The government has been accused of showing a "worrying" lack of scrutiny over the potential loss of millions of pounds of taxpayers' money in the dispute between the charity that runs the National Citizen Service and its main contractor.
The Challenge lodged a complaint with the Department for Digital, Cultural, Media and Sport on 3 October about an alleged catalogue of failures and concerns relating to the trust, including its IT system.
Documents seen by Third Sector reveal that Nicky Morgan, the culture secretary, replied on 9 October saying the DCMS would investigate the complaint "in line with standard complaint procedures".
But she added that "contractual and relationship disputes should continue to be raised with the NCS Trust".
This prompted concerns at The Challenge about the speed and scope of the investigation by the DCMS, which awarded the trust a grant of £185.7m in 2017/18.
More than 400 staff at The Challenge face uncertain futures when the organisation's contracts with the trust expire at the end of the year.
An email response to the DCMS sent the following day and approved by The Challenge's trustees and Oliver Lee, the chief executive, said: "We are very surprised to discover your continued inability to scrutinise the taxpayer money, which your department controls and attributes through the NCS programme.
"Can it genuinely be that the NCS Trust is beyond your department's scrutiny? We find this very worrying.
"We are sorry and surprised that you are unable to become involved more effectively and rapidly in this situation."
A source at The Challenge said it had not lodged a formal complaint with the trust because matters had escalated beyond this point now the two parties were in legal dispute.
A DCMS spokesman said: "In line with standard complaint procedures, we will examine every aspect of the NCS provider's complaint about the NCS Trust.
"We will not provide an ongoing commentary while the issues are being explored."
Michael Lynas, chief executive of the trust, said: "The NCS Trust made a number of offers to address The Challenge’s concerns, including having an independent auditor look at its payment complaint, none of which have been accepted by the charity.
"That said, we continue to have ongoing conversations with The Challenge regarding its current contractual obligations and will do so until its contract ends in December.
"It is right and proper that the DCMS wants to investigate the charity’s complaints. The NCS Trust will cooperate to the fullest extent possible with this process given the ongoing legal challenge."