Download - Enterprising commissioning

TheEnterprising

CommissioningToolkit

A collection of resources to help third sector organisations to compete in the market for

public sector service delivery

TheEnterprising

CommissioningToolkit

Published by Birmingham ChangeUp Consortium, March 2010 | Developed and written by iSE and brap

© Birmingham ChangeUp Consortium 2010. All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission, in writing, of the copyright owners.

IntroductionPurpose

The toolkit is a useful resource which infrastructure organisations can use to assist their work with frontline organisations which are considering tendering for public sector service contracts. It can also be used by frontline organisations themselves and as a reference document for commissioners.

The toolkit is neither exhaustive or overly detailed. It aims to give a good understanding of particular topics and signpost to further reading and support.

Background

Birmingham ChangeUp Consortium was successful in gaining funding from the Capacity Builders Modernisation Programme - to help develop modernised support services for the third sector in Birmingham. Part of the funding is being used to support the development and production of a toolkit and the development and delivery of a training seminar programme. iSE in partnership with brap, both members of the consortium, have developed this toolkit and the associated training programme.

Advisory group

The Third Sector Advice & Action Group – which includes both third sector providers who are experienced with local commissioning processes and commissioners who have successfully contracted with the third sector – has influenced the shaping and content of both the toolkit and seminar programme.

Rationale

The content of the toolkit has been driven both by commissioners and third sector support agencies. The toolkit contains the information, resources, knowledge base, advice and guidance the third sector needs to ensure it can compete. It covers a range of topics including full cost recovery, equality impact assessment, risk management and social return on investment.

How to use the toolkit

This toolkit is designed as a self help guide – a training resource for infrastructure organisations and a reference document for commissioners to give to third sector organisations for support.

The toolkit has two parts. The first is informative and about the commissioning process itself. The second is more practical and designed to help organisations prepare to tender.

The Enterprising Commissioning Toolkit

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Contents

1 | About commissioning

Context 9

Understanding commissioning 16

Procurement 20

Governance 31

Working as a cluster or consortium 32

2 | Preparing to tender

Managing risk 36

Equality impact assessment 44

Full cost recovery 50

Quality assurance 56

Outcomes 59

Impact assessment 64

Environmental sustainability 69

Local good practice 70

Enterprising Commissioning quiz: A tool to help you use the toolkit 71

Appendix: Members of Third Sector Advice & Action Group 72

Index 73

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Birmingham ChangeUp Consortium


Aboutcommissioning

Developing your understanding of

the commissioning process and how it

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ContextOver the last 10 years, central government has given more credence and recognition to the role of the third sector in shaping and implementing key policy agendas. In 1998, the Voluntary Sector Compact was introduced setting out guidelines

for how the two sectors, public and voluntary, should work together.

A refreshed national Compact1 was published in December 2009 after extensive discussion and consultation. This Compact highlights the shared principles which Compact partners should follow when engaging in partnership working, and records all the Compact commitments. These commitments cover three key areas:

~ Involvement in policy development

~ Allocating resources

~ Advancing equality

The shared principles underpinning the Compact include: honesty, respect, independence, diversity, equality, citizen empowerment and volunteering. The Birmingham Compact is in the process of being refreshed and a forum set up comprising of the key partners from Be Birmingham2 to oversee its implementation, particularly in relation to compact-compliance commissioning processes.

As far back as 2002, with the publication of ‘The Role of the Voluntary and Community Sector in Service Delivery – A Cross-cutting Review’3 the government was calling for the third sector to play a more active part in the delivery of public sector services.

Since then a plethora of commissioning/third sector reports have followed mainly through the Office of the Third Sector4. The Capacity Builders programme was launched to support the development of infrastructure organisations so that they could more effectively support frontline organisations in bidding for public sector contracts; and last year the Cabinet Office committed to invest a further £85m of new resources into further infrastructure support.

Together with a change in attitude towards the third sector has come a change in the way organisations are funded. Whilst in the past organisations were awarded grants to deliver a particular service, public bodies now identify the service they want to fund through the commissioning process and ask organisations to bid to deliver it.

1. www.thecompact.org.uk/information/100023/publications/

2. Be Birmingham – Birmingham’s local strategic partnership

3. HM Treasury (2002)

4. E.g. National Procurement Strategy for Local Government 2003-2006, Office of the Deputy Prime Minister (October 2003), Independent Review of Public Sector Efficiency: Releasing resources to the front line, Sir Peter Gershon OBE, HM Treasury (July 2004), Working with the Voluntary Sector, House of Commons Committee for Public Accounts (February 2006)

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In ‘Partnership in Public Sector Services: an Action Plan for Third Sector Involvement’5, the Government identified that the third sector had an important role to play in improving the delivery of public services in the following areas:

~ Health and social care

~ Employment and training services

~ Correctional services

~ Children’s services, education and training

~ Local services

The same action plan focuses on improving the experiences of third sector organisations in the commissioning process by establishing a ‘National Programme for Third Sector Commissioning’ and investing in developing the skills of 2,000 commissioners. The whole programme is being underpinned by eight key principles that commissioners need to follow.

5. Office of the Third Sector, Cabinet Office (2006)

Eight key principles of commissioning

~ Understand the needs of users and other communities by ensuring that alongside other consultees, public sector bodies engage with the third sector organisations as advocates, to access their specialist knowledge.

~ Consult potential provider organisations, including those from the third sector and local experts well in advance of commissioning new services, in order to set priority outcomes.

~ Put outcomes at the heart of the strategic planning process.

~ Map the fullest practical range of providers with a view to understanding the contribution they could make to delivering those outcomes.

~ Consider investing in the capacity of the provider base, particularly those working with hard to reach groups.

~ Ensure contracting processes are transparent and fair, facilitating the broadest range of suppliers, including considering sub-contracting and consortia building where appropriate.

~ Ensure long term contracts and risk sharing, wherever appropriate as ways of achieving efficiency and effectiveness.

~ Seek feedback from service users, communities and providers in order to review the commissioning process in meeting local needs.


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Running in parallel are three other elements that the Government are focussing on which include procurement, accountability and learning from the third sector. The purpose of the overall action plan is to develop an equal and effective partnership between the state and the third sector.

The Government, through the Office of the Third Sector, are ensuring their own central departments are taking a pro-active approach to third sector engagement. To date the Department for Environment, Food and Rural Affairs (DEFRA), the Department for Children, Schools and Young People and the Ministry of Justice have all produced strategies6 outlining how they are working with the third sector.

There is a Third Sector Partnership team at the Department of Health which promotes the third sector in the context of health and social care policy, service development and delivery.

Policy driversIt is essential that all organisations are aware of both national and local key policy drivers which influence their areas of work and in particular the role of the third sector in driving those policies forward.

On a national level there are a range of policy documents particularly around the health and social care agenda. ‘Our Health, Our Care, Our Say: a new direction for community services’7 centres around providing health and social services around the needs of individuals and communities rather than expecting people to fit in with available services. There is also an emphasis on prevention and early intervention.

The ‘world class commissioning’ programme will transform the way health and care services are commissioned. It will deliver a more strategic and long-term approach to commissioning services, with a clear focus on delivering improved health outcomes.

There are four key elements to the programme8; a vision for world class commissioning, a set of world class commissioning competencies, an assurance system and a support and development framework.

Other policy documents have followed particularly around the personalisation agenda – ‘Transforming Social Care’ (Department of Health, 2008) which presents new challenges for the third sector. Similarly policy on welfare reform ‘Raising Expectations and Increasing Support’9, (Department for Work and Pensions, 2008) and the ‘Welfare Reform Bill’ (2009) are key documents for all organisations working in training and employment. And for those organisations working with children and young people, the outcomes focussed ‘Every Child Matters’ framework is driving all activity.

6. www.defra.gov.uk/corporate/about/how/third-sector/documents/Defra-Third-Sector-Strategy-1108.pdf; www.dcsf.gov.uk/everychildmatters/thirdsector; www.justice.gov.uk/consultations/docs/third-sector-strategy.pdf

7. www.official-documents.gov.uk/document/cm67/6737/6737.pdf

8. www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_107080.pdf

9. www.dwp.gov.uk/docs/fullversion.pdf


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Third Sector Foresight10, part of the National Council for Voluntary Organisations has an excellent website which details all the policy drivers and gives guidance to organisations on selecting those which are likely to impact on them the most and which will inform their strategic planning.

PersonalisationThe personalisation agenda deserves a special mention because it will have a huge impact on the way adult social care services will be delivered. ‘Putting People First: A Shared Vision and Commitment to the Transformation of Adult Social Care’,

published in 2007 made a commitment to creating more personalised services for people who need them. It advocated a radical change to the way individuals receive social care support. Personalisation is about allowing the individual to determine how their needs are met and allowing them to decide how the funding allocated to meeting those needs is spent.

At the moment services are not tailored to individual needs. For example, individuals are told that they can attend a day centre 2 or 3 days per week; or a carer will visit them in their homes to help with bathing and dressing; or someone will come twice a week and help with cleaning and washing. Individuals cannot dictate who provides the service for them and when. A provider will be asked to provide a service and they will then allocate a member of staff to deliver it at a particular time. The service user has to fit in around the service provider. The local authority will contract with organisations to provide these services for a specific number of people in a specific location; this is usually referred to as ‘block contracting’.

Under the new system individuals will be allocated a budget which they can then use to meet the priorities and needs within their care plans. There are two types of budgets – individual budgets and personal budgets.

Budgets can be paid in a variety of ways:

~ Directly (called a direct payment) into the individuals’ bank account

~ Managed by an independent broker (for a fee)

~ Managed by a service provider who will provide all the services needed

~ Managed by the local authority who will continue to organise the provision of services

~ Managed by a third party (family member/friend, etc) to administer and manage.

Individual budgets combine several sources of funding e.g. independent living, access to work, and social care money. Personal budgets only include social care money. Under personalisation, individuals will be able to purchase services directly themselves. This is called micro-commissioning.

Individuals can decide to carry on receiving their current services or do something completely different or a combination of both.

10. www.3s4.org.uk


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In Birmingham there has been some pilot activity already, both for people over 65 and people with disabilities. Individual budgets will start being rolled out across the city from April 2010.

Currently the City Council are working with the third sector to develop a user-led brokerage service. The aim of a brokerage service is to help individuals plan and organise the services they need. A user-led brokerage service has to fulfil certain criteria including: works from a social model of disability perspective, promotes independent living, promotes people’s human and other legal rights (value base); provides support to enable people to exercise choice and control, is a legally constituted organisation, has a minimum of 75 per cent of the voting members on the management board drawn from the organisation’s constituency (organisational characteristics) and provides information and advice, advocacy and peer support (services). These are just examples of the criteria not the full list.

Implications for third sector organisationsPersonalisation will mean that third sector providers will have to adapt their current ways of working to meet the requirements of individuals and micro-commissioning. This presents both enormous challenges as well as exciting opportunities. One of the

many challenges will be developing a marketing strategy so that services can be marketed effectively to individual budget holders who will have the freedom to choose where and who they buy from. Marketing is traditionally an area in which the third sector has invested very little (unlike the private sector) mainly because it has not had to sell its service to users because someone else (the local authority) has paid for it.

Local contextLocally in Birmingham there are a range of strategies and plans that the third sector needs to be aware of because these again drive the types of services being commissioned and procured.

What strategies should the third sector be aware of?There are a host of different strategies and policy documents. Some of the main ones are listed on page 14. Funding is often linked to policy so it is essential that organisations have a good understanding of how policy will affect them. The Third

Sector Assembly11 (managed by BVSC) is a long-term network of voluntary and community organisations, which aims to ensure the sector can actively participate in, influence and improve policy making, commissioning and service delivery in the city.

