Memorandum submitted by A4e (EP 07)
INTRODUCTION
1.1 This formal response is submitted on
behalf of A4e in relation to the Work and Pensions Select Committee
inquiry into the management and administration of contracted employment
programmes. A4e would be happy to provide further clarification
on any aspects of our response, and willing to give oral evidence
to the Committee if required.
1.2 A4e currently delivers a range of contracts
across the UK on behalf of the Department for Work and Pensions
(DWP), including the New Deal Prime Contract, Pathways to Work,
New Deal for Disabled People, DWP European Social Fund and JCP
Programme Centre. A4e have also been awarded Phase 1 Flexible
New Deal contracts which will begin delivery in October 2009.
1.3 A4e takes its role as a responsible
provider of contracted employment programmes seriously. We continue
to work closely with DWP to jointly ensure that the welfare to
work market, and its response to fraud and contract management
continues to mature and evolve.
1.4 At a time of increasing pressure on
Government Departmental budgets it becomes ever more important
that public resources aimed at supporting the most disadvantaged
people in society are spent effectively. Fraud and cases of poorly
executed contract management seriously undermine this objective,
and A4e is committed to working with the DWP and other partners
to tackle these issues.
1.5 This report addresses each of the questions
posed by the Committee and aims to set out those areas in which
processes have been, and continue to be, improved. It also sets
out a number of particular recommendations that A4e itself makes
to enhance the way DWP and providers prevent fraud.
1.6 In doing so, A4e have drawn on some
lessons learnt from the fraud case in Hull, and this report provides
full details of the issues raised and the organisation's response
to them.
EXECUTIVE SUMMARY
2.1 Reducing fraud in contracted employment
programmes is the shared responsibility of contracted employment
programme providers and DWP. A4e has been delivering welfare to
work services in the UK since 1992. Over this period our safeguards
against fraud have evolved. This trajectory of reform has been
hastened by the recent case of fraudulently claimed job outcomes
found in Hull.[26]
2.2 A4e's response to fraud has included
an investigation to ensure the organisation is aware of the scope
of fraudulent practice[27]
[See paragraph 3.5].
2.3 A4e have put in place reforms intended
to highlight quickly when fraud occurs, these include centralised
administration of all job outcome claims [See paragraphs 3.7-3.8],
checks with employers to verify job outcomes [See paragraphs 3.9-3.10],
and an increased emphasis on the importance of whistleblowing
[See paragraphs 3.11].
2.4 A4e has also implemented safeguards
intended to reduce the opportunity for staff to commit job outcome
related fraud in the future, these safeguards include a shift
in emphasis from compliance to assurance [See paragraphs 3.13-3.16],
Deloitte developed assurance processes to identified fraud risks
[See paragraphs 3.17-3.18] and a shift from individual to group
incentives [See paragraphs 3.19].
2.5 DWP's response to removing the risk
of fraudulently claimed job outcomes has included transferring
from a vulnerable paper based client referral and payment system
[See paragraph 3.22] to an electronic system known as PRaP supported
by the off-benefit verification [See paragraphs 3.25-3.26] and
removal of the subjective conditions around what constitutes a
job outcome [See paragraph 3.27]. DWP have also bound Prime contractors
to prescriptive contractual requirements in terms of actions against
fraud [See paragraphs 3.29-3.30].
2.6 A4e believe that the contractual and
systems safeguards introduced by DWP on new contracts will drastically
reduce the opportunity for fraud. A4e's internally developed safeguards
are comprehensive and proportionate in the context of a system
which, whilst paper based and complex, will be inherently vulnerable
to potential fraud.
2.7 A robust whistleblowing policy offering
clear protection for employees who raise concerns about the organisation's
delivery of contracted employment programmes should now be considered
part of a responsible Prime Contractor's duties to its employees
[See paragraphs 4.1-4.7].
2.8 DWP's methods for ensuring quality of
provision is evolving from one based purely around commissioning
to a wider Quality Framework which draws together continuous self-assessment
and provider development planning, Independent External Inspections
and STAR ratings [See paragraphs 5.1-5.9].
2.9 A4e expects DWP's reform of its Financial
Appraisal and Monitoring function to play a vital role in ensuring
the effective monitoring of provider's management information
systems and performance [See paragraphs 6.1-6.8].
2.10 A4e believes the centralisation of
contract management is an essential part of DWP's role as market
steward. However it remains important for providers to explore
ways of creating better working relationships with JCP locally
[See paragraphs 7.1-7.4].
2.11 A4e strongly supports the proposed
customer charter and believes that its success will be dependent
on implementation and the relationship between the advisor and
the client [See paragraphs 8.1-8.4].
