Last month, an out-of-state firm backed by private equity and venture capital beat a Maine-based early childhood education organization for a pair of state contracts.

Now, advocates are sounding the alarm over what the decision could mean for Maine children and raising concerns about how the Maine Department of Health and Human Services evaluated the proposals.

Shine Early Learning, a New York organization backed by the private equity behemoth BlackRock, won two multimillion-dollar contracts to provide training and assistance to Maine’s early childhood educators through 2028.

The firm underbid Maine Roads to Quality, a group created in 1999 by the Catherine Cutler Institute at the University of Southern Maine, by about $2 million. Shine Early Learning said it will achieve lower costs by using artificial intelligence to do much of the work Maine Roads’ 30-odd employees currently perform.

Those employees are now bracing for layoffs as Maine Roads might be forced to shut down. The University of Maine System appealed the contract decisions last week.

Ending a decades-long partnership in favor of an out-of-state tech company could have drastic effects on the state’s early childhood education system, said Lauren Stark, an analyst with the progressive Maine Center for Economic Policy.

“There is not necessarily an incentive for the company to improve early learning or to increase access to affordable childcare. There’s not a public good motivation for them as a for-profit venture capitalist company,” Stark said. “The motivation is to have a greater profit.”

“Lower cost is not the same as a better value,” she added.

Maine Roads provides training and assistance to about 10,000 Maine childcare providers each year. It’s cultivated relationships with schools, educators, students and regulators alike over the last 27 years, said University of Maine System spokesperson Samantha Warren.

Work that was historically housed under a single contract was instead split into two earlier this year: One for coaching, credentialing and training educators, and another for providing a DHHS-approved plan “designed to improve (the) quality” of child care services.

Kimberlee Belcher-Badal is the executive director of the National Workforce Registry Alliance, a group that supports early childhood workforce registry systems across the country. The alliance has worked with Maine Roads for decades, Belcher-Badal said.

In a letter to DHHS’ appeals committee, Belcher-Badal said “Maine’s registry and its team are among the strongest in the nation” and questioned whether Shine Early Learning’s plans to implement AI chatbots would really benefit Maine educators.

In Missouri, Montana and many other states where Shine Early Learning operates, established early childcare providers have seen similar outcomes after losing contracts to the firm: Sweeping layoffs, worse services and less person-to-person connection in a field heavily reliant upon it.

DHHS graded Maine Roads’ and Shine Early Learning’s proposals on a scale from 0 to 100, as it does all submissions. Shine Early Learning’s bid for the coaching contract received a 97 and its proposal for the training plan got a perfect 100, public records show. Maine Roads received about 73 points on each.

In a pair of letters sent to the state, the university system questioned how DHHS graded each proposal and asked regulators to invalidate the contract decisions over irregularities in the scoring process. Maine Roads lost points “for no stated reason,” the appeal alleges.

“(DHHS) gave Shine near-perfect technical scores without resolving questions the evaluators themselves raised,” the appeal reads. “The award is arbitrary and capricious, and the evaluation contains irregularities creating fundamental unfairness.”

A DHHS spokesperson said the scores were issued in accordance with the processes laid out in its requests for proposals but did not specify how Shine Early Learning received such high marks.

Shine Early Learning’s website says the company uses “data-driven services and solutions” to “accelerate child and family outcomes.” The company has not responded to requests for comment on its expansion into Maine.

The company’s proposals state they plan to use AI agents and chatbots to screen prospective teachers’ applications, power a “family navigation assistant” and manage the state’s early childcare provider registry.

Stark, with the Maine Center for Economic Policy, is skeptical that AI will be an adequate replacement for Maine Roads’ human staff.

“You need people with expertise to set up the systems, you need mentors who have experience in the field working with early childhood educators. And a chatbot is not a mentor,” she said.

Shine Early Learning is owned by Acelero Inc., a company backed by some of the world’s largest private equity and venture capital companies. The senior portfolio manager for BlackRock, which manages some $11 trillion in assets globally, said the firm was investing in Acelero to widen its reach across the country.

A report published in February by the National Women’s Law Center, a nonprofit advocacy organization, found private equity groups are increasingly acquiring vital community services, from childcare to housing.

“Private equity investors face more structural incentives to prioritize short-term profits than any other form of corporate ownership or investment,” the report states. “This makes them the quickest and most likely to identify and exploit opportunities to extract wealth from any market.”

It is unclear when the appeal will be resolved. The state’s contracts with the firm have not yet been finalized, a DHHS spokesperson said, and won’t be until the appeals process is complete.