11. www.assembly3.org.uk


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Important strategies and policies

~ Birmingham 2026 (Sustainable Community Strategy)

~ 2008/11 Local Area Agreement – sets out priorities for Birmingham against seven strategic themes: economic, health and wellbeing, culture, community safety, environment, children and young people and housing

~ Birmingham Joint Strategic Needs Assessment (Health)

~ Brighter Futures Strategy (Children and Young People)

~ Adults & Communities Third Sector Prospectus – 2007

~ Birmingham Economic Strategy

~ Housing Department – Voluntary Sector Commissioning Prospectus 2007-2010

Further information and support

Local

~ VCS Matters | A third sector partnership exists to support voluntary and community organisations to work within the Every Child Matters Framework. It is useful if third sector organisations ensure that they are on VCS Matters’ database so that they have regular access to information (including commissioning opportunities), briefings and events | www.vcsmatters.org

~ Birmingham City Council (Corporate Policy) | For information and access to key policy documents | www.birmingham.gov.uk

~ Be Birmingham | Birmingham’s local strategic partnership, which brings key partners together from the business, public and third sector. Responsible for implementing the Local Area Agreement | www.bebirmingham.org.uk

~ Birmingham East and North Primary Care Trust | Provides primary care, intermediate care and community services for 437,500 people in the Birmingham area | www.benpct.nhs.uk

~ Heart of Birmingham Teaching Primary Care Trust | Serves around 300,000 people living in the HoBTPCT patch, which covers some of the city’s poorest neighbourhoods as well as the wealthier shopping and business districts in the centre of Birmingham | www.hobtpct.nhs.uk

~ South Birmingham Primary Care Trust | Serves around 383,000 people | www.sbpct.nhs.uk

~ West Midlands Public Health Observatory | WMPHO works to improve the health of the public in the region and reduce inequalities by providing intelligence, developing public health capacity and acting as advocates for both | www.wmpho.org.uk


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~ West Midlands Learning & Skills Council | Exists to improve the skills of young people and adults in the region to ensure competitive advantage | www.lsc.gov.uk/regions/WestMidlands

National

~ Office of the Third Sector | Leads on ‘third sector’ policy across government departments | www.cabinetoffice.gov.uk/third_sector

~ Department of Health | The department responsible for all public health issues; its work includes shaping the direction of health and social care services and promoting healthier living. It manages a third sector investment programme | www.dh.gov.uk

~ World Class Commissioning | www.dh.gov.uk/en/Managingyourorganisation/Commissioning/Worldclasscommissioning/index.htm

~ Department of Health: Third Sector Update and News | Newsletter produced quarterly | www.dh.gov.uk/en/Publicationsandstatistics/publications/publicationsPolicyAndGuidance

~ National Council for Voluntary Organisations (NCVO) | A comprehensive website for all matters relevant to the third sector | www.ncvo-vol.org.uk

~ Third Sector Foresight | Part of NCVO, which provides guidance and tools for strategic planning | www.3s4.org.uk

~ The Compact | Information on the Compact and all five Good Practice Guides, including ‘Compact Code of Good Practice on Funding and Procurement’ | www.thecompact.org.uk

~ National Association for Voluntary and Community Action (NAVCA) | National voice of local third sector infrastructure. Provide members with networking opportunities, specialist advice, support, policy information and training. NAVCA influences national and local policy | www.navca.org.uk

~ Improvement and Development Agency for Local Government (IDeA) | IDeA supports improvement and innovation in local government | www.idea.gov.uk

~ National Brokerage Network | Set up to act as an information exchange and an authoritative voice for the development of Brokerage throughout the UK | www.nationalbrokeragenetwork.org.uk

~ Social Care Institute for Excellence (SCIE) website | An online source of good practice guidance, research and learning materials; excellent range of reports on personalisation | www.scie.org.uk/adults/personalisationpub.asp


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Understanding commissioningWhat is commissioning?

Commissioning is the whole process from ‘assessing need’ through to ‘monitoring and review’ which in turn leads to ‘reassessment’ of need and the whole cycle beginning again.

The commissioning cycle

How often does commissioning occur?Services are usually commissioned or recommissioned every 3 to 5 years although a service can be decommissioned at any time if it is failing to perform. At the moment the third sector are involved to varying degrees in each aspect of the commissioning

process. Much is dependent on individual commissioners, but it is fair to say that the majority of participation is confined to procurement and service delivery rather than needs assessment, mapping and planning.

6Monitor, review, evaluate

1Assessing

need

4Procuring services

3Planning to meet needs – identifying

outcomes and resources

5Deliveringservices

2Mapping existing

services and identifying

gaps


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All third sector organisations need to look for opportunities to become involved in the early stages, e.g. assessing needs, planning and designing services. It may well be that organisations have data based on their experiences they can feed into these processes. Individual organisations need to be proactive in contacting their local commissioners and/or the procurement departments in public organisations and/or lobbying for involvement through appropriate networks, e.g. Third Sector Assembly12.

Increasingly, there is a move towards ‘Joint Commissioning’ which is when two or more agencies pool their resources to implement a common strategy for providing services. Birmingham’s three Primary Care Trusts (PCTs) and the City Council’s Adults and Communities Directorate are pooling their funding for learning disabilities and mental health.

Outlined below are some of the key areas against each process in the commissioning cycle.

12. www.assembly3.org.uk

1. Assessing need

~ What are the needs of the population now? What will be the need over the short term 3-5 years and the long term 5-10 years?

~ Information used to assess need: Joint strategic needs assessments, population data, consultation with users, providers, other strategic partners, carers, under-represented communities, potential users

~ Are some needs specific to a particular group?

~ Level of need across different geographical areas

2. Mapping existing services and identifying gaps

~ Range of current providers – public, private, third sector

~ Type of services delivered

~ Location of services by constituency/local ward

~ Range of client groups

~ Number of ‘hard to reach’ groups

~ Quality of current services being delivered

~ Services meeting outcomes

~ Discussions with all stakeholders, e.g. providers, user groups, individuals, partners

~ Good practice

~ Which groups are not being served well?

~ Early prevention

Key stages in the commissioning cycle


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3. Planning to meet needs, deciding priorities, identifying outcomes, identifying resources

~ Managing demand

~ Shaping the market, i.e. provider vs. demand

~ Allocation of resources

~ Services to recommission

~ Services to be decommissioned

~ New services

4. Procuring services

~ Designing services

~ Drawing up service specification

~ Deciding on tendering processes

~ Undertaking tendering process

~ Awarding tenders

~ Negotiating service level agreements

5. Delivering services

~ Project planning

~ Outcomes

~ Milestones

~ Income and expenditure planning

~ Risk management strategy

~ Ensuring inclusivity and diversity

~ Staffing levels

~ Partnerships/networks

~ Monitoring and evaluation framework, social impact, added value – social return on investment (SROI)

6. Monitor, review and evaluate

~ Managing performance ~ Seeking views of others, recipients of services ~ Outcomes focus ~ Quarterly monitoring/review against milestones and outcomes ~ Quantitative and qualitative data


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In 2007/08, Birmingham City Council commissioned £900m of goods, services and construction works, making the authority the single biggest commissioner in the city.

Birmingham East and North Primary Care Trust (BENPCT) spends the most money on commissioning of the three Primary Care Trusts, most of which is spent on acute services (the most expensive) and delivered by the hospital trusts. The smallest resource is spent on community and preventative services.


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ProcurementWhat is procurement?

Procurement is the process of purchasing a service or goods and is one step in the commissioning cycle. Public bodies must ensure that the services they purchase offer ‘best value for money’. This is defined as the

‘optimum combination of both whole life costs and the quality of the service offered to meet the specification’. The balance between price and quality will depend on the service or goods.

Public procurement procedures must comply with the European Community Treaty which stipulates the following key principles:

~ No restriction of competition – cannot discriminate if a bidder is from a different member state if they meet requirements.

~ Proportionality – not to ask for particular requirements which are disproportionate to the value of the contract and which would therefore exclude certain potential suppliers.

~ Transparency and openness – it must be clear to potential bidders how the purchaser will evaluate and score tenders.

~ Fairness – a duty to ensure that processes are fair and that no organisation is excluded.

Types of servicescontract

There are two main services contracts. These are:

~ Part A services (priority) – including: financial services, maintenance and repair, computer support, publishing and printing, sewerage and refuse disposal, computer and related services, management consultancy.

~ Part B services (residual) – including: leisure services, social and health care services, education and vocational services, legal services.

Most of the services provided by the third sector are classed as Part B.

Part B services are not subject to the full EU procurement rules, although the EU principles and some of the rules will still apply. Public sector bodies often follow the full EU procurement rules even when they do not need to.


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Contrary to popular belief, competition is not always legally required when commissioning services. Formal EU procurement is only one way to commission, and

may be a poor approach for delivering services if used without thought. Alternative approaches can improve the chances of achieving the required outcomes and stimulate local markets. Commissioners should avoid over-dependence on competition as the primary driver for demonstrating best value, as alternative ways of choosing contractors, in addition to written submissions, can be useful and constructive.” 13

Whilst some pilot work around the use of ‘social clauses’ in the procurement process has been undertaken through the Office of the Third Sector, there is still a lack of real understanding on the part of commissioners to how they could incorporate this effectively into their commissioning processes. The Office of Government Commerce has produced a report, ‘Buy and Make a Difference – How to Address Social Issues in Public Procurement’, which gives guidance and case studies.14

TendersOnce a commissioner has drawn up a service specification, a call will be made for tender applications. Tendering is where potential suppliers, private, public and third sector bid competitively for a contract.

Tenders are advertised either with all the information applicants need or the name of a person to contact for the tendering documentation. This usually includes:

~ Service specification

~ Contract – terms and conditions

~ Timescales

~ Price

~ Guidelines for completing the tendering application

~ Application form

~ Eligibility criteria

~ Assessment criteria

All tenders will specify a closing date and a contact person for support.

If an organisation is not already on commissioners’ mailing lists it is in their interests to contact the appropriate commissioner and ask to be put on the list so that they automatically receive notification of tenders.

Interested organisations can also write to the commissioning department outlining their current service, number of users and the outcomes they are achieving so that commissioners are aware of the organisation and the services it provides.

13. Pathways Through the Maze – A Guide to Procurement Law, Anthony Collins Solicitors LLP (2009) – available to download from www.ncvo-vol.org.uk and www.navca.org.uk

14. www.ogc.gov.uk/.../Social_Issues_in_Public_Procurement.pdf


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As well as direct mailing lists, tenders can also be publicised via the websites shown below.

Websites with informationon tender opportunities

~ www.birmingham.gov.uk/procurement – All Birmingham City Council tenders above £50k

~ www.bpcssa.nhs.uk – A shared services portal for the three Primary Care Trusts (PCTs) in Birmingham

~ www.hobtpct.nhs.uk/commissioning – Heart of Birmingham PCT

~ www.supply2health.nhs.uk – Health

~ www.supply2.gov.uk – Government tenders under £100k

~ https://hpc.bravosolution.co.uk – Healthcare Purchasing Consortium (health)

~ www.ted.europa.eu – All tenders

~ www.dwp.gov.uk/supplying-dwp – Employment/welfare to work related tenders

~ www.dh.gov.uk/en/procurementandproposals/tenders – Health

~ www.lsc.gov.uk/regions/WestMidlands/contracting/current-tenders – Training and skills

~ www.fundingcentral.org.uk – All types of funding including contracts

The tendering processThe tendering process may be open, restricted or in exceptional circumstances, negotiated.

Types of tenderingprocess

~ Open tendering – The contract is advertised and any organisation can express an interest and submit a tender

~ Restricted tendering – The contract is advertised but there is a pre-qualification stage which is used to ensure organisations meet minimum technical and eligibility requirements. Those that meet the requirements are then invited to submit full applications

~ Negotiated tendering – Only in specific cases can this be used and it usually involves the purchaser carrying out post-bid discussions with applicants


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Types of tenderThere are also different types of tenders depending on size of contract. The Department for Work and Pensions’ Commissioning Strategy15 is for fewer, larger contracts. To date this has resulted in large organisations becoming the prime

contractors, e.g. Pertemps, Work Directions. It is virtually impossible for the third sector, unless they are the large national charities, to compete on equal terms with these large private providers.

However, third sector organisations can become involved in delivery through the sub-contracting process. Prime contractors have to demonstrate in their tender documentation that they are able to meet local needs and most do this by involving third sector organisations.

15. www.dwp.gov.uk/docs/cs-rep-08.pdf

16. From April 2010, the LSC will become the Skills Funding Agency and Young People’s Learning Agency.

Qualified ProviderFramework

The Learning and Skills Council (LSC)16 has a Qualified Provider Framework for providers of education and training services. The Qualified Provider Framework is a maintained list of all providers from which the LSC will secure education and training services. This list incorporates those providers with whom the LSC will negotiate and/or invite to tender. This is in effect a ‘preferred suppliers list’.

