said: “It’s fantastic if the agency is reducing minimum contract levels, but there needs to be more clarity on how this has been done and how providers can get these contracts.”

An agency spokesperson said: “We ran three pilots for apprenticeships, one contracted in September for 19 to 24 apprenticeships, and two for 16 to 18 apprenticeships contracted in April and May 2013.

“All provision was openly and competitively tendered, and contracts were awarded to the organisations that could demonstrate the highest quality and support from employers.”

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  1. Chris

    What a shabby article – if you had researched this more thoroughly and accurately you would have understood this was an open and transparent process and there were many conditions imposed on new providers in particular that they cannot displace activity with existing providers. Do you think you could deliver £500,000 mid year on new provision. You ignore the value of these contracts for carry over into 2013/14 and beyond.

    You should be celebrating this fact, not pointing fingers with little or no understanding of the processes followed and the reasons why.

    These contracts are due to stimulate apprenticeship growth in the core area of 16 – 19, not the use of ASB funding for stuff that frankly delivers little value to people

    I suggest you look a little more closely at how ASB funding is being used in 2012/13

    Shoddy reporting again from FE week – you do yourselves absolutely no favours !