2.12 Maintaining a role for sub-contractors
in our own supply chains and in the wider contracted employment
programme market is important and the new code of conduct/Merlin
Accreditation should help to ensure that supply chains are transparent
and appropriately managed [See paragraphs 9.1-9.8].
Are there sufficient safeguards in place to prevent
providers from making fraudulent claims for outcomes they have
not achieved?
3.1 Reducing fraud in contracted employment
programmes is the shared responsibility of contracted employment
programme providers and DWP.
3.2 A4e has been delivering welfare to work
services in the UK since 1992 and has been involved in delivering
many of the UK's welfare to work services including ONE, New Deal
25 Plus, New Deal Private Sector Led, Pathways to Work and
New Deal Prime Contract. Over this period A4e's safeguards against
fraud have evolved. The organisation has recently taken an additional
series of measures following a recent case of fraud in Hull and
following the appointment of a new Group Head of Risk who has
introduced a new assurance framework into the business.
3.3 In spite of A4e's rigorous policies
and procedures surrounding the delivery of the service, and the
significant investment in its own audit capability A4e has been
the victim of fraud perpetrated by its own members of staff. A4e
have used this example to highlight how fraud could occur. In
the period of June to October 2007, in A4e's Hull office, the
Deputy Business Manager and a Recruiter worked in complete contravention
to the organisation's policies through the submission of fraudulent
job outcome claims. One of these employees was also found to be
colluding with an employee from a recruitment agency to falsify
sustained job outcomes. Senior staff members received a number
of assurances from both the recruiter and Recruitment Agency staff
member that the job placements met the required threshold (ie
16 hours per week and expected to last 13 weeks). However
A4e were alerted by our clients reporting that jobs were lasting
for less than the required 13 weeks. Our local management
investigated and suspended all dealings with the recruitment agency.
3.4 DWP initiated a Risk Assurance Division
(RAD) investigation. The investigation confirmed that from a sample
of 200 cases drawn from the period under review 21 had
been fraudulently completed. Of the two employees found responsible
for the fraudulent claims, one had already left A4e prior to the
RAD investigation and the other was suspended in December 2008 following
completion of RAD interviews under caution and was dismissed in
January 2009. A4e repaid DWP £12,500 for these incorrectly
claimed outcome payments.
3.5 As a direct response to the fraud found
in Hull A4e accepted an implicit responsibility to conduct an
investigation to examine the scope of fraudulently claimed job
outcomes within the organisation's delivery of New Deal. The investigation
was based on the claims made by our twenty highest performing
recruiters across the New Deal Prime Contract programme. The sample
period which the investigation has covered was December 2008-May
2009. The initial audit of submitted job outcome claims was completed
in w/c 13 July 2009. The investigation has then used "off-benefit"
checks to validate the claims made by A4e's recruiters. Off-benefit
checks are conducted by JCP district support staff on clients'
National Insurance records to establish whether they are still
claiming out of work benefits. A4e have requested on many occasions
that this "off-benefit" check be made a standard part
of the delivery process across all contracted programmes. Providers'
staff could still falsify job outcome submissions, as occurred
in the Hull case, but they could not falsify the fact that a client
has signed off if they were still claiming benefits. This check
is entirely out of the control or influence of providers. The
investigation will be completed in w/c 5 October 2009. This
audit process of highest performing recruiters will now become
embedded in our routine assurance measures.
3.6 In addition to investigating the scope
of fraudulently claimed job outcomes present within the organisation's
current delivery of contracted employment provision A4e have made
substantive changes to our own internal auditing processes in
order to maximise the opportunity the organisation has to identify
fraudulent behaviour around job outcome submissions as soon as
it occurs.
3.7 A4e have centralised the administration
around the submission of all New Deal Job Outcome claims. This
is an additional layer of scrutiny that is completed after the
manager of the delivery office has made their own checks of claim
documentation. This centralised review of the submission of job
outcome claims across A4e ensures that despite the scale of the
organisation, there is robust oversight of all submitted claims.
This ensures that where possible, given that there are local differences
in procedure, checks on the outcome claim and corresponding evidence
are standardised.
3.8 The role of the existing Audit and Compliance
team has been examined. A4e's historic approach to audit has largely
been focused on compliance. This role has now developed to reflect
the joint thinking between DWP and providers around better assurance
and contract management. This has meant a focus on business processes
and internal control design alongside the routine checking of
outcome paperwork and supporting documentation.
