Sub-contracting and Partnership Working for Bidding and Delivery

1. Sub-contracting and Partnership Working for Bidding and Delivery Fiona Sheil Public Services Team National Council for Voluntary Organisations 27th June 2012, Norwich www.ncvo-vol.org.uk/psdnetwork @fionapsdn Fiona.sheil@ncvo-vol.org.uk

2. Joint Projects Informal networks Merger Informal Networks

3. Today’s objectives • Different consortia models • When to pursue a subcontract • Practical factors for partnership working • Working with different sectors • How to be a good partner

4. Groundrules • Participation • Responsibility and respect • Confidentiality • Timekeeping • Explain the jargon! • Mobile phones off • Copies of presentations provided • Plus the exercises • And evaluation • but let us know if you want more

5. The External Picture http://www.ncvo-vol.org.uk/advice-support/public-service-delivery/public-service-delivery

6. Estimated Change in Govt Spending on VCS 2010/11 – 2015/16 (£mill 2010/11 prices)

7. VCS Grants and Contract Income 2000/1 - 2009/10

8. Income from statutory sources by sub-sector 2009/10

9. Government Expenditure on the VCS 2009/10

10. Future Forecast • Open public services • http://www.openpublicservices.cabinetoffice.gov.uk/ • http://www.ncvo-vol.org.uk/psd/public_services_history . • Efficiency via price and scale • Structural changes to funding • http://www.ncvo-vol.org.uk/commissioning/paymentbyresults • Shift in commissioning responsibilities • http://www.ncvo-vol.org.uk/advice-support/public-service-delivery/commissioning-procurement/commissioning-procurement-step-step • VCS decommissioning risks • VCS Strategic skills • http://www.3s4.org.uk/ • http://www.ncvo-vol.org.uk/advice-support/strategy • VCS culture of collaboration

11. Consortia: so what’s the value then? • Delivery quality: transformation • Best use of resources eg technology • Horizon scanning • Narrative of needs; evidence and marketing • Scale and referrals; market structure • Exchequer and capacity development • Risk appetite and risk arbitrage

12. Thinking it through http://www.ncvo-vol.org.uk/advice-support/collaborative-working

13. The key questions ‘Trustees of a charity have a duty to consider regularly whether the charity could be more effective at achieving its objects by collaborating or merging with other charities’ (Charity Commission) • What outcome do you want? • What do you know? • What do you own?

14. Structures for consortia • New legal body • Lead organisation • External non-delivering lead • … and merger

15. Legal and Commercial Issues (I) • Competition Act • Procurement regulations • http://www.ncvo-vol.org.uk/commissioning/procurment/legal_framework • http://www.legislation.gov.uk/uksi/2006/5/regulation/5/made • http://www.legislation.gov.uk/uksi/2006/5/regulation/28/made • Identifying risk • http://www.sayervincent.co.uk/Asp/uploadedFiles/File/Publications/MadeSimpleGuides/RiskManagementMadeSimple.pdf • Governance and legal structure • www.getlegal.org.uk • Appropriate documentation • http://www.ncvo-vol.org.uk/advice-support/collaborative-working/information-and-tools/jointworkingagreements

16. Legal and Commercial Issues (II) • Due diligence • http://www.ncvo-vol.org.uk/advice-support/collaborative-working/due-diligence • http://www.ncvo-vol.org.uk/products-services/publications/due-diligence-demystified-what-it-how-you-manage-it • Intellectual Property Rights • VAT and cost sharing • http://www.ncvo-vol.org.uk/advice-support/funding-finance/financial-management/financial-management

17. Lead contractor model

18. Appropriate use (I) Current Relationship • Cultural understanding and confidence? Has this been tested? • Their relations with others? • Do you know what they want? • Communications • Relationship beyond the contract? • Power balance? Contractual Issues • Is there a contract? • What terms are passed down? Including termination. • PQQ on the prime? How sustainable is it? • Variations? Break clauses? • Recourse and dispute resolution

19. Appropriate use (II) Risk arbitrage • What risks are they carrying? • What scope do you have to absorb identified risks eg lack of referrals? Market Positioning • What evidence of effectiveness, reach and USP do you have? • Which tier do you want to be? • How close is your work (IP) to that of the prime? • How much IP information do you need to share, and how? • Reputational risk? • Capacity building and fiscal sheltering role? • Bid candy?