Providers that wish to be eligible to receive invitations to tender can apply to be prequalified at any time during the year. This ‘always open’ approach will allow providers to apply at a time convenient to them and which suits their business need.

The pre-qualification questionnaireThe pre-qualification questionnaire is normally used in ‘restricted tendering’ and when there are known to be a number of possible applicants wishing to tender. It is also used when there is a high degree of risk involved. This allows commissioners to

pre-select and ensure only a limited number of tenders will be submitted and all those tendering will have already met certain criteria.

Applicants are usually asked a series of questions around particular topics to determine their technical and financial ability to deliver a service, usually including those shown over the page.


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Typical pre-qualificationquestionnaire questions

~ Organisational status

~ Finances – two years approved accounts

~ Management accounts (income/expenditure and cash flow)

~ Equal opportunities policy

~ Sector specific policies e.g. child protection, vulnerable adults

~ Health and safety compliance

~ Environmental policy

~ Relevant experience and track record/previous performance

~ Complaints policy

~ Quality assurance

~ Staffing – numbers of staff and qualifications (CVs sometimes requested)

~ List of board members plus copies of minutes from board meetings

~ References

Applications are scored based on the information submitted and if organisations are deemed to satisfy the minimum technical, financial and quality standards they will be invited to submit a full application.

Full applicationIf invited to submit a full tender, the information likely to be requested will include:

1. How the proposal relates to the service specification

Organisations will need to be clear how their tender fulfils the service specification.

2. Delivery mechanisms

How you will deliver and where; will you expect users to come to you or will you go to them, or a combination of the two, or will you sub-contract?


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4. Publicity and marketing

How you will engage with others; range of tools and methodologies you may use.

5. Equality and diversity

Much more detail is now expected of organisations in relation to how, in practice, they ensure and can demonstrate equality and diversity both within their organisation, (staffing, volunteers, trustees) and in service delivery (customers/users). A detailed section on equality impact assessment can be found on page 44

6. Partnership working

Depending on the size of the contract, organisations may want to work in partnership with another organisation or group of organisations. The monetary value of some contracts makes it almost impossible for all but the large national third sector organisations to compete. You can explore working as a cluster or consortium in more detail on page 32

7. Target groups

Detail on the range of clients or specific client groups, e.g. children, people aged 65 plus, newcomers and people with disabilities.

8. Milestones

These need to be significant events in the course of the contract which if achieved will ensure the contract is on track.

3. Management arrangements

Who has overall management responsibility, who has a key delivery role, who is responsible for finances, monitoring and how do all these individuals interact with each other to ensure timely and quality delivery?


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10. Project costs

The Birmingham Compact, a voluntary agreement between the public and third sectors in Birmingham, advocates ‘full cost recovery’. This means that organisations should be able to claim the direct costs of the service they want to deliver, but also the ‘indirect costs’ of running their organisation, without which they would not be in a position to tender for the service in the first place. However, whilst there is agreement in theory, in reality the picture is often quite different. Research carried out by the Charity Commission in 200717 identified that most public service contracts are under-priced, the result being that third sector organisations are subsidising them. Only around 12% are achieving full cost recovery. A more detailed explanation of full cost recovery can be found on page 50

11. Monitoring arrangements

Commissioners want to see the type of procedures, systems and tools organisations have in place to collect the evidence which will demonstrate that outcomes have been achieved.

12. Sustainability

Most commissioners want to know that third sector organisations have more than one source of income and are not totally dependent on one funding stream. More and more third sector organisations are having to develop alternative sources of income to ensure their sustainability.

13. Track record/previous experience

Previous experience of delivering contracts well is a good indication that an organisation poses minimum or less risk to the funder than another organisation with less or no experience.

9. Added value

Most third sector organisations are well versed in demonstrating their added value. This includes proximity to client groups (local service), affinity with hard to reach and excluded groups (actively engaging them) and flexibility to respond to needs. In addition to this is the role of volunteers and the value they bring; the fact that most are recruited locally as are many paid staff in small third sector organisations. All of this means that a contribution is being made to broader outcomes, i.e. the Local Area Agreement, the Community Strategy. In essence more is being achieved for less.

17. Stand and Deliver: The future of charities delivering public services (Charity Commission 2007)


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16. Exit strategy

There will often be a question about ‘where to next?’ Organisations will need to demonstrate what they will do in the future with the service they are delivering now and more importantly, how they will fund its continuation.

17. Disaster recovery or business continuity

Every organisation can experience a serious incident that can prevent it from operating normally, e.g. fire, a serious computer malfunction, floods. A business continuity plan defines the information, actions, and steps needed for an organisation to get back to a required level of operations as quickly as possible following an incident. Increasingly public sector purchasers are requesting disaster recovery information from potential suppliers and therefore it is in the interests of anyone wanting to tender for a public sector contract to put together an appropriate plan.

14. Outcomes and impact

The majority of commissioners are now using an outcomes model. Now the service is not so much about the activity or the way this is delivered, but the change or outcome this will bring about for the individual receiving it. As well as being able to identify outcomes, organisations need to be able to demonstrate that they have achieved them. More information on outcomes can be found on page 59 In addition to outcomes, commissioners are now looking for organisations to demonstrate impact on a wider level. For example, the Social Return on Investment (SROI) model is now being promoted through the Department of Health and the Office for the Third Sector. You can find out more about SROI on page 64

15. Risk management

In anything we do there is an element of risk. Few things go exactly to plan and whilst most funders are realistic enough to know this, at the same time they want some reassurance that public money is in safe hands. Potential providers need to demonstrate the potential risks that could arise and how these would be managed. This is critical for those providers with no track record to call upon. Managing risk is explored in more detail on page 36

Each of these areas will have to be answered in some detail. The commissioner wants to ensure a high quality service at the best price.


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Our top tentendering tips

1. Ensure you fully understand the service specification you are tendering for and the outcomes the commissioner is expecting.

2. If you are in doubt about anything in the tendering documentation, telephone the contact officer for clarification.

3. Ensure you understand what each question is asking of you.

4. Answer all parts of the question – many questions have two or three questions in one.

5. Ensure that it is financially worth your while to submit a tender.

6. Re-check your figures and ensure they are correct.

7. Once completed, but before submission, ask an independent person (a critical friend) to read your application/tender for accuracy and understanding.

8. Ensure you send all requested additional documents with your application as not doing so can make your application technically ineligible.

9. Do not underestimate the time required to produce a high quality tender – they usually take twice as long as you first anticipated!

10. Ensure that you understand the assessment process, how questions are scored and that you have structured your application accordingly.

There are a number of documents that organisations can prepare in advance of any tender being publicised. See page 29.

Assessment processApplications are usually weighted on quality and price against the service required. Birmingham City Council uses a 0-5 scoring system to assess individual questions with 5 being ‘excellent’ and 0 ‘not worth considering’. The City Council will select the

‘Most Economically Appropriate Tender’ (MEAT). Other public sector organisations will use a similar transparent system. Once the questions are scored in this way and the percentage weighting for each area agreed, the overall score is calculated.

Where the service requires a high level of skills from staff, the quality weighting will be higher than the price weighting – the more complex the service and the needs of the users, the higher the quality weighting. Where the service to be delivered is straightforward the price weighting will take precedence.


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Documents you can preparein advance

~ Last 2 years accounts

~ Names of referees (ensure that you have their permission and they know about submitted tenders)

~ Equal opportunities policy

~ Memorandum and Articles of Association

~ Health and safety policy

~ Insurance policy details

~ Safeguarding policies (including child protection)

~ Staffing structure

~ Quality assurance

~ Environmental policy

~ Reserves policy

~ Track record – i.e. previous contracts and grants including funding awarded, activities delivered and outputs and outcomes achieved

~ Networks/partnership details

Contract management and payments

Contracts and grants

Contracts involve a competitive tendering process but grants do not. In many cases contracts are the preferred choice because they allow for a broad range of suppliers to tender. However, sometimes a grant is preferable and better value for money i.e.

when the service is highly specialised, where there is only one provider or where the service is of a low value and the commissioning costs cannot be justified.

Differences betweencontracts and grants

With a contract there is an obligation to deliver a service on behalf of/for the public organisation; with a grant the organisation is in a position to provide a service for beneficiaries. If an organisation fails to deliver, a contract enables the purchaser to recover their costs plus compensation for non-delivery, but with a grant this is not the case.


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Contract negotiation

If a tender is unsuccessful organisations will normally be notified straightaway. All organisations value feedback so that they can improve on past performance. If an organisation is successful they will be notified, but this will normally take place after unsuccessful applicants have been informed.

Once an organisation is awarded the tender, the contract negotiation stage will begin. This will culminate in an agreed contract signed by both parties outlining the service to be delivered, the monitoring arrangements and payment schedule.

Contrary to popular belief, it is possible to re-negotiate the key elements of the contract delivery profile and in some instances even the funding.

Reporting

Reporting should not be too onerous, but third sector organisations will have to demonstrate that they are meeting the outcomes they said they would achieve and they have the supporting evidence. Quarterly monitoring is usually requested and these usually have to be submitted before payments are released although this does differ between funders. The Office for the Third Sector has recently produced ‘Principles of Proportionate Monitoring and Reporting’18 which sets out twelve principles to reduce bureaucracy and enable third sector organisations to spend more of their time delivering the service.

Further information and support ~ NCVO | NCVO’s website contains a range of information and resources including ‘Before signing on the dotted line ... all you need to know about procuring public sector contracts’ (NCVO, 2006) | www.ncvo-vol.org.uk

~ The Finance Hub | Contains an extensive range of resources on procurement and contracting including, ‘Tools for Procurement and Contracting’ and ‘Guide to Procurement and Contracting’, both of which can be downloaded | www.financehub.org.uk

18. www.cabinetoffice.gov.uk/.../090625_proportionate_monitoring.aspx


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GovernanceWhy is governance important?

To engage in trading activity which includes tendering for and delivering service contracts, it is important that organisations check their memorandum and articles to ensure that there are not any clauses which

debar them from any ‘trading activity’.

In addition, charities may also need to look at whether the activity they are proposing to undertake is defined in their objects clause of their memorandum and articles as their ‘principal activity’. This is due to the fact that ‘non principal purpose’ activities are restricted within the tax laws.

What can I do if our objects do not fit with trading and commissioning?

If your charitable objects are not compatible with trading and commissioning, one solution may be to develop a trading arm or subsidiary of the charity. This can take the form of a company limited by guarantee,

or a community interest company (CIC), limited by share or guarantee. Full details of the registration process are available from:

~ Companies House | www.companieshouse.co.uk

~ The CIC Regulator | www.cicregulator.gov.uk

Where can I get more advice and guidance on this issue?The Charity Commission would be more than happy to advise on these matters and there are two Charity Commission publications which are particularly helpful – ‘Charities and Trading’ (CC35) and ‘Charities and Contracts’ (CC47).

Trustees need to be fully aware of their responsibilities in the contracting environment. It is particularly useful if at least one trustee has experience of tendering for and/or delivering contracts. Valuable guides to effective management of your board of trustees are available at ‘governance hub’ at www.ncvo-vol.org.uk.

Of particular relevance is ‘Good Governance – A Code for the Voluntary Sector’, which is available in full, pocket sized and toolkit formats.

Further information and support ~ Charity Commission | Detailed information on charity regulation | www.charity-commission.gov.uk

~ NCVO | Information on governance | www.ncvo-vol.org.uk/governanceandleadership


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Working as a cluster or consortiumWhat is a cluster?

Working as a cluster involves two or more organisations working together in partnership on a specific theme. Within the partnership there is usually a lead organisation who for the purpose of any contract would act as the

accountable body. Increasingly organisations are having to work together to submit joint tenders for public sector contracts because on their own they would be less likely to be successful.

Why would an organisation want to be part of a cluster?

Organisations may choose to cluster when tenders for a public sector contract are financially large, too large for one organisation to manage and geographically diverse. At the same time the public

sector has to make efficiency savings which in some cases means procuring large contracts rather than smaller ones as these do not require the same levels of monitoring.

