Retraining the Workforce - A private solution

I think the solution is in the private sector company that Vanisher mentions. Vanisher mentions this company bidding on a contract with the government, but I think a company like that might ultimately thrive even without a government contract. They could be compensated in a number of different ways: training fees (at a very low cost) from the laid off workers (perhaps some type of insurance could cover the cost), finder's fee from the workforce's future employers for finding and training the new personnel, and a public relations fee from the former employer for diminishing the stigma of the layoff. (Would such an action also reduce unemployment payments from the former employer?) I think it could work. It might take a substantial investment to get the business model right, but I think it could work.

Speaking of "a substantial investment", to me the point is determining the best use of limited resources to address this issue. If we had a $1 million to spend to fix this problem, what should we do?
A - lobby the government to implement a program to retrain workforces,
B - give it directly to companies to spend on retraining workforces, or
C - give it to a company to invest in a business model to provide affordable retraining.
(There can also be a D, E, F, etc. Any other ideas?)
I see a lot of complexities in getting effective results out of solutions A & B above. As for C, businesses like this may already exist, and if an organization challenged them all to provide the most effective training at the lowest cost, rewarded the best company with a small prize, and established a pattern of holding similar contests over time for prizes of increasing amounts… the world might end up with a company that's fit to provide an uncommon service at a price the market will naturally bear. Thoughts?