3.9 By concentrating on the training of
staff, increased clarity over expectations within the operational
structure, and the strengthening of outcome checks made by the
central administrative function; the renamed Internal Audit team
will focus on the design and effectiveness of managerial controls
aimed at identifying and mitigating risk in addition to their
existing role of independent assessment of compliance. A practical
example of this new approach in terms of job outcome claims has
been demonstrated in the additional detective controls that A4e
have implemented. In the past A4e reviews of job outcome claims
have been limited to checking that the paper evidence complies
with DWP criteria rather than identifying falsified data. A4e
has created an independent team who, as a matter of normal operational
practice, check 50% of all job outcomes claimed across all contracted
employment provision directly with the employer. This entails
telephoning an employer to verify the detail of a job outcome
claim, ie they are employing one of our clients. In the event
that the employer is not able to verify the information in the
Job Outcome claim a number of further checks, including off-benefit
checks are triggered. If further checks highlight evidence of
non compliance with procedures, appropriate disciplinary action
will be taken. In cases of proven fraud this will lead to dismissal
for gross misconduct and prosecution.
3.10 As part of A4e's supply chain assurance
the organisation is also applying this check to subcontractor's
job outcome claims. The process for subcontractors follows the
same escalation path. A4e will also take action in line with the
provisions of the contract, which could ultimately lead to termination
of the sub-contract.
3.11 A4e encourages whistleblowing as it
serves as another important mechanism for identifying fraud. A4e
has strengthened its whistleblowing procedures to encourage other
staff members to disclose concerns about malpractice.[28]
A4e also believe that an independent body acting as an Ombudsman
for the industry may be an effective way of regaining a sense
of openness and accountability in the industry. As more responsibility
for delivering the Government's targets for employment is vested
in the industry, the market needs to respond by placing an increased
emphasis on transparency and accountability.
3.12 A4e has an unequivocal stance on fraud
in our procedures and the organisation will always exercise sanctions
in full. Fraud is an act of gross misconduct leading to summary
dismissal. Moving forward A4e has also committed to pursuing criminal
prosecution against the individual. Employees are in no doubt
of the organisation's stance in relation to fraud and this is
clearly communicated in individual employment contracts and in
organisation's operating procedures. To ensure this is the case,
A4e have reviewed and revised the organisation's Fraud Policy,
and supporting Fraud Investigation Protocol guidance, and are
in the process of reissuing both documents to all staff.
3.13 It is important that A4e's safeguards
against fraudulently claimed outcome payments do not solely focus
on identifying fraud after it has occurred. A4e recognises that
as the contracted employment programme market matures, there is
a need for both DWP and providers to evolve and move from processes
intended to satisfy potentially narrow compliance standards to
developed systems designed to assure delivery against organisational
commitments. This requires the design of broader, more intelligent
systems. This recognition has led us to develop a different approach
to audit and compliance, an approach which mirrors many of the
changes currently being made within DWP's own Financial Appraisal
and Monitoring (FAM) function.[29]
3.14 This development process is being led
by A4e's Group Head of Risk, Sarah Aston, who joined the business
as a new appointment in April 2009. A fundamental review of the
Risk Assurance framework has been in process since April 2009 and
a number of actions have been implemented.
3.15 A4e are reviewing how to ensure that
the organisation better translates all contractual objectives
agreed with the DWP into internal operational and system objectives.
A4e are also reviewing the way in which commitments to our stakeholders
are subsequently measured and monitored. Two new appointments
have been approved to support this work of the Risk Assurance
function, in addition to the Group Head of Risk; a senior Policy
Officer and a qualified Information Security Officer, experienced
in the application of relevant international standards.
3.16 Work has been carried out to strengthen
the risk management framework across the Group through the use
of risk registers, formalised escalation processes and ongoing
monitoring mechanisms. By analysing the risks to the delivery
of our contractual objectives, A4e can continue to design an effective
internal control framework.
3.17 A4e have also commissioned Deloitte's
fraud team to work with us to develop our assurance processes
around the delivery of contracted employment programmes. Their
work has been carried out in three distinct stages. The first
stage included a survey and group workshops which analysed staff's
perceptions, attitude and experience in the fields of fraud and
business ethics, the purpose of the phase was to identify potential
risk factors and historic weaknesses. The workshops ran from 21-23 July
2009. A4e has decided that the survey will be periodically re-run
as part of a programme of activities which conducts a regular
temperature check of the organisation and feeds the continuous
improvement objectives outlined in A4e's strategic plan.
3.18 During the second and third stages,
Deloitte staff worked alongside A4e's front-line staff and management
to map out all the processes involved in delivering a contracted
employment programme, including the specific identification of
all fraud vulnerabilities in existing and new delivery models.