What do organisations need to consider?When working with others, organisations need to be clear about the advantages of joint working and their particular role in the partnership. Consortia do take time to establish themselves and often need a lead organisation to actively facilitate the

process. Unfortunately, the majority of consortia/clusters do not establish themselves until a specific opportunity presents itself, e.g. the call for tender, which means in many cases the forming, storming, norming, performing ‘group’ process has to be accelerated to fit in with limited timescales.

What would the lead organisation need to do? The lead organisation of a cluster needs to satisfy itself that its members meet a minimum level of quality standards before they can formally join the cluster. In order to avoid any confusion or miscommunication in the future, it is crucial that the lead

organisation has agreements in place with all partners outlining their responsibilities, obligations and boundaries as well as procedures for non-compliance.

In many cases, clustering involves third sector organisations working together but it can also mean working with private and public sector partners.

There are advantages and disadvantages of working in a cluster and these need to be discussed fully before any decisions are taken. ‘Building your cluster’, a toolkit written by iSE for the Office of the Third Sector, takes organisations through the process of developing an effective cluster/consortium. It is available to download from the iSE website.


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Further information and support ~ ‘Working in a Consortium: A guide for third sector organisations involved in public service delivery’ (Cabinet Office, Office of the Third Sector, 2008) | www.cabinetoffice.gov.uk/media/107235/consortium guide final.pdf

~ ‘Joint Working for Public Service Delivery: a model of collaborative working’ (NCVO, 2006) | www.ncvo-vol.org.uk/advice-support/collaborative-working

~ ‘Consortia Delivery of Public Services’ (NCVO, 2007) | www.ncvo-vol.org.uk/advice-support/collaborative-working

~ ‘Building Your Cluster: A workbook for third sector organisations to help them develop clusters to deliver public sector services’ (iSE, 2009) | www.i-se.co.uk

~ ‘Third Sector Snakes & Ladders’ | A game which shows organisations the ups and downs of bidding for public sector contracts (iSE, 2009) | www.i-se.co.uk


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Preparing to tender

Tools and guidance to help put together a successful tender.

SECTION

35


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Managing riskRisk management is a vital tool for every contemporary business. Organisations operating in the third sector are no exception. The most successful organisations in the sector use risk management, consciously

or unconsciously, as part of their organisational development. For example, many charities are now developing income generation strategies in the face of more challenging funding environments, in order to mitigate the risk of resources running out. While this may not be part of a conscious risk management process, it is one aspect of managing the risks presented by the economic backdrop.

While risk management is something that all organisations should be considering, there are very pertinent reasons for the third sector to adopt risk management strategies. The most pressing of these is the fundamental change that funding to the sector has undergone in recent years.

Is working with the third sector a risky business for commissioners?

The public sector has traditionally viewed the third sector as being inherently risky to work with. This is largely due to a perception in some quarters that third sector organisations are not businesslike,

that they rarely have resources to deliver, and are run mainly by volunteers. However, the public sector’s attraction to the third sector is also caused in part by some of the things that go hand in hand with this precariousness, such as:

~ Innovation

~ An ability to respond quickly

~ Proximity to and affinity with challenging client groups

~ More inclined to take a risk with something new

~ Freedom from the bureaucracy that can delay progress in the public sector.

For the public sector, commissioning third sector organisations (TSOs) is something of a double-edged sword and has therefore led to the publication of a raft of guidance on how to assess and manage the perceived risks of investing in the third sector.

Public sector strategiesThe primary strategy used by public sector bodies occurs pre-award, through the tender application process. The strategy is split into two strands: risk assessment and due diligence. The application process, in its entirety, is the method by which

commissioners gauge the extent to which a third sector organisation is a risky investment. Risk is assessed in four main areas (see page 37).


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The fourmain areas of risk assessment

~ Financial – propriety or regularity

~ Performance – objectives and outcomes not being met

~ Reputation – damaged reputation

~ Opportunity – opportunities missed

To support these four risk assessment criteria, the public sector uses a process known widely as due diligence. This term has been adopted from the corporate world and is a bit of a catch-all term for any supporting documentation that needs to be in place to mitigate against risk.

In this particular scenario, public sector commissioners use the process of due diligence to look for supporting evidence that underpins the four areas mentioned above.

Riskassessment at the pre-qualification stage

~ Commercial – structure, governance arrangements, risk management, income generation

~ Financial – annual financial statements, cash flow, approved accounts, financial policies and procedures

~ Legal – insurance certificates, safeguarding policies, health and safety policies

These are the areas that commissioners assess at the pre-qualification questionnaire stage.

However, it is important to keep in mind that not only are TSOs required to be a safe pair of hands, but they also need to demonstrate that they can work effectively in risky environments.

This often entails proving ability to seize opportunities to innovate, capitalising on chances to learn and taking calculated risks for the benefit of the communities that the organisation serves.

In the table on the following pages the four main risk assessment areas are laid out and some examples are given of how your organisation might be asked to demonstrate that it qualifies as low risk.


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Risk assessment:Showing that yourorganisation is a low risk

Financial

What are the risks?

What can you do to demonstrate you are low risk?

Building a picture of risk: What will commissioners ask you?

Exceeding the budgetPublic sector spending patterns have been scrutinised closely and as a result new measures and requirements have been handed to budget holders. As a result there is very little room for budgets to be exceeded.

~ A good track record of managing budgets of a similar size.

~ A staff member with the skills to manage and understand budgets.

~ Financial procedures that ensure that spend is signed off and authorised by a chain of people.

~ An accountable body, with sound financial procedures.

Q | Please clearly describe management roles and responsibilities.

Q | Please provide a brief pen picture to describe each of the different job roles, and the level of skill and experience required for each.

Q | Please provide a clear description of financial procedures.

Poor valueThe public sector has always expected the voluntary sector to do more for less. Whether we think this is fair or not, it is one of the ways in which public bodies assess applications from voluntary sector organisations.

~Demonstrate that you will meet the objectives of the commissioner and will do it within the stated budget, or by using existing resources in the form of staff time in kind.

~Demonstrate additionality and added-value. If you can exceed the targets, or can meet some of the targets by using existing resources or facilities that exist outside of the specific budget you are proposing.

~ Economies of scale.

~ Ease of access to client group.

~ Effective partnerships.

Q | Please indicate which staff will be drawn from within current resources and which are newly recruited.

Tenders rarely present applicants with the opportunity to talk explicitly about ‘added-value’, however look out for questions about innovation or performance as these can provide you with openings.

Q | Tell us about your partners and how they will assist you in delivering your outcomes.

Q | Please outline the knowledge and experience your organisation has of working with the client group – give examples.

Q | How will you develop and utilise links with relevant local partnerships and organisations?

Regularity or propriety

~Compliance with conditions set out by Charity Commission regulations, public contract regulations 2006 and fraud prevention measures. In most cases before a public body will award a contract it will check for evidence that you comply (part of due diligence) so be prepared to provide this information.

To sign conditions that are set out at the front of any tender form which detail Public Contract Regulations 2006, which cover things such as, conspiracy to defraud.


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Financial (continued)

What are the risks?



Regularity or propriety

~ A performance management system that does not incentivise individuals to falsely claim performance achievement.

~ Key information on your organisation’s identity.

Q | Fraud prevention – the organisation has:

~ Policies and procedures in place for staff to report fraudulent activity or improper activity.

~ An audit regime in place that periodically checks the effectiveness of the performance reporting regime

~ Established internal financial control systems.

Q | Name of legal entity.

Q | Trading name.

Q | Company registration number.

Q | VAT registration number.

Q | Type of organisation.

Q | Number of permanent staff.

Q | Is your organisation registered under the Data Protection Act 1998.

Performance

What are the risks?



Objectives not being met

~ Strong track record of delivering similar contracts and services.

~ SMART objectives clearly outlined in the tender.

~Quality marks and accreditation.

Q | Please provide information on your performance including targets set and outcomes achieved for your last five contracts, including your worst performing contract.

Q | Please provide evidence of how your organisation has previously met the specific needs of those groups outlined in this proposal or if you don’t have previous experience a strategy on how you plan to do this.

Q | Describe how you will deliver the key elements of this programme.

Q | Please set out your performance offer within each element of the specification and describe how you will support and achieve this.

Q | Please provide an outline of your quality assurance policy.

Q | Please provide details of any quality standards that your organisation holds or has applied for.


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Performance (continued)

What are the risks?



Objectives not being met

~Monitoring and evaluation processes.

~ Project management process.

~Clear roles and responsibilities.

~Capacity to deliver.

Q | How will you track customer outcomes?

Q | Please describe how you will monitor and manage this provision to ensure a quality service is provided and continually improved.

Q | Please attach an organisation chart for this provision, showing internal management structures, relationships with project partners, and reporting lines.

Q | Please clearly describe management roles and responsibilities.

Q | Please provide details of the resources that you expect to use to manage and deliver this proposal, by job title and the rationale behind these proposals.

Q | Please provide a brief pen picture to describe each of the different job roles and the level of skills and experienced required for each.

Q | Please explain how the proposed arrangements would be put in place without adversely affecting your organisation’s ability to deliver its existing contracts.

Q | Please provide a work plan which details all the activities, who is responsible for them and how you plan to address any contingencies and risks.

Reputation

What are the risks?



Damaged reputation

~ Strong track record. Q | Please provide information on your performance including your best performing contracts and your worst performing.

Q | Please explain what you have done/are doing to improve the performance of your worst performing contract.

Q | Please outline the knowledge and experience your organisation has of working with the client group.


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Reputation (continued)

What are the risks?



Damaged reputation

~High customer satisfaction – You should always be on the lookout for clever ways to include things like this. You could insert a quote or two when detailing your track record, or insert a quote when detailing your experience in working with the client group that demonstrates you have a strong credibility and reputation.

~Quality standards.

~ Referees.

Tenders rarely ask for quotes or testimonies from your clients, even though these often demonstrate quality in service delivery better than any other information.

Q | Please provide an outline of your quality assurance policy.

Q | Please provide details of any quality standards that your organisation holds or has applied for.

Q | Please provide the dates and results of any external inspections that you have undergone and a copy of any grades you have been awarded.

Two referees who can vouch for the quality of your services/organisation/product.

Opportunity risk

What are the risks?



Fear of risk results in lack of innovationThis risk is a bit mind boggling, namely: As a consequence of risk assessment, organisations become so risk adverse that opportunities to take risks (e.g. innovate) and to act in the moment are missed. The trick here is to demonstrate a propensity to be innovative, rather than to take lots of risks.

~Demonstrate that you are innovative, creative and able to make changes to your services in line with problems as they arise.

~Demonstrate success in adversity through a track record of working with challenging client groups when others haven’t been successful.

Q | Describe how you will deliver the key elements of this programme.

Q | Please set out your performance offer within each element of the specification and describe how you will support and achieve this.

Q | Please outline the knowledge and experience your organisation has of working with the client group – give examples.

Q | Describe how your project seeks to be innovative and add value to existing provision and give examples.


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SafeguardingThe Independent Safeguarding Authority (ISA) is a non-departmental public body which was set up to help prevent unsuitable people from working with children and vulnerable adults. The ISA is part of the new Vetting and Barring Scheme in England,

Wales and Northern Ireland. It works with the Criminal Records Bureau (CRB).

What does this mean?

Vulnerable adults in either regulated or controlled activities must undergo an enhanced vetting procedure. Potential employees and volunteers will need to apply to register with the ISA. This means:

~ It is now a criminal offence for individuals barred by the ISA to work or apply to work (paid or unpaid) with children or vulnerable adults in a wide range of posts.

~ It will be a criminal offence to take on someone for a regulated activity without checking their status under the vetting service and/or allow a barred individual to work in such an activity.

~ It will be mandatory to check the status of someone before they work or volunteer in a controlled activity.

Regulated or controlled?

There is an important distinction between regulated activity and controlled activity.

~ Regulated activity is defined by the ISA as “...any activity of a specified nature that involves contact with children or vulnerable adults frequently, intensively and/or overnight.”

~ Controlled activity is related to more limited areas of work such as ancillary support workers in the NHS and further education settings, and those working for organisations who have frequent access to sensitive records about children, i.e. local authority.