20. Appropriate use (III) Supply Chain management and competition • Commissioner involvement (black box)? • Requirement for new systems? • Data sharing and confidentiality? • Is there competition within the supply chain? • Volume guarantees? Payment mechanism? • Fiscal sponsorship? • How transparent is the supply chain? • Gagging clauses – sharing best and worst practice? • Merlin Standard / Compact management quality assurance?

21. Risks and disadvantages • Clauses commonly passed downwards • Distance from commissioner • Creaming and parking • Competition management / guaranteed volume and funding • Incentives to market manage • Imbalance of power

22. Development Process • Initial contact PQQ response or marketing • Volumes and costing developed by the prime • Negotiation (as possible) on contract terms • Capacity building (?) • Due diligence • Service / quality sharing… this is very risky However • primes can bring you in to the contract later: are you ready for this?

23. Hub and spoke

24. Appropriate Use (I) Quality and Availability of Partners • See ‘Joint Working Agreement’ • See flipchart Quality of Commissioning • Integrated / at scale? • How sustainable is this decision: • Length of contract? • Trial or proven service? • Subject to political weather? • How involved has the commissioner been in hub development? • Timescale before tender • PQQ hurdles? • Any other choice at scale?

25. Appropriate Use (II) Culture and Capacity Building • Open or closed membership? • Sustains sector delivery activity • Creates an independent, democratic mechanism • Pooling resources, skills and user pathway • Can be a first step to merger • Skills up a range of members • Isolates delivery and contract risk • However may have to adapt to least able member

26. Risks and disadvantages (I) • Access to initial finances • Complex and heavy legal costs • Start up time scale (9 months) • Governance and conflict of interest • Risk of not-winning • PQQ barriers • Insurance • Track record • Income

27. Risks and disadvantages (II) • Risk of being decommissioned • Failure to deliver • Quality management: political; bureaucratic • Process heavy • Often developed in a generalist manner • IPR ownership • People… no matter how good your process

28. Development Process • Identify potential partners • Board sign-off from each org • Identify market; liaise with commissioners • Create membership protocol and support structures • Governance responsibilities and strategy • Hub protocols (exchequer, tender alert, disputes, quality) • Marketing and communications • Tender readiness

29. First steps

30. Partner readiness test • Shared outcomes • Complementary areas • Good governance • Horizon scanning (contracts coming?) • Innovation • Business skills and capacity: to scale, technology, referral systems etc • Ready to start Due Diligence • Available capacity / finance committment • Trust and reputation

31. Bidding in Partnership: preparing • Lawyer, accountant, service specialist, manager, bid writer • Project Plan • Timeline • Responsibilities • Market research: • Policy, Buying Intentions – Committee Reports, Performance and Contract Compliance Reports, Satisfaction and Need Surveys, Focus Groups, Competitors. • http://www.ncvo-vol.org.uk/sites/default/files/Creating_Trust_Base_Relationships_Case_Study_TACT_February_2011.pdf

32. Writing a Tender Quality assurance: who will deliver? Heads of Terms Referrals pathways Service plan Risks matrix: Identify risks Analyse risks Analyse risk capacity / appetite Allocate risks Risk management plan Instructions and orders

33. Today’s objectives • Different consortia models • When to pursue a subcontract • Practical factors for partnership working • Working with different sectors • How to be a good partner

34. Thank You! www.ncvo-vol.org.uk/psdnetwork http://www.ncvo-vol.org.uk/advice-support/collaborative-working fiona.sheil@ncvo-vol.org.uk 0207 520 2411 commissioning; procurement; public service delivery; consortia and collaboration