The second stage focused on applying this diagnostic approach
to Flexible New Deal and the third stage extended the approach
to all other contracts. In the future A4e will incorporate this
diagnostic process into project implementation for all new welfare
to work contracts. These final phases have not yet finished. However
A4e received the interim results from Deloitte in week commencing
28 September 2009 and are currently reviewing the findings.
A4e expects to use the conclusions to determine the direction
of ongoing development of the organisation's systems of control.
3.19 Finding good quality jobs for jobseekers
and achieving sustainable employment in a difficult labour market
is a huge challenge and A4e needs to incentivise its teams to
compete on behalf of its customers. These incentives need to be
balanced. A4e have found that individual performance incentives,
whilst effective in delivering short-term results, may have been
a driver for individual malpractice. Partially as a safeguard
against individuals making fraudulent job outcome claims, A4e
have initiated a team based incentives package that emphasises
collective rather than individual performance and reduces the
risk of individuals abusing the system.
3.20 A4e's internally developed and developing
safeguards represent an appropriate attempt to identify and prevent
A4e staff making fraudulent claims for outcomes which have not
been achieved on current contracts that use paper based systems
to verify claims. A4e estimate that our investment in safeguards
intended to prevent fraud in our welfare to work delivery this
financial year equates to £1.9 million.[30]
3.21 DWP, as market steward, controls the
contractual framework including the processes and checks made
against a providers job outcome claim. This contractual framework
plays an important role in determining how easy or difficult it
is for the staff of providers to make fraudulent job outcome claims.
3.22 Under existing contracts, such as New
Deal Prime Contractor and Pathways to Work, there is a paper based
system which is used to evidence the progress of clients, which
in turn triggers payment to the provider; this system is known
as the Contracted Employment Provision (CEP) referral and payment
process. Paper based systems rely on evidence such as timesheets
with signatures made by both the customer and provider staff,
to authenticate the information on the forms. DWP have rightly
recognised that this existing paper based referral process is
vulnerable to fraud, is time consuming, costly to administer and
prone to error and delay.
3.23 Another frailty in the contractual
framework relates to the conditions placed on the Job outcome.
Under New Deal Prime Contract job outcomes are rewarded for jobs
which providers "expect" to last for 13 weeks.
As was shown in the Hull case, this reliance on the subjective
opinion of provider staff is open to abuse. Staff could claim
a job outcome having moved someone into very temporary work and
yet claim that they expected that work to last for 13 weeks.
3.24 DWP are implementing safeguards under
the next generation of contracted employment programmes which
deal with both of these issues.
3.25 The single most important fraud safeguard
for contracted employment programmes will be the transition to
an electronic referral and payment system known as the Provider
Referral and Payments system (PRaP). Under the PRaP system job
outcome payments made to providers will be claimed via the PRaP
system, all claims for outcome payments are verified by an "off-benefit
check". Off-benefit checks are conducted by JCP district
support staff on clients' National Insurance records to establish
whether they are still claiming out of work benefits. Providers'
staff could still falsify job outcome submissions, as occurred
in the Hull case,[31]
but they could not falsify the fact that a client has signed off
if they were still claiming benefits. This check is entirely out
of the control or influence of providers. Without a successful
off benefit check the provider will not receive an outcome payment.
Initially supporting Flexible New Deal contracts, all contracted
employment provision will migrate onto PRaP at contract award
or renewal by 2011-12.[32]
3.26 Our own work identifying the likely
paperwork generated by each customer suggests that PRaP will also
significantly reduce the volume of paperwork which circulates
between DWP, the Prime Contractor and JCP. Currently for New Deal
each individual customer could potentially generate up to 137 pages[33]
of paperwork. Last year A4e directly worked with 59,722 customers
through our New Deal Prime Contract so as a result A4e will have
been managing between six and eight million pieces of paper for
this single area of delivery. This figure does not include sub-contracted
delivery or indeed other contracted programmes such as Pathways
to Work, New Deal for Disabled People or DWP ESF provision. Under
Flexible New Deal paperwork will be greatly reduced. The reduction
in the amount of paperwork will result in a reduction in claim
errors.
3.27 The conditions of job outcomes will
also evolve with Flexible New Deal. As noted earlier under New
Deal job outcomes were rewarded for jobs which providers "expected"
to last for 13 weeks. In comparison, under Flexible New Deal
short job outcomes are paid for jobs which as a minimum do last
for 13 or 26 weeks. The removal of subjective opinion
around the sustainability of job opportunities, along with the
automatic off benefit check will drastically reduce the vulnerability
of the system.