For more detailed information please visit: www.isa-gov.org.uk

Managing risk: the nuts and boltsSome tenders ask for organisations to complete a risk assessment, including demonstrating how any potential risks would be managed. One way organisations can think about this is to use a table like the one below.

Risk assessmentmatrix

Risk(example)

Probability (scale 1-3)

Impact (scale 1-3)

Risk factor (probability x impact)

How to manage the risk

Scales: 1 = low risk, 2 = medium risk, 3 = high risk


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Differences betweencontracts and grants

Sarah Patel has been asked to manage a volunteering project for young people who are not in employment, education or training (NEET). The role will involve recruiting volunteers and providing basic training before matching volunteers with local businesses. Young people will be referred via Connexions.

The table below suggests some of the risks and how best to manage them.

Risk Probability (scale 1-3)

Impact (scale 1-3)

Risk factor (probability x impact)

How to manage the risk

Lack of referrals from Connexions

1 3 3 Ensure Connexions advisors are fully aware of the project and the benefits of participation.

Local businesses unwilling to provide placement opportunities

2 2 4 Identify individual businesses and publicise benefits of involvement prior to project starting; ensure public, private and voluntary sectors targeted.

Young volunteers not liking their placements

2 1 2 Try to ensure best match for volunteer by identifying preferences in terms of role, responsibilities, location, sector.

Volunteers not happy about ‘working for nothing’

3 3 9 Through training programme ensure that volunteers understand how volunteering can really help them to demonstrate their strengths to potential employers and that volunteering can be a means to an end.


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The range and reachof equality andhuman rights legislation

Equality impact assessment (EqIA)Overview of UK equalities and human rights legislation

There is a raft of equality legislation in the UK, designed to eliminate discrimination, promote equality of opportunity and improve the employment environment and service provision for everyone, but

particularly those groups traditionally disadvantaged in terms of access, experience and outcome.

Equality and human

rights legislation

AgePeople from across all the age groups,

from younger to older

Religion or belief

Religion – practising and non-practising

peopleBelief

No religionNo belief

‘Race’Nationality

National originEthnic origin

EthnicitySkin colour

Sexual orientation

BisexualHeterosexual

Homosexual (gay or lesbian)

DisabilityPeople with a

physical, mental and/or sensory impairment

or a chronic illness

Single Equalities Bill

Social classPoverty

Positive action

Gender/sexWomen and men People who are

unmarried, married or in civil partnerships

People who are transgender/

transexual

Human rightsFairnessRespectEqualityDignity

Autonomy


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ContextThe aim of this legislation is to find ways of eliminating discrimination and ensuring fairness for everyone, but particularly in situations where public money (taxation) is used to fund organisations, and the people they employ and commission, to deliver

services to the population.

One way of achieving this under current disability, gender and ‘race’ legislation, has been the requirement for organisations in the public sector to carry out equality impact assessments.

Future-proofingIn an environment where equalities legislation is dynamic and where there is a recognition that there are many disadvantaged groups (some covered by newer legislation and others not yet covered), many public sector organisations are

including consideration of age, religion or belief, sexual orientation and human rights in their equality impact assessment process, even though this is not yet compulsory.

The relevance of equality impact assessmentsSince the introduction of the specific duty on the public sector to carry out equality impact assessments, there has been a recognition that it has, at best, been missing an opportunity or – at worst – been negligent in ensuring that the equality impact

assessment process has been applied to commissioning and procurement systems and relationships with partner providers.

It is ultimately public sector organisations’ responsibility to consider the way the public’s equality and human rights may be affected in the provision of services or goods commissioned or procured from private or third sector organisations.

The spending of public money, therefore, offers an opportunity to check that those private and third sector organisations funded to deliver services or goods on behalf of the public sector are committed to equality and will support the public sector to achieve their equality duties, by demonstrating the fairness of their employment, training and delivery functions in respect of those services.

This means that many local authorities and government agencies that contract out work to the third sector are increasingly asking for evidence of equality and diversity objectives, strategies and outcomes in relation to staff, volunteers, service users and the local community. The public sector is being advised that private and third sector organisations tendering for work should, as a matter of good practice, be asked:

~ To demonstrate how they meet, in practice, existing disability, gender and ‘race’ equality legislation.

~ How they ensure relevant and proportionate equality issues are built into service design (e.g. providing for a range of dietary requirements in a meals on wheels service or accessible buses for disabled people or people travelling with push chairs).

~ To provide evidence of progress after an employment tribunal loss.


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It is anticipated that this sort of assessment will ensure that equality, human rights and fairness will be explored more rigorously by public bodies via their relationships with partners they have contracted with to provide services to the public. They must ensure that public money is not spent on practices that lead to unlawful disability, ‘race’ or sex discrimination, but is used to actively promote equality of opportunity and good relations and that any goods or services they procure are provided in such a way as to enable them to meet the requirements of the duties.

Expectations of TSOs in the commissioning and procurement process

Whilst TSOs will not be expected to carry out equality impact assessment themselves, it is likely that they will be expected to respond to a range of questions or issues arising from the public sector commissioner’s equality impact assessment of

the service/s it is asking TSOs to tender for.

Up until recently, as part of the tendering process, TSOs will generally have been asked whether they have an equal opportunities policy in place for staff (covering, for example, recruitment, pay, training, harassment, bullying, consultation and grievances) as well as policies in place to ensure that customers or service users are not discriminated against or harassed, can complain, and have opportunities to express their views and opinions about the service/s provided.

Simply having the policies in place is unlikely to be sufficient now. Instead, it is likely that TSOs will be required to provide more proof - and be ready to talk confidently – about their active involvement in the promotion of equality and human rights within their organisation.

Consequently, organisations may be asked for evidence that they really understand the issues in relation to their staff, volunteers, service users or customers and local community in the context of eliminating discrimination, promoting equality, and promoting good relations between social groups – definitely in relation to disability, gender and ‘race’, but potentially also in relation to age, human rights, religion or belief, sexual orientation, social class and transgender.

What should third sector organisations do? One way of preparing would be to invest in learning. Staff at all levels, as well as volunteers, Board or Steering Group members, should understand equality and human rights legislation and principles and be committed and able to translate these

into practice (i.e. know exactly what this means for them in their role).

Regular equalities-focused professional development, legislation updates and more routine opportunities to discuss equality issues – for staff, volunteers and board members - is definitely something to aim for. TSOs may also want to find a way of very publically declaring their approach to equality and human rights and their expectations of staff, volunteers, contractors and service users in relation to anti-discriminatory practice, challenging discrimination, and promoting good relations.

Organisations need to be collecting, analysing and using monitoring information (‘intelligence’) to understand how well they are doing in relation to equality principles and practice.


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TRY THIS...Audit yourorganisation’s intelligence

What ‘intelligence’ does your organisation have about the people it employs and service users?

Organisation intelligence base

r Recruitment profile

r Employee profile

r Board/Management committee profile

r Volunteer profile

r Staff/volunteer grievances

r Staff/volunteer voices

r Equalities training – staff/volunteers/board

Service user intelligence base

r Local community profile

r Hard to reach profile

r User/community profile

r User satisfaction

r User complaints

r User/customer voices

Once an organisation has a good level of monitoring information, the next step would be to draw up some organisational targets or priorities for dealing with some of the issues the analysis has identified.

Having completed the intelligence audits, organisations can then analyse the information and act on the findings.

What might an organisation be asked about?Typically, an organisation may be asked about the extent to which, if applicable, people accessing the service/s, who sit on the board or employees include:

~ Younger and older people

~ Men and women – and transitioning or transgender people

~ People from the range of ethnic groups in the local area, city or country


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~ People with physical disabilities, chronic illness and or mental ill-health

~ People from a range of religious backgrounds and with no belief

~ Bisexual, heterosexual and homosexual people

~ Marginalised groups (such as: ex-offenders, cared for young people, lone parents, people who have experienced domestic abuse).

Further thoughtsFinally, organisations need to be proactive! Nominate a member of staff to have responsibility for equality (if there is not someone already); plan to ensure you are not discriminatory in the future, consider what reasonable adjustments your organisation

can make, and review what preparation and support staff would need, for example, in relation to gender transition, mental ill-health, chronic illness if this should arise for them, for a colleague they work with, or for a service user or customer.

Equality impact assessment – the processAlthough third sector organisations are unlikely to have to carry out their own equality impact assessment (sometimes abbreviated to EqIA), it is useful to understand the principles and the process that public sector commissioners go through.

What is an equality impact assessment? An equality impact assessment process, at its simplest, is a way of analysing any proposed or existing function, policy, activity, service or decision.

Why? To identify whether it might undermine equality of opportunity or prove discriminatory in some way. This means that potential problems or unintended consequences can be identified before the proposal is confirmed and implemented.

In very broad terms the assessment or screening brings a small group of people together to interrogate whether the proposal under consideration will or could:

~ Have an effect (whether positive or negative) on different groups of people

~ Fulfil the general equalities duties

~ Achieve positive outcomes.

Which groups of people are considered in the assessment or screening process?Increasingly, the public sector are considering all groups currently covered by legislation (age, disability, gender, ‘race’, religion or belief, sexual orientation, transsexual, and human rights), even though equality impact assessments, for compliance purposes, are currently only required on the basis of disability, gender and ‘race’.

What has to be assessed?Assessment or screening should be undertaken on:

~ Anything new or planned that is large scale and will have an impact, or has the potential to have an impact, on people or services


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~ Any existing functions, policies, activities, or services that are to be continued, updated or amended.

What sorts of things will be considered as part of the assessment?

~ What the service (or activity, function, policy, decision) is meant to achieve.

~ Who will benefit from it?

~ Whether the activity has the potential to cause an adverse impact or discriminate against different groups. For example: y Might the activity/service present any problems or barriers to any community or group? y Will any group of people be excluded? y Does the activity have the potential to worsen existing discrimination and inequality? y Will the activity have a negative effect on community relations?

If yes, are there alternative ways of:

~ Achieving the same goals that would remove or mitigate the impact?

~ Delivering the service that will mean the impact is not as adverse?

And...

~ What positive equalities outcomes will the service achieve?

~ Might these outcomes be different according to the beneficiaries’ age, disability, gender, ‘race’, religion or belief, sexual orientation, social class, or transgender/transsexual status – or indeed a combination of these?

Further information and support ~ brap | www.brap.org.uk

~ Improvement and Development Agency (IDeA) | www.idea.gov.uk

~ Government Equalities Office | www.equalities.gov.uk

~ Equality and Human Rights Commission | www.equalityhumanrights.com


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Calculatingthe full costof a contract

Direct costs – Costs directly related to projects (project workers’ wages (including pension costs) equipment, volunteer costs, etc). This category also includes any support costs for that particular project – usually this happens if it is a large project which needs a dedicated administrator or dedicated fundraiser.

Indirect costs – these are an organisation’s running costs. Sometimes these are referred to as core costs or overheads. For full cost recovery overheads are usually split into four categories:

~ Premises and office overheads – rent, rates, electricity, gas, water, buildings insurance, stationery and postage, employer’s liability and public liability insurance, depreciation, computers, furniture

~ Central Functions overheads – central or support functions/staff within the organisation (HR costs, finance and accountancy costs, administration costs, IT costs and cleaning/maintenance costs, office equipment e.g. photocopier, office materials, leadership)

~ Governance – the costs of developing the strategy and business planning, as well as the costs of meeting any legal or statutory obligations (usually some of the Chief Executive’s time, trustee expenses, audit costs, legal costs, and also any consultant’s time)

~ Fundraising – the costs of general fundraising that is not for a specific project (such as holding fundraising events, marketing and publicity for general fundraising and time spent on general appeals for funds).

Full cost recoveryWhat is full cost recovery?

Full cost recovery (FCR) simply means recovering all your project costs plus a fair share of the organisation’s overheads so that you do not have to subsidise the activity in any way.

Whilst both central and local government are committed to the idea of full cost recovery, and this is a main requirement within the ‘Compact’, there are in reality very few TSOs recovering all their costs. One of the main reasons for this is that all commissioners are constrained by limited resources.

However, TSOs still need to be able to calculate the full cost of a contract so that they can make an informed decision about whether or not to submit a tender.

All organisations have overhead costs associated with premises, central functions, governance and fundraising.


