Initial Observations from the Non-Levy Tender Process

Peter Marples

Wednesday 13th December 2017

A flurry of nervous activity late last Thursday and into the early hours of Friday was the culmination of over 1 year of nervous anticipation for many existing and potentially new Apprenticeship providers.

An aborted first attempt by the Government of the day to procure provision to support the non-levy paying employers who still make up over 60% of Apprenticeship starts, followed by a second attempt kicked off just about when everyone was to go on their Summer holidays.

But the results are now in and whilst we are still to await details of the winners and losers in terms of values, there are some interesting results from our brief analysis of the data that in now in the public domain.

So the net effect is that there is an increase in 46 contract holders after the dust has settled. Not quite the dramatic increase in contract holders we expected to see but made more stark by 191 existing Apprenticeship contract holders who simply did not bid or from looking at their previous allocations, most of them would have failed to have met the di minimis thresholds to secure a contract. There are some anomalies in the data where ‘old’ providers have taken the opportunity to re-badge themselves with new identities or there have been mergers resulting in a consolidation of allocations but there still remains a significant number of existing providers either choosing to not bid or failing to make the mark.

As was said during the tender process, it does feel, and evidenced by this result that existing providers with low contracts were unreasonably penalised through restrictions on their bidding ability whilst new providers with little apparent experience of operating an ESFA contract have been put at a significant advantage. Something here doesn’t feel quite right but as the Skills Minister said, there will always be some winners and losers – we will just have to wait and see how many of the new providers have been given allocations at or near the maximum permitted.

So with 237 new providers in the scope of OFSTED, most of them needing to purchase MI systems and be subject to ESFA audit, it will be interesting times ahead. I wish them all the best of luck. We have all been there at some time in the past and as the ESFA always said to us, future growth is dependent on the holistic triangle – performance, priority and quality – and we now have at least 171 untried providers from a quality perspective in the market.

I haven’t undertaken a complete analysis of the results – I’ve been too busy addressing the myriad of tenders that keep hitting my email every day, but it is an interesting read:

• One new provider appears to have secured four separate allocations – simply by registering four different but similar names – an effective cut and paste job for their submission potentially and a canny move by them.
• Whilst I don’t have the need for much support from my local hairdresser anymore, we have a significant number of new hair and beauty providers securing contracts for the first time – well done to them!
• A small number of levy payers themselves have appeared as providers – assuming they will be supporting their supply chains or maybe they have a different strategy in using non – levy funding.
• I couldn’t but notice a few providers having been given contracts where they have been the sole sub-contractor to an employer provider and their previous inspections have been less than positive – I’m assuming they didn’t mention that in the ESFA questions or didn’t quite hit the character count so had to be deleted!
• A significant number of training provider groups and colleges have appeared to have fallen by the way side as part the process – not sure why this is so, but it could be the first assault on reducing the level of sub-contracting in the market.

Many of the new providers on the list have previously been sub-contractors – so we don’t have a totally new situation. Nevertheless, being a sub-contractor is totally different to the responsibilities of operating your own contract. Whilst I wish everyone well, particularly the 171, it is almost inevitable that by sheer statistics there will be not that many OUTSTANDING inspections at the first time of asking.

So we await the allocations to see the real winners and losers.

I really do believe these new 237 providers will deliver some more competition in the market and that has to be a good thing. More choice for employers and for Apprentices of all ages, but it comes with responsibility.

I hope the ESFA are able to provide these new providers with support and that OFSTED don’t come in after the horse has bolted and take a good early look at this new provision.

I also hope the providers can make a quick start – to make up some of the ground of the lost starts in 2017 and not have to resort to even more sub-contracting because we will then be back to Square 1.

Peter Marples

December 2017