3.28 DWP's RAD teams work with providers
to investigate fraud and irregularities and part of the RAD process
review entails a system review leading to recommendations for
improvement. A4e has always implemented these recommendations
to the satisfaction of the assurance team. The conclusions of
these reviews allow RAD to refresh best practice across the network.
3.29 In addition to these process based
safeguards DWP also employ legal safeguards against fraud. Prime
Contractors are contractually bound to legal agreements which
set out exactly how DWP expect the programme to be delivered.
These contracts include specific sections relating to fraud.[34]
The fraud clauses in the New Deal Prime Contract required the
provider to "pay the utmost regard to safeguarding public
funds against misleading claims for payment and shall notify Jobcentre
Plus immediately if it has reason to suspect that any serious
irregularity or fraud has occurred or is occurring."
3.30 Under the more recently awarded Flexible
New Deal contracts. DWP has tightened the legal framework with
regards to fraud by placing more prescriptive requirements on
providers to reduce the opportunity for fraudulent behaviour.
To summarise, prime contractors are expected to have a whistle-blowing
mechanism,[35]
have staff performance management systems which do not encourage
individual staff to make false claims, and ensure that the programme
is not delivered by the same staff members who then produce and
provide performance information to the Department. These provisions
are currently being changed through the contract variation process
to align the provisions in all our contracts with DWP to the recent
drafting introduced through Flexible New Deal. DWP also included
a clause which will see any provider paying an escalating fine
for minor and serious fraud/irregularities. These fines are in
addition to the repayment of the outcome payments.
3.31 A4e's internally developed safeguards
are comprehensive and proportionate in the context of a system
which, whilst paper based and complex, will be inherently open
to potential abuse to provider staff intent on committing fraud.
A4e believe that the contractual and systems safeguards introduced
by DWP on new contracts will drastically reduce the opportunity
for fraud.
Is there sufficient protection for employees who
raise concerns about their employers' delivery of a contracted
employment programme?
4.1 As noted in our response to Q1, DWP
has for the first time imposed a contractual requirement under
Flexible New Deal contracts to "have an established system
that enables Prime Contractor and Sub-Contractor staff to report
inappropriate behaviour by colleagues in respect of Provision
performance claims". By enshrining this in the contractual
terms of all future welfare to work contracts DWP will ensure
that providers have systems in place to enable "whistle-blowing".
4.2 Until recently A4e's measures relating
to whistleblowing formed part of the wider A4e grievance policy.
However, in recognition of the importance the organisation places
on having a visible process in place; a dedicated whistleblowing
policy has been developed. The policy gives clear guidelines about
who an individual with a concern about wrongdoing can go to. A4e
are also engaging the independent charity Public Concern at Work
(PCaW) who will provide confidential telephone advice to any of
our employees who witness wrongdoing at work but are not sure
whether or how to raise their concern. If someone finds themselves
in this position, PCaW will help identify how best to raise the
concern, ensuring protection for the individual and maximising
the opportunity for any wrongdoing to be addressed.
4.3 Our policy also clearly states that
any member of A4e's staff found to have victimised a bona fide
whistleblower will be subject to disciplinary procedures.
4.4 To further strengthen our control framework
A4e recognise that it is important to engage with our staff on
an ongoing basis, and so commissioned Deloitte to assist us in
identifying areas and opportunities that could expose the organisation
to fraudulent and other unethical behaviour. This included conducting
a web-enabled survey designed to provide valuable insight into
areas of fraud susceptibility, our ethical culture and the actual
impact of A4e's fraud and ethical risk management programmes.
4.5 Anonymous feedback was sought from all
of our employees and Deloitte independently received and collated
the responses. A4e received the interim results from Deloitte
in w/c 28 September 2009 and are currently reviewing
the findings. The organisation expects to use the findings to
drive evidenced based development of the organisation's systems
of control.
4.6 A4e's commitment to ensuring its staff
will always have an outlet for raising their concerns means that
this process will be revisited periodically in order to ensure
that the organisation's approach to wrongdoing of any kind remains
consistently vigilant.
4.7 The combination of both contractual
direction and welfare to work providers' innovative approaches
will mean that there is sufficient protection for employees who
raise concerns about their employers' delivery of a contracted
employment programme.
Does DWP's contract management approach ensure
the quality of service received by customers is commensurate with
the level required under the contract terms?
5.1 Historically DWP has used contract procurement
as an important driver of quality of service. Providers have to
set out how they propose to ensure service quality in tender submissions.
However as the duration of contracts has been extended, the ability
of procurement to have an ongoing impact on quality becomes reduced.
5.2 In response, DWP's approaches to maintaining
quality of service are evolving. The Department has established
a Quality Framework which draws together a number of different
methods for ensuring quality of service.