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How to identify costs and allocate these to projects

Direct costs

Direct costs relate specifically to the activity an organisation is undertaking and can include:

~ Wages/salaries of sessional workers or staff time spent on this project

~ Recruitment costs

~ Equipment

~ Art and crafts materials

~ Marketing and publicity materials

~ Room hire or venue hire for the project

~ Refreshments for beneficiaries

~ Volunteer costs

~ Redundancy costs for project staff

~ Travel costs

~ Crèche/childcare

When planning a project organisations estimate what they think these costs will be either based on previous experience or by obtaining quotes or undertaking research.

Overhead costs

Once an organisation has identified all the direct costs for a project, they should then list all their overheads, and split them between the four overhead categories.

An exampleof overhead costs calculation

If a member of staff costs £10,000 and spends 20% of their time on project activity, 50% doing general office administration and 30% on organising general fundraising events then the staff costs would be split as follows:

~ Direct project costs £2,000 (£10,000 X 20%)

~ Central functions overheads £5,000 (£10,000 X 50%)

~ General fundraising overheads £3,000 (£10,000 X 30%).


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Guidance on allocating overheads to your project

Once an organisation has listed all the direct costs of the project plus all the overheads, the data can be entered into a Full Cost Recovery Toolkit.

There are two Toolkits that are generally used by organisations – one is produced by the Big Lottery Fund and the other by ACEVO (see below for links)19.

Both toolkits are able to allocate overhead costs. To allocate overheads organisations need to think about what causes that type of overhead to increase or decrease (this is sometimes referred to as a cost driver).

Costdrivers for overhead costs (ACEVO)

~ Head Count for premises/office costs (for the allocation of premises and office costs)

~ Time (for the allocation of central function costs)

~ Expenditure (for the allocation of governance costs)

~ Fundraising – A share of the general fundraising costs to cover the expected shortfall in funding for the project (for general fundraising costs) – so if there is no expected shortfall then no general fundraising costs will be allocated to the project.

ExampleThe organisation has 8 members of staff and 2 of these will work directly on the project. The total premises overhead costs are £63,000.

~ 3 members of staff work in central functions

~ 2 work on other projects

~ 1 works as a general fundraiser.

The premises overheads would be allocated as follows:

Number of staff working in that area X Total premises overheads

Total number of staff

E.g. 2 staff will work on this project so the calculation is:

2 X £63,000 = £15,750

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This project Central functions Other projects General fundraising

No. of staff 2 3 2 1

Amount allocated

£15,750 £23,625 £15,750 £7,875

19. www.fullcostrecovery.org.uk/main and www2.biglotteryfund.org.uk/fcr_spreadsheet.pdf


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Once you have entered the costs in the toolkit you should check them to make sure they seem reasonable i.e. are they a reasonable percentage of total project costs?

What are the benefits of full cost recovery?There are many benefits to the full cost recover approach, including:

~ An organisation understands the true cost of the projects and activities it delivers

~ With FCR all overheads/core costs are covered

~ Overheads are seen as part of the project and not as a separate cost by the organisation, and each funder pays for the appropriate share of the organisation’s overheads rather than an arbitrary amount

~ It avoids the continual pressure to try and find funding for core costs

~ It hopefully also generates a surplus to support the development of new projects

~ It makes the organisation sustainable in the long term as all costs are covered

~ It avoids the use of arbitrary percentages for allocating overheads

~ Organisations are aware of projects where full costs are not recovered and what the shortfall will be

~ It helps with decision making – whether to bid or not – can you afford to subsidise the project or not?

~ Negotiating with funders for overhead costs is easier as you are using a generally accepted model of allocating overheads to projects, and you can provide evidence to show how you allocated overheads

Further help and support ~ Big Lottery Fund | Full cost recovery guidance and downloadable spreadsheet | www.biglotteryfund.org.uk

~ ACEVO | Full cost recovery guidance and downloadable toolkit | www.fullcostrecovery.org.uk

~ ACEVO | Negotiation Guide: Win Win – to help organisations negotiate for full cost recovery with funders. Also available is the Full Cost Business Planner, for organisations that wish to apply full cost recovery to multiple projects | www.acevo.org.uk

~ Futurebuilders | Investment fund loans and grants available for third sector organisations wanting to deliver public sector services | www.futurebuilders-england.org.uk

~ Funding Central | All types of funding including contracts and loans | www.fundingcentral.org.uk


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A FULL COST RECOVERYCASE STUDY:Young People Need Us GroupThis example is one used in an iSE training seminar

Young People Need Us Group (YPNUG) provide a range of evening clubs for young people with an aim of keeping them engaged in positive activities. Following on from this success they have consulted with their stakeholders and have been asked to provide an after-school service with sports activities. The services will be provided five days a week for three hours per day and will cater for fifty young people each day.

YPNUG are applying for funds for the first year’s start up costs. These include all costs of equipment and revenue for start up.

They have identified that they will need to recruit 3 part time staff who will work for 4 hours per day in order to provide the services. They currently employ 8 other full time equivalent (FTE) staff who work on other projects.

A full time post at the organisation is 35 hours per week. The new staff will be paid a salary equivalent to £18,000 per annum (pa) for a full time post.

YPNUG currently employs a driver who will collect the young people from their schools and drop them off at the centre. The driver is paid £16,000 pa and will be required to work on the new project for 2 hours per day.

The young people services are co-ordinated by a full time staff member who earns a salary of £28,000 pa. It is estimated that the co-ordinator will spend 10% of their time working directly on the project. The co-ordinator is supervised by the chief executive who earns a salary of £32,000 pa. It is estimated that the chief executive will need to invest 10% of their time on the new project.

IT, cleaning and other functions are provided by the central hub and their costs are normally attributed to projects using apportionment. The total yearly cost of these services is £25,000 and it is estimated that the apportionment for this new project will be at 5%.

Rent for the building, utilities, etc. cost the organisation £22,000 pa and costs allocation for projects are normally worked out as a percentage of time of operation. The centre is open for 60 hours per week.

Food will be provided for the young people at a cost of £1 per person per day.

Equipment for the year will cost £10,000 and depreciate over 3 years.

You, as the project co-ordinator, are tasked with working out the full costs of the project.


YPNUG full cost recovery solution

3 staff of £18k equivalent working 4 hours per day

£18,000.00 ÷ 52 (weeks) = £346.15 Weekly rate

£346.15 ÷ 35 (hours) = £9.89 Hourly rate

£9.89 × 4 (hours) = £39.56 Daily rate

£39.56 × 5 (days) = £197.80 Weekly rate

£197.80 × 3 (staff) = £593.40 New staff weekly rate

£593.40 × 52 (weeks) = £30,857.00 New staff cost for project

Driver

£16,000 ÷ 52 (weeks) = £307.69 Weekly rate

£307.00 ÷ 35 (hours) = £8.77 Hourly rate

£8.77 × 2 (hours) = £17.54 Project day rate

£17.54 × 5 (days) = £87.70 Project weekly rate

£87.70 × 52 (weeks) = £4,560.40 Driver project costs

Co-ordinator

£28,000.00 ÷ 100 × £2,800.00 = Co-ordinator project costs

Chief executive

£32,000.00 ÷ 100 × £3,200.00 = Chief executive project costs

IT and back office staff

£25,000.00 ÷ 100 £1,250.00 = Back office staff costs

Service running per 3 hours per day

3 ÷ 60 × 100 = 5% of time to this project

£22,000.00 ÷ 100 × 5 = £1,100.00

Food

£1.00 × 50 (people) = £50.00 Daily cost of food

£50.00 × 5 (days) = £250.00 Weekly cost of food

£250.00 × 52 (weeks) = £13,000.00 Yearly cost of food

Equipment

£10,000.00 + 1 yr depreciation = £3,333.33 Yearly cost of equipment

Other costs to considerPetrol, road tax, insurance, maintenance for minibusEmployer insurancePhotocopiesTelephones

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Quality assuranceQuality systems

Third sector organisations (TSOs) who are interested in gaining contracts through commissioning and procurement will need to demonstrate that they have the appropriate quality systems to manage contracts effectively.

The organisations will need to be able to show that they provide quality services and have processes for ensuring quality across different areas of their work including:

~ Financial systems which are transparent and appropriate for public sector funding

~ Staff development and training

~ Legal requirements such as health and safety or data protection.

It is therefore essential that organisations aiming to gain contracts from public sector procurement officers have the appropriate systems and can demonstrate their quality.

There are a myriad of quality systems that have been developed to meet different needs and demands; organisations are often confused with working out which systems are appropriate to their needs. Some of these systems are holistic and support quality across all of an organisation’s work, e.g. social accounting, whilst others are sector specific i.e. systems such as Matrix quality system which is specifically designed to ensure advice and guidance services are of a sufficient quality, or ‘eco mapping’ which concerns itself with environmental improvements.

To add to the confusion some quality systems are independently checked and audited whilst others are based on self assessment. Some of the systems which require external assessment will incur a cost to the organisation.

Examples of quality systems available include:

Practical Quality Assurance System for Small Organisations (PQASSO)

~ A holistic quality management system designed specifically for small voluntary organisations.

~ Step-by-step approach provides a simple way of identifying what an organisation is doing well.

~ Helps to set priorities for the future and to make improvements.

~ Seeks to improve a wide range of quality issues.

www.ces-vol.org.uk


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Quality First

A simple quality management framework aimed at very small organisations (for example, run primarily by volunteers).

~ Free and simple to use.

~ Systematically addresses quality without requiring an organisation to be familiar with more complex quality assurance systems.

~ Addresses limited capacity.

www.bvsc.org/development/quality-first.html

The Big Picture

A framework for identifying the strengths and areas for improvement of an organisation across all of its activities or single issues/projects.

~ Makes links between what an organisation does, the results it achieves, and how the results are reached.

~ Easy to use in ‘bite-sized’ parts or for whole organisation.

~ Works for small organisations.

www.thebigpic.org.uk

Social Firms Performance Dashboard

An internal management tool for business improvement geared towards social firms

~ Helps social firms to spell out their objectives and track performance on these over time.

~ Can integrate with existing systems easily.

~ Free for social firms and easy to use.

www.socialfirms.co.uk

Social Enterprise Balanced Scorecard

An internal management tool and visual representation for social, environmental, economic strategy and financial sustainability.

~ Useful for managing strategic organisational change.

~ Helps to focus on strategic planning and measuring progress.

~ Can facilitate communication of organisation’s goals internally and externally.

www.socialfirms.co.uk

Investors in People Standard

A business improvement tool designed to advance an organisation’s performance through improving its relationship with its employees.

~ A method for improving staff management, employee satisfaction, motivation, and access to training and development.

~ Inclusive: involves paid and unpaid staff.

~ Award ‘mark’ is widely recognised by staff, funders and customers.

www.investorsinpeople.co.uk


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Development Trusts Association (DTA) Healthcheck

A guide to good practice for development trusts and other community and social enterprises allowing them to assess their progress against development trusts’ values.

~ Helps to ensure that DTA members hold certain competencies and characteristics in common.

~ Can help new trusts to establish themselves, and established trusts to improve.

~ Provides a backbone for the improvement conversation with DTA support staff.

www.dta.org.uk

Investing in Volunteers

UK quality standard for organisations working with volunteers (including trustees); externally assessed.

www.investinginvolunteers.org.uk

Commissioning for Quality and Innovation (CQUIN)

‘High Quality Care for All: NHS Next Stage Review – Final Report’20 included a commitment to make a proportion of providers’ income conditional on quality and innovation, through the Commissioning for Quality and Innovation (CQUIN) payment framework. It is essentially about providers improving quality resulting in better outcomes. An example could be improving patient satisfaction levels from 60/70% to 80% plus and payments being calculated accordingly. This was brought in for acute services in April of this year but will be operational in April 2010 for community and mental health services.

www.dh.gov.uk/en/Healthcare/Highqualitycareforall/index.htm

Customer First

A national standard for customer service which comprises of 32 statements across three areas:

~ People

~ Market awareness

~ Customer relationships.

www.customerfirst.org

20. Department of Health (2008)


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An exampleof outcomes from a local authority

The outcomes stated in Birmingham City Council’s 2007 Adults and Communities Directorate ‘Third Sector Prospectus’ are:

~ Improve health and emotional well being

~ Improve the quality of life

~ Making a positive contribution

~ Increase control and choice

~ Improve freedom from discrimination

~ Increase economic wellbeing

~ Improve personal dignity and respect

OutcomesWhy are outcomes important?

