The Skills Funding Agency quango has awarded A4e the contract to run prison education programmes in London and the east of England, even though it is facing a string of fraud accusations.
The decision came despite an announcement by the Department for Work and Pensions last week that it has launched an inquiry into 10 welfare-to-work contracts operated by A4e.
The DWP warned it would cancel all of its contracts if it uncovered evidence of systemic fraud.
The firm, owned by Mrs Harrison, the Prime Minister's former adviser on troubled families, is already facing investigation by the police. The Serious Fraud Office has also faced calls to look into the claims.
Most people find it unbelievable that A4e has been handed major contracts when its conduct is being investigated by both the police and Government officials.
I find it astounding that, at a time when one Government department is investigating a company for systemic failures, another department is awarding the same company new contracts. You couldn't make it up.
The new contracts involve providing basic education to prisoners in area such as maths and English, and helping prepare them to find jobs on release. The London contract is worth about £15million.
The East of England contract is thought to be worth a similar amount. Other contracts were mostly awarded to further education colleges.
One rival bidder said: "It seems deeply ironic that offenders are to be given lessons in getting back on the straight and narrow by a firm that is being investigated for fraud."
A4e's entire £180million UK turnover comes from state contracts. The firm has faced a storm of criticism since it was revealed that Mrs Harrison paid herself an £8.6million dividend last year – despite the firm's failure to hit Government targets for finding jobs for the unemployed.
The revelation prompted a string of whistleblowers to come forward with allegations of fraud at the company, which is one of five main contractors on the Government's £5billion Work Programme. Mrs Harrison resigned from her role advising the Prime Minister and quit her post as A4e's chairman, although she retains ownership of 85 per cent of the firm's shares.
Tory Employment Minister Chris Grayling has acknowledged the DWP was aware of fraud allegations at the time that A4e was given hundreds of millions of pounds.
The claims are the subject of an inquiry by Thames Valley Police.
Mr Grayling told MPs that officials were made aware of the allegations in February last year, although they did not inform ministers until the autumn. In the intervening months A4e was handed five Work Programme contracts.
This is an astounding failure by government ministers.
One constituent from Crosby told me of her experience. She attended a course run by A4e and was told she had to stay in a room with other job seekers for eight hours per day reading the Yellow Pages. There was one computer in the room and the people on the course were not allowed to speak or to go to the toilet.
Another constituent was told he had to go on a course run by A4e instead of accepting a place at a college learning bricklaying. As a result he missed the chance to train for his chosen career.
A further constituent was not allowed to go for a job interview while in the middle of a course run by A4e.
In each of these cases, the people looking for jobs were actively prevented taking the steps that would have helped them find a job.
The A4e staff used the threat that benefits would be withdrawn if they did not finish the course. In fact, the reality was that A4e would have lost their payments for each job seeker who did not complete their course.
The way the government has structured the work programme, A4e are paid for each person who attends and completes the course, so it is in the financial interest of A4e to make sure job seekers do not find a job until the course ends and it is in their financial interest to stop people taking up real training opportunities.
The people who told me of their experiences with A4e all want to work but have found that A4e make it harder for them to find a job. A4e has a target of finding jobs for 40% of those who attend its courses but so far only 10% of those who go to A4e courses find work.
A4e was announced as one of the companies on the bidders list for prison education the same day The Department for Work and Pensions (DWP) announced that they will be conducting an immediate investigation into A4e following an allegation of attempted fraud.
The government should be helping people find work and people on benefits who are fit for work should be making every effort to work. But a work programme which actively stops people finding work and pays a private company to stop people helping themselves is a disgrace.
For the same government to then award the private company lucrative contracts to run education in prisons is a damning indictment of this government as it shows they are more interested in making sure private companies profits come before helping people of benefits and into work.
Company announced as one of the companies n the bidders list for prison education the same day The Department for Work and Pensions (DWP) announced that they will be conducting an immediate investigation into A4e following an allegation of attempted fraud.