Adult skills contracts to get more competitive

10th July 2009 at 01:00
Ministers are drawing up plans to allow bidders to undercut other colleges and training providers for some adult skills contracts

The Department for Business, Innovation and Skills (Bis) is considering proposals to allow "contestability" of some contracts to extend to the price, instead of the standard costs per learner that it uses now.

But it is unlikely that the whole budget will be open to competitive bids of this kind. The department will instead look at top-slicing a part of the funds. The aim is to encourage greater efficiency from providers as Bis looks to find pound;340 million of savings and stretch its pound;4 billion adult skills budget further.

Colleges and training providers were concerned that the plans might compromise quality and make it harder for some trainers to survive.

Julian Gravatt, assistant chief executive of the Association of Colleges, said the plan was a consequence of the Government's decision to make greater efficiency savings from further education compared with higher education.

But he questioned: "How can we have a national set of quality standards if they are running things on different prices?"

"Bid by price" had already failed in the case of National Express and the railways, he said, even with the advantage of five- or seven-year contracts that allowed for investment to make long-term savings.

The Association of Learning Providers said it had experience of bidding by price for welfare to work and would want to ensure contracts were not big regional monopolies.

A spokeswoman for Bis said: "We are aiming to make savings and the point is to get the best value for money. Obviously it has to be done sensibly and we have to make sure it meets the department's priorities."

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