Increasingly commissioners are using an outcomes based framework to commission services. This is very different to the approach used previously which focussed more on the funding available to spend on

activity rather than the outcomes for service users.

The ‘outcomes’ approach puts the service user at the centre of the service. It also allows providers to think of new innovative ways of responding to users needs. This approach makes organisations think about the changes they want to bring about and the difference they want to make.

However, when putting service specifications out to tender commissioners have already identified the outcomes that need to be achieved. These are usually based on national policy requirements, local strategic assessments, and local plans.

Commissioning documents will usually hold information on changes commissioners want to see from their investment.

All commissioned services must contribute to these seven outcomes being achieved. These are the seven outcomes identified in ‘Our Health, Our Care, Our Say’21. Overlaying these outcomes are key local priorities as identified in the Local Area Agreement, directorate strategies and joint strategic needs assessments.

21. Department of Health (2007)


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Similarly the outcomes stated in Birmingham’s ‘Childrens and Young People Third Sector Commissioning Prospectus’ are:

~ Be healthier

~ Be safer

~ Enjoy and achieve

~ Make a positive contribution

~ Achieve economic well-being.

Just as the Adult and Communities local outcomes reflect national outcomes, the children and young people outcomes reflect the national outcomes of ‘Every Child Matters’.22

22. www.dcsf.gov.uk/everychildmatters/about/aims/outcomes/outcomescyp

Definition of ‘outcomes’

Outcomes are all the things that happen because of the project’s or organisation’s services, facilities or products. This includes the bad and not so good, as well as the good; the unexpected as well as the expected.

Definition of ‘outputs’

Outputs relate to the activities or products the project delivers – i.e. the interventions that bring about the change.

Reporting outcomesIf successful TSOs will have to prove that they have met their outcomes. Most funders collect monitoring data on a quarterly basis. It is usual that monitoring reports are completed before funding is released.

In some cases TSOs are provided with a form to complete which will ask for progress against each outcome. Organisations will need to ensure that they have the evidence to back up their statements. Some public organisations now use a ‘red, amber, green’ traffic light system for monitoring contracts.


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An exampleof demonstrating outcomes

Happy Days, a third sector organisation providing family support services, has to prove that it is contributing to the ‘Be healthy’ and ‘Stay safe’ outcomes of Every Child Matters. To do this, the organisation will need to demonstrate a change in attitude and behaviour of both the parents and the children they are working with.

Examples of outcomes

~ Parents have an improved knowledge of healthy foods

~ Children are eating more fruit and vegetables

~ Both parents and children are undertaking more physical activity

~ There is a reduction in the number of accidents in the home

~ Families have an ‘escape plan’ in the event of a fire at home

In order to achieve these outcomes they decide to deliver the following activities:

~ Healthy cooking demonstration and practical application

~ Presentation-healthy snacks/fun ways with fruit and vegetables

~ Trip to swimming baths

~ Talk from local dentist

~ Picnic in the park

~ Visit from local fire fighter

~ Fun physical exercises for parents and children to do at home

As a result of actively participating in these activities there should be an improvement in children’s lifestyles.

Proving outcomesTo prove organisations have met the outcomes they said they would, TSOs will need to put in place a system for collecting evidence; the simpler the system, the easier it will be to manage.

IndicatorsFor an organisation to show that it has met the outcomes of a contract, it will need to put in place outcome indicators. These indicators will relate to a change in skills, attitude, knowledge or behaviour. It will be up to organisations to agree with staff and

users the indicators they will use to measure the difference their activities are making.


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Using the Happy Days example, some of the indicators could be:

~ An increase in the amount of fruit being eaten by children in the group

~ An increase in the number of times per month parents take their children swimming

~ An increase in the number of times parents and children go to the park together every week

~ Over 50% of parents reporting they feel ‘healthier’

~ Over 50% of parents reporting that they feel more confident in their knowledge about healthy and unhealthy foods

Methodologies/tools to use to collect evidenceTo measure improvement or change, there must be a starting point or baseline to measure against.

If possible use information that you already have to help you e.g. the same organisation would probably carry out an initial assessment with a family to find out their specific needs. With perhaps some adaptation, these families could be asked about their current knowledge, attitude, etc. to their family’s health and child safety.

If this was not possible a simple quiz could be used at the beginning of sessions to establish a baseline or starting point.

To measure if change has occurred monitoring needs to take place on a regular basis. This could be done face to face, over the telephone or in a group situation.

Other tools to use to measure change include:

~ Self-assessment questionnaires

~ Video diaries

~ Case studies

~ Personal statements

~ Questionnaires

~ Focus groups.

There are some excellent examples of tools developed by other agencies for specific client groups, e.g. the Outcomes Star. Outcomes Star developed by Triangle Consulting for vulnerable groups of people including homeless, young people, substance users, mental health users.

Qualitative and quantitative informationThere are two types of information organisations need to collect – qualitative information and quantitative information.

Qualitative information is about what you do, achieve or provide that tells you the nature of the thing you are doing, providing or achieving. When it is used as part of an indicator, the information should tell an organisation about the worth or quality of the thing being measured. E.g. “In their exit interviews, every student said they had enjoyed the course and had got a lot out of it.”


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Quantitative information is about what you do, achieve or provide that tells you how many, how long or how often you have done it, achieved it or provided it. E.g. “We provided 30 reading courses, consisting of five weeks of two hour sessions each week.”

Charities Evaluation Services

When to measure changeMeasurement must be made at least twice, once at the beginning before any activity takes place and then at the end of the activity. Dependant on the length of the activity there will be measurements in between.

It is essential that someone in the organisation takes responsibility for monitoring and recording outcomes and that this takes place on a regular basis. Once collected and recorded the information you collect needs to be analysed and the key messages and findings reported to your board, funders and your service users.

Care Services Improvement Partnership (CSIP) West Midlands have developed a generic web based toolkit to support third sector organisations with demonstrating their outcomes in terms of well being and social inclusion, client pathways, governance and risk assessment. Much of this was based on what commissioners said they wanted to see from the third sector.

The toolkit is completely open i.e. ‘not locked’ and if you have some IT expertise you will probably be able to adapt it to suit your own needs. See details below for web link.

Further help and support ~ Health Project Development Toolkit for Community Groups | Heart of Birmingham Primary Care Trust | www.hobtpct.nhs.uk/_docs/communitytoolkit.pdf

~ Explaining the Difference Your Project Makes – A BIG guide to using an outcomes approach | Triangle Consulting | www2.biglotteryfund.org.uk/er_eval_explaining_the_difference.pdf

~ Your Project and its Outcomes | Charity Evaluation Services for Big Lottery | www.ces-vol.org.uk/index.cfm?pg=165

~ Outcomes Star | Details of all the outcomes stars – tool for supporting and measuring change when working with vulnerable people – and guidance for using them | www.outcomesstar.org.uk

~ Activity and Outcomes Database | To help smaller third sector organisations demonstrate their activity and outcomes to commissioners from health and social care agencies | www.wmrdc.org.uk/wmrdc/en/mental-health/commissioning/activity-and-outcomes-database

~ Legacy Publications Volume 1: What difference does it make? A handbook on evaluating outcomes for local projects working with children and young people (Liz Hoggarth and Hilary Comfort, Youth Affairs Unit, De Montfort University, Leicester, 2007) | Birmingham Children’s Fund | Contacting VCS Matters www.vcsmatters.org

~ Prove and Improve | An online resource for proving and improving: a quality and impact toolkit for charities, voluntary organisations and social enterprise | www.proveandimprove.org


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Impact assessmentSocial Return On Investment

“Social Return On Investment (SROI) is an outcomes-based measurement tool that helps organisations to understand and quantify the social, environmental and economic value they are creating.”

New Economics Foundation

In 2006 SROI UK won resources from the Office of the Third Sector [OTS] to develop ‘The SROI Guide’ (published in May 2009), the aim being to provide a do-it-yourself guide to SROI and create a bank of financial indicators and proxies to standardise the approach.

Some public sector authorities (for example the Department of Health) have further invested in SROI and now ask organisations to indicate how they use the process to measure their impact within tendering documents. There is then, some national recognition of the process and an expectation that organisations will prove their impact when seeking and gaining public sector contracts.

SROI is seen as a method for measuring impact in two distinct ways.

~ It tells a story of change, and

~ Considers a monetary rate of return on investment. That is the amount of savings made to the public purse for the investment made.

SROI can be evaluative (seeking to demonstrate the impact on a past project or activity) or predictive (seeking to identify the potential impact of investment)

Social Accounting and AuditingSocial Accounting and Auditing (SAA) was developed by the Social Audit Network (SAN) and written by John Pearce and Alan Kay with the publishing of the ‘Social Accounting and Audit manual’ in 2001. The

manual was subsequently revised and the second edition published in 2005.

SAA provides a framework to enable organisations to consider their social, environmental and economical impact, which is referred to as the Triple Bottom Line.

What is the difference between SROI and SAA?The main difference between SROI and SAA is that SAA concentrates on the social, economic and environmental impact from a stakeholder’s point of view, whilst SROI considers this impact, but assesses the monetary value of it.


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The processSAA and SROI essentially follow a similar process of:

~ Reviewing an organisation’s mission, vision and values

~ Identification of stakeholders

~ Stakeholder consultation and analysis

~ Publishing results

~ Planning improvement.

SROI: an overview of the processSROI starts with a consideration of the scope of the SROI report. The scope is essential as it sets the parameters of the study and report. The scope could for example, be on a project within an organisation, or on a department or service area

or equally it could consider the whole of the organisation’s activities and services. Once the scope has been decided the process has four stages:

Stage 1

~ Identification of stakeholders – a stakeholder is someone or an organisation that can either be affected by the organisation or that can affect the organisation.

~ The intended impact or change that the organisation expects to achieve – it is important to review what you intended to do when setting up an activity or service in order to measure whether you are achieving this intended change.

Stage 2

Considers the inputs and outputs, i.e.:

~ Input – What is required to achieve the output in monetary terms, for example the input (funding) an organisation needs to achieve a job outcome

~ Output – What were the outputs in numerical terms, for example, with an investment of £10,000 the organisation supported 10 people into employment, and the organisation therefore achieved 10 outputs for the one (£10k) input.

Stage 3

Gather data for analysis including:

~ Identifying the change

~ Measuring the change

~ Source of information

~ Type of change

~ Duration of change

~ What is the value of the ‘change’ which has occurred? For example if the change was an unemployed person gaining employment they may no longer require benefits. What was the cost of the benefits? They will likely begin to pay taxes to the state; they may well spend more


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money in local shops, etc. Are there additional changes, e.g. less use of the health services? What might this save, i.e. how much does the average visit to the doctor cost the health service?

Stage 4

The final stage of the SROI analysis which considers other issues, for example:

~ What would have happened without the activity or intervention? Would the person have got a job anyway; who else could have contributed to the person getting the job?

All of this information has to be plotted onto a map so that the analysis can take place. The SROI Guide (see below) will take you through the complete process.

A Social Return On Investmentexample

Wheels-to-Meals runs an older people’s lunch club like a meals on wheels service, except that service users are transported to meals. This gives users opportunities to socialise and attend group activities.

Stage 1: Establishing scope and identifying key stakeholdersWheels-to-Meals decided that key stakeholders would include volunteers, service users and the local authority. They agreed that the SROI would:

~ Contribute to the upcoming review of their local authority contract

~ Cover all the activities of the organisation over one year

~ Be a forecast SROI analysis

~ Be undertaken by internal staff.

Stage 2: Mapping outcomesThrough discussions with their stakeholders, Wheels-to-Meals identified the inputs, outputs and outcomes of their work. Their outcomes included service users being fitter, healthier and making new friends. By involving stakeholders, they also identified changes they had not known about, both positive and negative. For example, as a result of attending exercise sessions, residents said they were fitter, and this resulted in a reduction in falls.

