Sub-contracting and Partnership Working for Bidding and Delivery

Fiona SheilPublic Services Team

National Council for Voluntary Organisations

27th June 2012, Norwichwww.ncvo-vol.org.uk/psdnetwork

@fionapsdnFiona.sheil@ncvo-vol.org.uk

Informal networks

Informal Networks

Joint Projects

Merger

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

GroundrulesParticipationResponsibility and respectConfidentialityTimekeepingExplain the jargon!Mobile phones offCopies of presentations provided

Plus the exercises And evaluationbut let us know if you want more

The External Picture

http://www.ncvo-vol.org.uk/advice-support/public-service-delivery/public-service-delivery

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

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

Income from statutory sources by sub-sector 2009/10

Government Expenditure on the VCS 2009/10

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-pr

ocurement/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

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

Thinking it through

http://www.ncvo-vol.org.uk/advice-support/collaborative-working

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?

Structures for consortia • New legal body

• Lead organisation

• External non-delivering lead

•… and merger

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/MadeSi

mpleGuides/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

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

Lead contractor model

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

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?

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?

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

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 riskyHowever• primes can bring you in to the contract later: are

you ready for this?

Hub and spoke

Appropriate Use (I)Quality and Availability of Partners•See ‘Joint Working Agreement’•See flipchartQuality 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?

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

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

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

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

First steps

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

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

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

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

Thank You!

www.ncvo-vol.org.uk/psdnetworkhttp://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