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New approaches to commissioning through
consortium working
Neil Coulson
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Why consortia?
Barriers Facing Small Organisations
• The procurement process (long, complex, expensive)
• Unable to find out about opportunities
• Contracts are too big
• Frameworks (if too complex and too large)
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Barriers…cont
• Pre-qualification
• Understanding the requirements (anachronisms used, poorly worded specifications)
• Lack of feedback
• Cashflow (Smaller Supplier..Better Value?, OGC & Small Business Service, 2002)
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Consortia – overcoming barriers
• Scale
• Development of specialist tendering and contract management infrastructure
• Greater bargaining power
• Adding value at the frontline
• Building capacity
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Key Trends Part 1 (deficit reduction and heightened competition)
• Deficit reduction
• New forms of private sector competition
• New forms of social economy competition through ‘externalisation’ of public sector human resources
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Key Trends Part 2 (changing dynamics)
• Radically changing dynamics within the commissioning arena
• The ‘more for less’ agenda – downward pressure on unit price and greater focus on outcomes
• Reduction of ‘transaction costs’ through aggregation (joint commissioning, bundling) -> devolved commissioning
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Key Trends Part 3 (political reform)
• Big Society – shift from state to non-state provision (White Paper, Localism Bill etc)
• Personalisation
• Growth of voluntary sector consortia, management companies, special purpose vehicles
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Different Contracting Forms
• Provider
• Managing Agent
• Managing Provider
• ‘Super Provider’
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Provider
Contractor
Provider Provision of Services
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Managing Agent
Contractor
Managing Agent
Sub-contractors Provision of Services
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Managing Provider
Contractor
Managing Provider Provision of Services
Sub-contractors Provision of Services
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Managing Agent/ProviderContract top slice
Percentage of contract to pay formanagement of sub-contractors:
Performance Quality Financial management
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‘Super Provider’
Provider Provider
Provider Provider
Provider Provider
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aka Formal Consortium
Collaboration Spectrum
Networks/ Loose consortia Formal consortia Mergers
Partnerships
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How does it work?
• Incorporation to form new legal entity
• Providers become members of this company
• Hub and spokes operating model
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Hub & Spokes operating model
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Ownership & Management Structure
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Social ownership
• Owned and controlled by the members
• 2 tier governance:
Council of MembersBoard
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Examples
• VC TrainEstablished 2000/operational 2002120 membersc. £30m (case study at www.acevo.org.uk)
• Viva (Eventus as a managing agent)Established 2008/operational 20098 members (4 on the board)£600k (case study at www.acevo.org.uk)
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Here2Help (H2H)
• Coventry VCS Consortium
• ‘Pipelining’ as well as competitive tendering
• Involvement in all aspects of the commissioning cycle – co-design through to allocation of resources
• ‘Co-commissioning’ through collegiate board structure
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Membership eligibility criteria
Universal criteria– Sector (not-for-profit organisations and social
enterprises)– Provision of services for the vulnerable and
hard-to-reach– Area of operation – Commitment to consortium working– Commitment to sharing expertise via a time
bank
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Contract-Readiness Criteria
– Financial health– Quality systems– Suitable organisational policies– Suitable governance– Technical capacity
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Process
• Steering group• Seed corn/set up funding • 3 Year Strategic/Business Plan • Membership Prospectus• Membership recruitment• Incorporation• Grant aid/investment finance for ‘baseline’ hub?• Win tenders• Deliver
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Challenges
• ‘Procurement-readiness’ - meeting the PQQ thresholds (especially smaller providers)
• QA and accountability
• Measuring social return
• Conflicts of interest – ensuring contestability
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Critical Success Factors
• From culture of entitlement to culture of enterprise
• Business skills and entrepreneurial acumen
• Long-term vision
• Tenacity