Stage 3: Evidencing outcomes and giving them a valueFor each of their outcomes, Wheels-to-Meals identified indicators, things they could measure that would show whether the outcome had been achieved or not.

For example, for the outcome ‘healthier residents’, Wheels-to-Meals chose the indicators ‘number of GP visits’ and ‘number of residents reporting improved health’. Then, for each

23. Social Return on Investment – an introduction (Office of the Third Sector, September 2009)


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indicator, Wheels-to-Meals identified a financial proxy. For example, for the indicators ‘number of GP visits’, Wheels-to-Meals looked at the NHS Cost and found that a visit to a GP cost the NHS £19. This was therefore the potential saving each time someone did not need a GP visit because they were healthier, as a result of the work of Wheels-to-Meals’ service.

Stage 4: Establishing impactTo calculate their impact, Wheels-to-Meals took the quantity of each outcome and multiplied it by the financial proxy. This gives the total value of the outcome. Then they adjusted each outcome, taking into account what would have happened anyway, and how much of the change was due to factors other than Wheels-to-Meals.

Stage 5: Calculating the SROIWheels-to-Meals then worked out their social return ratio. They projected their impacts into the future for five years, which was how long they thought their outcomes would last. They then added up the value of the projected impacts, which was £81,742 over the five years. This figure was then divided by the total inputs (or investment) made to the project, which was £42,375. This gave a total ratio of £1.93:£1. So for Wheels-to-Meals, there is £1.93 of value for every £1 of investment.

To check that their data and the assumptions they made were robust, Wheels-to-Meals carried out a sensitivity analysis. Using a spreadsheet, they changed the numbers for a range of things, including their estimates of impact and their financial proxies. Then they looked at how these affected the ratio. Where the effect on the ratio was significant, they took extra care to double check that their data and estimates were accurate.

Stage 6: Reporting, using and embeddingWheels-to-Meals sent a copy of their report to their funders, and used the findings in subsequent funding applications. They held an event for volunteers and service users to give them the findings of the study verbally.

As a result of undertaking the SROI, Wheels-to-Meals improved their outcomes data collection, and put systems in place to undertake an evaluative SROI in a year’s time.

Social Accounting and Audit: an overview of the processSAA is a similar process to SROI, but does not seek to establish a monetary value to the social impact. Some organisations link the SAA process with the SROI process to demonstrate their impact in qualitative and quantitative ways

The SAA process has three stages (four if it is the first time an organisation is embarking on it):

Stage 1: Social, Environmental and Economic planning

This is where an organisation will clarify:

~ The mission of the organisation


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~ The values that guide the organisation

~ The objectives of the organisation

~ The activities that reflect what the organisation does to achieve its objectives

~ The stakeholders of the organisation – those it affects and those who can affect it

~ The key stakeholders to consult.

Stage 2: Social, Economic and Environmental Accounting

This stage of the process is often described as the nuts and bolts – the doing stage. That is the process of:

~ Deciding and managing the scope of the organisation’s social accounting – what to measure and report on

~ Agreeing the indicators that will allow the organisation to report on performance and impact

~ Deciding what quantitative and qualitative data to collect for the Social Accounts and how

~ Deciding how to report on environmental and economic impacts.

Stage 3: Reporting and Audit

Stage 3 is the final step of the social accounts and is where the information collected, collated and analysed is put together into one document – the social accounting report which is then externally audited by a panel.

~ Draft organisation’s Social Accounts

~ Circulate accounts to the members of the Social Audit Panel

~ Have accounts verified through the discussion at the Social Audit Panel meeting and make the required changes

~ Receive the organisation’s Social Audit Statement

~ Use the audited Social Accounts

~ Disclose and discuss the findings.

These two frameworks and methods are used for evaluating an organisation’s impact. Each has advantages and disadvantages. There are also other ways to measure impact some of which have been noted in the further reading part of this section.

Further help and support ~ Social Return on Investment: A Guide to SROI Analysis | Lenthe Publishers (2006)

~ Measuring Real Value: A DIY Guide to Social Return on Investment | New Economic Foundation | www.neweconomics.org

~ The SROI Guide – a step by step guide to undertaking SROI (2009) | The website has other resources and help to develop SROI | www.sroi-uk.org

~ Prove and Improve | An online resource to support measuring impact, packed with resources in relation to quality and impact measurement | www.proveandimprove.org/new/meaim/index.php

~ Social Audit Network | Contains a range of resources on social accounting including case studies | www.socialauditnetwork.org.uk


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Environmental sustainabilityThe Birmingham Sustainable Procurement Compact24 was launched in March 2008. The combined procurement budgets of members of Be Birmingham which includes Birmingham City Council and the three Primary Care Trusts, amount to approximately £6 billion. Be Birmingham has also produced a ‘Climate Change Strategy and Action Plan’ which aims to reduce carbon emissions in Birmingham by 2026 by 60% from 1990 levels.

In order to action the Procurement Compact, purchasers, through the tendering process, ask specific questions relating to environmental sustainability.

For example, for Birmingham City Council tenders, an organisation must be able to demonstrate its commitment to environmental sustainability. Organisations are asked to do this through submitting an environmental policy or statement which sets out their commitment to:

~ Compliance with relevant legislation

~ Pollution prevention

~ Waste management

~ Increasing recycling

~ Energy efficiency

~ Purchasing goods

~ Communication of policy to staff.

The higher the number of employees, the more detailed the information will need to be. Information provided will be scored and will have to meet a minimum threshold.

Further help and support Birmingham City Council | www.bebirmingham.org.ukDepartment of Energy and Climate Change | www.decc.gov.uk

24. www.bebirmingham.org.uk/uploads/Compact%20Doc%20Complete.pdf


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Local good practice in BirminghamPan-Birmingham Adult Mental Health Commissioning

There is a pan-Birmingham approach to Adult Mental Health Commissioning, led by NHS Birmingham East and North Primary Care Trust. The commissioning team has a third sector lead commissioner, who is supported by an interim contracts manager. There is a regular bi-monthly Pan-Birmingham Third Sector Forum meeting, where commissioners update, support third sector providers and welcome discussions around any current issues. This forum feeds into the City Wide Mental Health Local Implementation Team, which in turn feeds into the Joint Commissioning Group for Adult Mental Health. Commissioners are very enthusiastic about supporting the third sector, encourage partnership working and offer support/advice around legal structures and business planning.

Lynne Archer, Senior Strategic Commissioners (Third Sector Lead)Ernestine Diedrick, Interim Contracts Manager | 0121 333 4113

South Birmingham Primary Care Trust

South Birmingham has a third sector lead officer and have produced a third sector prospectus.

David Parkes | 0121 442 5600

VCS Matters

VCS Matters supports third sector organisations working with children and young people. The team of four staff are based at BVSC.

Caroline Anson | 0121 678 8837

Third Sector Assembly Birmingham

The Third Sector Assembly is a long-term association of third sector networks. It is facilitated by BVSC with the aim of improving communication across the sector, to grow its ability to influence and to improve its relationship with the public sector.

Katy Bunn | 0121 678 8820


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Enterprisingcommissioningquiz

Use the following questions to guide you through the toolkit. You’ll find the answers on the pages indicated.

Question Page

I don’t understand the commissioning cycle 16

How do you start to do full cost recovery? 50

What does risk assessment mean? 36

How do commissioners know what to commission? 16

What’s an outcome? 59

How do you measure social impact? 64

What the difference between qualitative and quantitative data? 62

How often does commissioning occur? 17

What are the different types of tenders? 22

What is a PQQ or a pre-qualification questionnaire? 23

Why do commissioners have Pre-qualification questionnaires? 23

What are the benefits of full cost recovery? 53

What is quality assurance? 56

What is impact assessment? And what could you use to help you? 64

Name 3 pieces of UK equalities and human rights legislation 44

How do I complete a question on equality impact assessment? 48

What’s the difference between commissioning and procurement? 16 & 20

What are the top tips when writing a tender? 28

What’s the difference between a contract and a grant? 29

What is SROI? 64

How do we answer questions on environmental sustainability? 69

What is procurement? 20

What are the 8 key principles of commissioning? 10

What is the likely assessment process for tenders? 28

What is a cluster in the context of commissioning? 32

Why would an organisation be part of a cluster for commissioning purposes? 32

What do organisations need to check with regard to governance before they tender for contracts?

30

Why is working with the third sector a risky business for commissioners? 36

Name three quality assurance systems 56

Why is equality impact assessment relevant to the third sector? 45


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AppendixMembers of Third Sector Advice & Action Group

Commissioners

~ Cheranne Kermath | Job Centre Plus

~ Elaine Russell | Birmingham Health & Well Being Partnership

~ Elizabeth Lawson-Bennett | Heart of Birmingham PCT

~ Harvey Brown | Heart of Birmingham PCT

~ Jerry Conway | Birmingham & Solihull Learning and Skills Council / Skills Funding Agency

~ Shirley Mallon | Birmingham East and North PCT

Third sector organisations

~ Sarah Crawley | iSE (Chair)

~ Yvonne Davies | Birmingham Citizens Advice Bureau

~ Annette Fleming | Aquarius

~ Helen Wadley | MIND

~ Susan Barter | St Paul’s Crossover

~ Theresa Gillard | BVSC

~ Tracey O’Brien | BVSC

~ Pauline Roche | Digbeth Trust

The accountable body for Birmingham ChangeUp Consortium

Introduction 4Purpose 4Background 4Advisory group 4Rationale 4How to use the toolkit 4

Context 98 Key principles of commissioning 10Policy drivers 11Personalisation 12Local context 13Further information and support 14

Understanding commissioning 16What is commissioning? 16How often does commissioning occur? 16

Procurement 20What is procurement? 20Tenders 21The tendering process 22Types of tender 23The pre-qualification questionnaire 24Full application 24Assessment process 28Contracts management and payment 29

Governance 31Why is governance important? 31What can I do if our objects do not fit with trading and commissioning? 31Where can I get more advice and guidance on this issue? 31

Working as a cluster or consortium 32What is a cluster? 32Why would an organisation want to be part of a cluster? 32What do organisations need to consider? 32What would the lead organisation need to do? 32

Managing risk 36Is working in the third sector a risky business for commissioners? 36Public sector strategies 36The four main areas of risk assessment 37Risk assessment at the pre-qualification stage 37Risk assessment: showing that your organisation is low risk 38Safeguarding 42Managing risk: the nuts and bolts 42Differences between contracts and grants 43

Equality Impact Assessment 44Overview of UK equalities and human right legislation 44Context 45Future proofing 45The relevance of equality impact assessments 45

Expectations of TSOs in the commissioning and procurement process 46What should third sector organisations do? 46What might an organisation be asked about? 47Further thoughts 48Equality Impact Assessment – the process 48

Full cost recovery 50What is full cost recovery? 50Calculating full cost recovery 50How to identify costs and allocate these to projects 51An example of overhead costs calculation 51Cost drivers for overhead costs 52What are the benefits of full cost recovery? 53Full cost recovery case study 54

Quality Assurance 56Quality systems 56PQASSO 56Quality First 57The Big Picture 57Social Firms Performance Dashboard 57Social Enterprise Balance Scorecard 57Investors in People Standard 57DTA Healthcheck 58Investing in Volunteers 58CQUIN 58Customer First 58

Outcomes 59Why are outcomes important? 59Reporting outcomes 60Proving outcomes 61Indicators 61Methodologies/tools to use to collect evidence 62Qualitative and quantitative information 62When to measure change 63

Impact Assessment 64Social Return On Investment 64Social Accounting and Auditing 64What is the difference between SROI and SAA? 64The process 65SROI an overview of the process 65SROI example 66Social Accounting and Audit – overview of the process 67

Environmental sustainability 69

Local good practice in Birmingham 70Pan-Birmingham Adult Mental Health Commissioning 70South Birmingham PCT 70VCS Matters 70Third Sector Assembly Birmingham 70

Enterprising Commissioning Quiz 71

Appendix: Members of Third Sector Advice & Action Group 72

Index

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Chair | Brian Carr

BVSC, The Centre for Voluntary Action138 DigbethBirminghamB5 6DR

0121 643 4343

[email protected]

Vice-Chair | Sarah Crawley

iSEAvoca Court23 Moseley RoadBirmingham

B12 0HJ

0121 771 1411

[email protected]

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