United Kingdom-London: Legal services
Prior information notice
This notice is for prior information only
Section I: Contracting authority
Main address: https://www.gov.uk/government/organisations/department-for-education
Section II: Object
Insolvency and legal services to support the insolvency regime for further education and sixth form colleges in England and Wales
The Government is introducing a new insolvency regime for further education (FE) and sixth form colleges in England and Wales. The regime will apply aspects of normal corporate insolvency law to colleges that are statutory corporations, and will also introduce a special administration regime known as education administration, with a special objective to protect learner provision for existing students at an insolvent college.
This contract will allow the Secretary of State (in relation to a further education body in England) or Welsh Ministers (in relation to a further education body in Wales) to secure the services of relevant insolvency-related professionals (such as licensed insolvency practitioners, accountants and legal advisors). This will enable a quick response to potentially rapidly-changing situations in individual colleges which are in severe financial distress.
England and Wales
There are 266 colleges in England (as at 3.8.2018), comprising general further education colleges; 6th form colleges; land-based colleges; art, design and performing arts colleges and specialist designated institutions. There are a further 14 further education colleges in Wales. Although a small number of these colleges are companies limited by guarantee, the vast majority are statutory corporations incorporated under the Further and Higher Education Act 1992.
In 2016, the Government set out proposals for the introduction of an insolvency regime for the FE sector, recognising that (a) there was merit in having a specific insolvency regime clearly applying to FE and 6th form college corporations, and (b) learner provision should be protected if a college were to be in severe financial distress.
Legislation was brought forward later that year and the Technical and Further Education Act 2017 (the 2017 Act) received Royal Assent on 27.4.2017. The 2017 Act provides that normal corporate insolvency procedures will apply to FE bodies in England and Wales (with modifications to be made in relation to those that are statutory corporations). This regime was established to provide clarity within the law on what would happen in the unlikely event of a further education or sixth form college becoming insolvent and to provide orderly winding-up provisions similar to those available to companies and other organisations in the UK. The Act also expressly protects learner provision for existing students in insolvent colleges by introducing a special administration regime for the sector, known as an education administration.
The Government is now preparing draft secondary legislation to implement the 2017 Act and bring the insolvency regime fully into force. Our current intention is that the insolvency regime will come into force in early 2019.
In order to fully implement the regime, we also need to have the necessary infrastructure in place to allow us to respond quickly to cases of colleges in financial distress. The Department for Education already operates a system of monitoring and intervention, through the Education and Skills Funding Agency (ESFA) and the office of the Further Education Commissioner (FEC) for colleges in England. (Note that a similar regime operates in Wales but this is not the responsibility of ESFA, nor do Wales have an FEC role).
We are also adopting the approach of commissioning Independent Business Reviews (IBRs) to be undertaken on colleges where it is deemed necessary, and ahead of any formal insolvency procedure commencing.
Where it is clear that a college is in severe financial distress and there is no alternative viable solution for managing the college out of that situation, the expectation is that the college will enter into insolvency proceedings.
We are therefore proposing to procure the following services:
1) Services of licensed insolvency practitioners (IPs) or other suitably qualified/experienced professionals (such as accountants or restructuring experts) to conduct IBRs on colleges in financial difficulty;
2) Services of licensed insolvency practitioners (IPs) to take formal appointments in relation to the insolvency of individual colleges;
3) Provision of specialist commercial legal advice to the department in relation to cases of severe financial difficulty and/or insolvency of colleges.
The insolvency regime represents a new intervention for the Department, which is being introduced as part of our wider work to improve the financial resilience and sustainability of the FE sector. As such, we do not have existing comparable measures that could be used to accurately estimate the volume of work that the regime may generate. However, we have estimated that the total value of the work could have an approximate maximum cost of 7 500 000 GBP over the initial 15-month period of the contract. We will aim to provide further details about this at our market engagement events in September.
Section IV: Procedure
Section VI: Complementary information
Education in Wales is a devolved matter so the Secretary of State has no responsibility for further education in Wales. However, at the request of Welsh Ministers the provisions made under the insolvency legislation cover both England and Wales, meaning that the regime will also cover the 14 FE colleges in Wales. This allows Welsh Ministers to use the professional services procured through this exercise for any IBR or insolvency process which occurs in these FE colleges.
In line with best practice, DfE is holding pre-market engagement events for potential contractors, to provide further information about the insolvency regime and our proposals. Officials from the relevant policy and commercial teams will be in attendance, and there will also be an opportunity to ask questions.
The events will take place at our office at Sanctuary Buildings, 20 Great Smith Street, London SW1P 3BT on Friday 7.9.2018.
The first event will run from 10:00 – 12:00 and will focus on insolvency services (IBRs and formal insolvency appointments).
The second event will run from 14:00 – 16:00 and will focus on legal services.
Potential attendees are requested to provide advance notification of their wish to attend. Due to limited space, we have had to restrict attendances to two people per organisation, and places will be allocated on a first come, first served basis. If the event is fully subscribed, we may ask for only one attendee per organisation, or look to hold an additional event if required.
Please email FEinsolvency.email@example.com by 12:00 noon on Friday 31.8.2018, with the name and contact details of your organisation, the names of the people who wish to attend and specify which event (insolvency or legal services) you would like to attend. We will respond to confirm your place(s).
Estimated value: approximate maximum cost of 7 500 000 GBP over an initial 15-month period. Actual value will be dependent on length of contract and scope of services procured, and will be determined on a case-by-case basis.
Start and end dates of the contract:
We currently expect the contract to start on 1.1.2019. The initial contract end date will be 31.3.2020 but an extension is likely, to continue to support the insolvency legislation.