The government is poised to terminate the contract of the Dutch multinational company it hired to run its flagship national tutoring programme (NTP), after official figures revealed the scheme was falling far short of its targets, sources close to the education department have told the Observer.

The £1.5bn programme was set up to help pupils across England whose learning has been most disrupted by the pandemic. But the Observer understands that the Department for Education has been holding meetings in the past two weeks to discuss replacing Randstad, which has so far met only 10% of its target for children receiving one-to-one or small-group tutoring from NTP tuition partners.

Many heads are strongly in favour of the idea of offering tutoring to families that would not normally be able to afford private tuition. But their feedback on the way the programme has been running under Randstad is damning. Schools have reported tutoring companies cancelling lessons just before they are due to start, tutors failing to arrive, and tutorials being run by people with no knowledge of the subject they are teaching.

Schools also say that the main web platform is “bureaucratic and too difficult to use”.

A senior education source involved in the discussion over the future of the programme said: “There has been a lot of discussion behind the scenes. A rival bid from tutoring organisations has been made and this is being seriously considered by officials and ministers.”

The source said that they were expecting the department to make an announcement in a matter of weeks.

Sam Freedman, senior adviser to the education charity Ark and a former senior policy adviser to Michael Gove when he was education secretary, said that the department’s contracts usually had a “tight performance commitment”. “I can’t imagine Randstad is hitting the performance targets, and from what I’ve heard they will have the ability to kick them out.”

He added: “It would make sense to give a grant to the charities to run it. The [tutoring] charities are furious. Some haven’t been paid by Randstad.”

It is widely expected that the National Audit Office will conduct an investigation into the NTP, and Freedman said: “If ministers have been shown what is going wrong and not acted on it, that will make things much worse for them.”

Lee Elliot Major, professor of social mobility at the University of Exeter, said: “What is happening with the NTP would be a national scandal if we weren’t all so diverted by partygate and I hope there will be a public inquiry. It is a lot of public money but, more importantly, it is a battle for the futures of a whole generation of children.”

The education select committee is already undertaking an inquiry into what has gone wrong in the delivery of the programme. School leaders have told the committee that the programme is “a bureaucratic nightmare”.

This week, its chair, Robert Halfon, said that the government should “seriously consider” revoking Randstad’s contract.

He said that he feared the funding “is not reaching the most vulnerable children in our communities”. Writing for the Conservative Home website, he quoted research showing that more than 96% of schools in the south had worked with the NTP, but that only 50% of schools in the north had.

Nick Brook, deputy general secretary of the National Association for Head Teachers union, said: “Every child in every school in every part of the country should be able to access tutoring support if they need it regardless of their family income. It is exasperating to see something that could be so transformational falling flat.”

He said: “It all needs to be made simple and easy for schools to access. The most obvious solution would be to give a single tutoring grant to schools and let them choose to go to a tuition partner or employ their own tutors.”

A spokesperson for Randstad said: “We understand the importance of the national tutoring programme and take the responsibility of running it seriously.”

The DfE was asked to comment but declined.