5.3 Continuous Self-Assessment and Provider Development
Planning
Following the award of a contract, providers
complete a Quality Assessment Questionnaire (QAQ), which will
give information about the quality of the provision they are about
to deliver. The QAQ is used by the DWP Contract Manager to award
a quality risk rating which informs the management of the contract.
The QAQ will also be used by providers and DWP Contract Managers
to discuss and agree actions for the coming year. These actions
are recorded on the provider's Contract Start-up Plan until their
first Provider Performance Review after which the Provider Development
Plan is used.
5.4 Independent External Inspections
Providers of post-16 government funded
training or education are covered by the Learning and Skills Act
2000 and are subject to independent inspection by Ofsted
in England and Estyn in Wales. The key purpose of inspection is
to: give an independent public account of the quality of provision,
the standards achieved and the efficiency with which resources
are managed and help bring about improvement by identifying strengths
and areas for improvement.[36]
5.5 Star Ratings
DWP has developed a provider ratings system
where providers are given scores based on the delivery of performance
outcomes, quality of provision and compliance and contractor issues.
Each of these three areas has a number of Key Performance Indicators
(KPIs) and measures. The scores for these are added together to
produce a Star Rating for each contract. The Job and Sustained
Job Outcome KPIs are based on relative assessment. The relative
assessment element compares performance against targets set out
in each individual contract and ranks these against other contracts
delivering the same provision. Points are then awarded to each
contract based on where it appears in the ranked order. The Quality
and Compliance and Contractor Issues KPIs are measured against
predetermined benchmarks.[37]
Currently DWP only monitors Employment Zone contracts against
this tool but has indicated that it intends to apply the Star
Ratings system to Flexible New Deal.
5.6 Other Measures
In addition to the Quality Framework DWP is
also testing the impact of competition on the quality of services.
Employment Zones, Pathways to Work and Flexible New Deal have
seen multiple providers to deliver in a single Contract Package
Area. These customer choice districts create small discrete markets
and force multiple providers to compete with each other on quality
of provision and performance. DWP has indicated that in Flexible
New Deal customer choice districts it will use Star Ratings as
a mechanism for rewarding provider performance. DWP will shift
market share away from the weaker performing provider to the strongest.[38]
5.7 The contract management processes needed
to assure service quality are evolving and DWP recognises this.
Current contracting rounds are leading to the creation of larger
contracts where providers have a deep impact on the employment
outcomes in an area. It is important that contract management
becomes a partnership based approach, with open and transparent
systems allowing both the provider and DWP to track performance
and quality. The focus of contract management should be on improvement
and best practice with DWP using the benefit of its interaction
with different providers to promote and facilitate performance.
Good contract management should also be about making informed
judgement and having flexibility to adapt to changing circumstances,
particularly over a longer contract term. Contract managers need
the skills and insight to define appropriate challenges for providers
in the circumstances they are tackling in local economies that
will recover from recession at different pace, with an unequal
impact on performance.
5.8 Current systems across contracted programmes
are more focused on compliance rather than continual improvement
and we believe it is to the benefit of future service quality
that this balance is redressed. This means making a substantial
investment in the skills of DWP contract management teams and
ensuring providers make the ongoing commitment to invest in service
quality and improvement over the life of the contract.
5.9 Systems across the board need to be
more engaged with customers so that they have a real voice and
impact on service quality measures. This is essential if employment
services are to become service led treating service users as both
experts and customers.
Do DWP and the National Audit Office effectively
monitor the accuracy of providers' management information systems,
provider performance against targets, and the evidence on which
provider payments are claimed?
6.1 DWP employs Financial Appraisal and
Monitoring (FAM) and Risk Assurance Division (RAD) teams to monitor
providers MI, performance and evidence on which provider payments
are claimed.
6.2 In A4e's experience DWP's FAM functions
in particular have become increasingly poorly matched to the task
that they are expected to do. This is because the structure and
terms of reference for the function have not evolved with fundamental
changes in contracted employment provision. Provider feedback
and DWP's own recognition of a need to reform this area of their
organisation has led to a substantial program of change. DWP expects
to have a new function in place for 1 October 2009.[39]
6.3 A4e expects that the new function will
be far better adapted to providing a robust assurance to the welfare
to work market. Key changes include:
— Moving from a regional to a national
level—this better reflects how the Welfare to Work market
has evolved.
— Rationalised lines of communication between
DWP and providers.
— Staff specifically qualified in Audit.
