We mustn’t restrict employer choice with the latest non-levy procurement

The new invitation to tender (ITT) for non-levy apprenticeship allocations is a major improvement on last year’s procurement exercise with one significant caveat.  It is really fantastic that the new skills minister, Anne Milton, has listened to AELP and its members in coming forward with a solution that should with one change strike the right balance between stability of provision, promoting competition and offering choice for employers.

With a potential 47% increase in the overall budget taking it to £650m, this is a very positive step forward from the scrapped tender with a proper focus on existing capability and capacity in respect of good quality providers who have plenty of SMEs lined up wishing to offer apprenticeships.  At the same time the approach allows for the possibility of growth for providers who perform well against their contract and deliver good quality apprenticeships to learners.  Hopefully the new ITT should significantly reduce the chances of ‘apprenticeship deserts’ appearing across the country following the big drop in starts since April.

Many of our concerns in relation to the canceled procurement have been tackled and we thank the minister and officials for listening.  There are inevitably questions surrounding the tender details which need urgent answer through the ESFA’s Bravo service because of the early September submission deadline and AELP is also addressing them in the three regional workshops that we are running over the next few days.  Any points of clarification should be put through Bravo and there is a commitment from the Agency to a quick turnaround with its replies which means that the official answers are shared with everyone.  If someone doesn’t think an answer is appropriate or there are more fundamental issues with the process, then these are the issues that AELP can take up on behalf of its members.  We have staff covering the whole of the summer period so will be able to respond as issues occur.
 
Amid the generally good feedback, there is the serious caveat about the government specifying a minimum contract award of £200k.  This is causing real alarm among smaller and new providers.  We understand why the government would want a minimum contract size, but the new contract only covers a transition period until April 2019 and all those allowed to bid have been accepted on the apprenticeship register which for main providers has a lower threshold of £100k.  For existing prime providers there are caps on how much a provider can bid for based on the ‘historic value’ of their delivery in the year 2015-16, but basing the calculation on just one year is causing dismay among some of those providers.  Some for example had lower volumes than usual due to their switching over to standards.

Providers who can’t secure a non-levy contract must hope to survive during the transition period by winning apprenticeship business from the 2% of employers who are levy payers.  After that, when all employers are on the digital Apprenticeship Service, the ‘clunky’ contract system should become history in 2019 and every provider on the register can compete for any employer’s business.

We are also concerned about the providers who are on the cusp of the new threshold.  There are over 1,600 main providers on the register and therefore the procurement will be extremely competitive.  Therefore even if a provider scores very highly in the bidding process, their final contract award will be very likely subject to a pro-rata decrease.  We simply cannot be left with a situation where a provider has the ability to bid for over £200k but the pro rata pushes the provider below the threshold and because of this the provider is excluded.  This seems very unfair and outside the control of the provider.  Either there should be a floor of £200k before any pro rata is applied, or if the floor is breached because of the ESFA decision-making, the provider still gets that smaller contract with the ability to grow back over £200k.

We have proposed that in addition to this change, the following should be considered as an alternative or adjustment to the £200k threshold:

• scrap the threshold altogether 
• drop the threshold to the register threshold of £100k or
• allow consortium bids to take the bid over the limit.

Another AELP proposal is to allow a small provider to add their delivery to another provider’s bid (the lead main provider) to reach a higher bid threshold and that small provider is then listed as a subcontractor.

Not a week now goes by without us reading about the skills challenges that Brexit poses across many sectors.  It seems very strange that simply to handle a transition period, the government is prepared to dispatch from the apprenticeship supply market some high quality training providers just because of their smaller size, thereby reducing an employer’s choice of good local providers in the process.  We’ve come a long way since last autumn’s aborted procurement; one change could make the new one fair and successful.

Mark Dawe is chief executive of the Association of Employment and Learning Providers ([email protected])