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
Joint
Projects
Informal networks
Informal
Networks
Merger
Today’s objectives
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Different consortia models
When to pursue a subcontract
Practical factors for partnership working
Working with different sectors
How to be a good partner
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
The External Picture
http://www.ncvo-vol.org.uk/advice-support/public-servicedelivery/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-servicedelivery/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
Consortia: so what’s the value then?
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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
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New legal body
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Lead organisation
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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/collaborativeworking/information-and-tools/jointworkingagreements
Legal and Commercial Issues (II)
• Due diligence
– http://www.ncvo-vol.org.uk/advice-support/collaborative-working/duediligence
– http://www.ncvo-vol.org.uk/products-services/publications/due-diligencedemystified-what-it-how-you-manage-it
• Intellectual Property Rights
• VAT and cost sharing
– http://www.ncvo-vol.org.uk/advice-support/funding-finance/financialmanagement/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
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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 risky
However
• 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 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?
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)
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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
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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
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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
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Lawyer, accountant, service specialist,
manager, bid writer
Project Plan
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Timeline
Responsibilities
Market research:
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Policy, Buying Intentions – Committee Reports, Performance and Contract
Compliance Reports, Satisfaction and Need Surveys, Focus Groups,
Competitors.
http://www.ncvovol.org.uk/sites/default/files/Creating_Trust_Base_Relationships_Case_Stu
dy_TACT_February_2011.pdf
Writing a Tender
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Quality assurance: who will deliver?
Heads of Terms
Referrals pathways
Service plan
Risks matrix:
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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/psdnetwork
http://www.ncvo-vol.org.uk/advicesupport/collaborative-working
fiona.sheil@ncvo-vol.org.uk
0207 520 2411
commissioning; procurement; public service
delivery; consortia and collaboration