6.4 The evidence requirements which DWP
places on provider payments are based on National Audit Office
criteria. The documentation that providers submit to evidence
job outcomes is subject to ongoing review. As of 27 January
these criteria are:[40]
6.5 Written statements as opposed to oral
evidence; Independently validated—ie obtained from an independent
source. Restricted to official access—DWP accept only official
supporting employer documentation (letterheads, business cards,
etc.)
6.6 As noted in our response to Question
1, the evidence requirements outlined above will become less important
under Flexible New Deal. Job outcome payments made to providers
will be claimed via the PrAP system, and will be verified by off-benefit
checks.
6.7 Aside from providing guidance to DWP
on acceptable forms of evidence the NAO has periodically reviewed
Contracted Employment Provision. In 2007 NAO published "Helping
people from workless households into work"; the report concluded
that the current range of employment programmes had been successful
for those who participate in them.
6.8 A4e is currently contributing to a NAO
review of the value for money of the Pathways to Work programme.
In particular NAO was interested in how well DWP, JCP and A4e
were working together in the South West. The final report is due
in February 2010 but informal interim feedback has been very
positive about the excellent partnership working.
How has the centralisation of contract management
in DWP impacted upon the role of Jobcentre Plus and both provider
and customer experience of outsourced employment programmes?
7.1 The centralisation of contract management
has been necessary to facilitate DWP's role as market stewards,
allowing DWP to take a more strategic view of contract management.
In A4e's experience centralising contract management has enabled
a better quality of engagement between DWP and providers at a
senior level and better reflects providers own structures for
managing contracts. Better engagement around contact management
has in turn provided a greater degree of shared understanding
about contract performance and best practice.
7.2 In A4e's experience this shift in functional
responsibility has not come at the cost of either customer experience
or a diminishing role for Jobcentre Plus at a local level. JCP
continues to be an essential local partner, both in ensuring compliance
with agreed working practices and standards embedded in Provider
Guidance and in collaborating with Providers to provide the best
experience to customers. It remains essential that there continues
to be a close relationship and a level of pragmatic autonomy at
a local level through a close working relationship between Jobcentre
Plus and A4e staff.
7.3 There are many examples of local partnership
working between JCP and A4e. For example, in rural areas of Devon
and Cornwall A4e and JCP have combined delivery sites so that
A4e and JCP staff work alongside each other. This has ensured
that the programme of support runs seamlessly for the customer.
Partnership also promotes excellent working practices between
the organisations.
7.4 Furthermore A4e is currently working
closely with DWP and JCP to support the JCP growth programme.
A4e, alongside other providers, is examining ways of working with
JCP to combine other delivery sites in order to ensure better
joined up services for customers and to ensure best value for
tax payers.
Will the customer charter proposed by DWP ensure
that customers, Jobcentre Plus and contractors know what they
can expect of employment programmes?
8.1 The rights and responsibilities of benefit
claimants and the welfare state have been central to the welfare
reform agenda for some time. The Customer Charter sets out clearly
the rights and responsibilities of both advisors and its customers.
A4e understands that Employment Related Services Association (ERSA)
is currently working with DWP to finalise a version of the customer
charter which will be specific to contracted employment programme
providers. DWP's customer charter has captured the central tenets
around the interaction between the customer and the employment
programme provider (whether it is JCP or a contracted provider).
8.2 A4e would recommend that a Customer
Charter is prominently displayed as a poster in all delivery offices
(JCP or contracted provider). The impact of the Customer Charter
will be determined by two key factors: its implementation and
the underlying relationships between staff and customers.
8.3 Implementation—It is important
that the implementation of the Charter is handled appropriately.
Advisors should understand the importance of the charter and why
the charter is being adopted. Failure to get "buy in"
at a local level would reduce this to a superficial bureaucratic
exercise unlikely to change the interaction between staff and
customers. It is also important that the Charter features in the
first contact made between customers and advisors. The advisor
needs to draw the customer's attention to the charter and explain
what the charter means for them.
8.4 Relationship—It is important that
the charter is not seen as a substitute for a strong underlying
relationship between the customer and JCP staff. In particular
the charter should not absolve the advisor from treating each
individual with respect.
Will contract management in the prime contractor
model be transparent and effective in monitoring quality throughout
the supply chain, and in maintaining a role for sub-contractors?
9.1 Our sub-contractor network provides
A4e with delivery capacity in areas where the organisation does
not have a presence and it provides A4e with specialist expertise
which the organisation does not have, without it A4e would not
be able to fulfil contractual obligations to DWP and would not
be able to provide customers with the richly tailored provision
currently on offer. Last year A4e worked with 173 sub-contractors
to deliver welfare to work services and the value of the work
which A4e subcontracted equates to £12.8 million or
14.5% of our welfare to work turnover in the UK for the same period.
