Competition for contracts to inspect secondaries is so intense that prices are being forced down and the Office for Standards in Education is now paying 16 per cent less on average per school than two years ago. In the early days, OFSTED was paying an average of Pounds 22,700 for a secondary school - the average for this summer has fallen to Pounds 18,400.

In the latest bidding round for the 163 secondaries to be inspected this summer, two-thirds of the contracts have been won by the private sector. The fortunes of the local authorities have reversed since the bidding for the first 392 schools inspected in the autumn of 1993, when they won 78 per cent of contracts.

While there is a price war for secondary inspections - with an average of five bidders for each contract - better rates for inspecting primary schools have not attracted enough interest to allow OFSTED to fulfil its legal requirement to inspect all schools every four years.

It may be that local authorities are carrying out the bulk of primary inspections (68 per cent) because private companies find it more difficult to find freelance inspectors with experience in that sector.

The key companies are Compass and Millwharf. Both bid for contracts over a wide area and appear able to undercut local authorities.

Compass, based in Reading, has around 10 per cent of the secondary market. According to David Banham, contracts manager, the company is getting as many school inspections as it can cope with. This term, it is inspecting between 80 and 90 schools - about half are secondaries.

Compass employs 11 headquarters staff and draws on freelance inspectors to put together inspection teams. It uses about 300 inspectors, but as they are not employees, Compass does not have to pay the costs of pensions or holidays.

In Bradford, the acting principal inspector, Clive Halliwell, reckons the private Westminster Education Consultants from London was able to put in bids for three of its middle schools at prices that undercut the authority’s bids by between 10 and 20 per cent.

“We don’t mind competition, but we have had nothing but A-class from the monitoring of our work, so we were rather surprised in terms of whether quality was the criteria,” he says.

“We’ve taken a decision not to do as much inspection. It is very hard work for poor money and there is more consultancy work than we can handle.”

John Nellist, director of education in Cumbria, believes local authorities are drawing back from the contest because it is increasingly difficult to cover costs and because councils want inspection teams to do other work with schools.

“This authority is doing as many secondary school inspections as last year, but there is fierce competition. Local authorities cannot subsidise the cost of inspection and we have to cover the cost of employing inspectors full-time, ” he says.

“I think we will continue to do some in order to maintain a level of expertise, but there are more important things to do.”

Other local authorities paint a similar picture. East Sussex is doing half the number of secondaries it did last year. Rose Godfrey, an adviser, said it was difficult to maintain consistent quality at the current price level.

The advance of the private sector is seen by OFSTED as an evening-out of the market. “We always expected the local authorities to provide the initial majority of bidders, but we always hoped to see that widen,” said a spokesman.

The fall in price is seen as the market finding its level. “The secondary market is healthy. At the top end we are getting 15 to 16 bids for a school, ” she added.