Revealed: Edenred sued government over tender-free contract

The under-fire company that runs the national free meal voucher scheme took legal action against the government almost six years ago for issuing a contract to a rival without a tender.

Schools Week revealed the government’s contract with Edenred – valued at up to £234 million – was awarded without going to tender under emergency powers introduced during covid-19.

It has emerged that in 2014 the company took the government to court for awarding its flagship tax-free childcare policy contract to the French outsourcing giant, Atos, without a public procurement process.

Edenred, which provided childcare vouchers under the scheme, said the award was “unlawful”. The Supreme Court dismissed the claim in 2015.

The company has faced growing criticism in the past few weeks after the free school meal voucher scheme was swamped by demand.

Parents said their families were left to go hungry after waiting weeks for vouchers, while school staff said they could not log on to the Edenred website to check on the status of orders.

When Schools Week asked Edenred two weeks ago about the lack of a tender, the company said it had been a government supplier for the past five years and had been “validated through a competitive tendering process by the Crown Commercial Service”.

Public contract regulations also allowed for “urgent provision of services in response to the covid-19 pandemic”.

Court documents unearthed by Schools Week show the company waged a legal battle with the Treasury over a £130 million contract issued to Atos. It was part of the government’s flagship policy that allowed parents to open bank accounts to pay toward childcare costs, which the government then topped up.

National Savings and Investment, an executive agency of the Treasury, proposed to modify a contract it already held with Atos to include services for the new scheme – without going out to tender again.

But Edenred, with the Childcare Voucher Providers Association, claimed EU procurement law required a new tender process.

It claimed the arrangement was unlawful and in October 2014 was granted an interim order preventing the implementation of the new scheme.

However, the claim was dismissed in an expedited trial in November 2014, before the Court of Appeal dismissed an appeal in March 2015.

In July of that year the Supreme Court unanimously dismissed another appeal, and the interim order was set aside.

A government press release after the hearing described the victory as a “landmark procurement case” that would benefit “many hardworking families”.

However, the new scheme has been dogged by problems. The Daily Mirror newspaper reported in 2017 that just 30,000 parents out of a promised 415,000 had been helped.

The Guardian then reported in 2018 that the government was accused of failing to support hard-pressed families after a £600 million underspend on its tax-free scheme was returned to the Treasury.

Edenred refused to comment.