A4e is set to further increase the number of sub-contractors used
under Flexible New Deal.[41]
9.2 A4e believe that Prime Contractors have
a duty to ensure the long term sustainability of the welfare to
work market. This means working in partnership with sub-contractors
and ensuring they are able to continue to play a valuable role
in the delivery of welfare to work provision.
9.3 It is in the prime contractor's commercial
interest to ensure that their supply chain meets all appropriate
quality and performance targets as the prime contractor is accountable
for the quality and performance of all delivery of services by
the supply chain. A4e have Partnership Managers in Flexible New
Deal operation, for example, whose role it is to monitor quality
in the supply chain and promote continuous improvement. A4e is
committed to working with a diverse range of partners and as part
of that commitment A4e recognise that part of our role as prime
contractor is to capacity build smaller organisations in terms
of training, seconding support, providing access to tools and
processes. A4e believe this strong mutual interest is essential
to sustainable performance.
9.4 In the first instance supply chains
will be transparent to DWP at the point of contract award. If
DWP has issues with the way a potential prime contractor is proposing
to treat their supply chain they can award the contract to somebody
who will take a more sustainable approach to their supply chain.
9.5 DWP have also made it a condition of
Flexible New Deal contracts that many of the contractual requirements
in the Prime contract are flowed down through to sub-contracts.
These provisions relate to areas such as fraud, security and data
protection.
9.6 Alongside these measures designed to
build in transparency and accountability before delivery begins
DWP is in the process of establishing a code of conduct for supply
chains.
9.7 The code of conduct was proposed as
part of the DWP's commissioning strategy. The code is intended
to cover key values and principles of behaviour in relation to
establishing a supply chain and the subsequent treatment of that
supply chain to support the code of conduct there will be an underpinning
accreditation scheme and dispute mediation service. Merlin accreditation
will confirm that providers are adhering to the code of conduct.
The mediation service is intended to be invoked as a tool of last
resort when a dispute between providers cannot be resolved by
other means. These services are in early stages of development.[42]
9.8 DWP's role in the protection of supply
chains needs to be carefully balanced against the need to ensure
that the benefits derived from allowing the top tier of quality
Prime Contractors to use their position to find "what works"
is not needlessly impeded. Imposing too many barriers will return
the welfare to work market to an era of micro-management, albeit
by proxy.
October 2009
26 3.1 Full details of the fraud committed at A4e's
Hull office is provided as Appendix 1. Back
27
On New Deal Prime Contract Delivery Back
28
More detail on our whistle blowing procedures follow in our response
to Question 2. Back
29
A more in-depth discussion of the reform of the FAM function appears
in our response to Question 4. Back
30
These costs include Business Risk, Central Admin Support, Quality,
Audit and Deloitte's fraud consultancy work. They do not include
any wider HR costs. Back
31
See Appendix 1. Back
32
DWP (2008) DWP briefing on Provider Referral and Payment system. Back
33
This number represents the maximum number of pages that A4e believe
can be generated by a single New Deal customer. Back
34
To illustrate how DWP's approach to fraud has developed A4e include
the fraud clauses from a New Deal Prime Contract and from a Flexible
New Deal Contract as Appendix 1 & 2 respectively. Back
35
This is described at length in paragraphs 4.1-4.7. Back
36
DWP (2009) Quality Framework
http://www.dwp.gov.uk/supplying-dwp/what-we-buy/welfare-to-work-services/quality-framework/
Back
37
DWP (2009) Star Rating system
http://www.dwp.gov.uk/supplying-dwp/what-we-buy/welfare-to-work-services/star-rating-system/
Back
38
DWP (2009) Moving Market Share in FND
http://www.dwp.gov.uk/docs/mov-market-share-present-fnd-241008.pdf
Back
39
More detail on the upgrading of the FAM function can be found
at 08/06/09 (DWP) Notice to Providers-Changes to the Financial
Appraisal and Monitoring (FAM) of Contracted Employment Programmes
http://www.dwp.gov.uk/supplying-dwp/what-we-buy/welfare-to-work-services/notices-to-providers/changestothefamofcep.shtml
Back
40
27/01/09 09 (DWP) Notice to Providers-Evidencing Job
Outcome Claims in Contracted Employment Programmes
http://www.dwp.gov.uk/supplying-dwp/what-we-buy/welfare-to-work-services/notices-to-providers/notice-to-providers-evidence.shtml
Back
41
We have over 40 end to end and specialist end to end partners
and over 100 intervention partners. Back
42
The contract for the provision of these services was awarded in
August 2009. Back
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