Memorandum submitted by ERSA (EP 13)
1. ERSA welcomes this Work and Pensions
Select Committee Inquiry and advises the Committee that:
(a) The management and administration of contracted
employment programmes is not failing to safeguard against risks
of fraud or insufficient public accountability for public spending;
(b) Providers are realistic enough to accept
that it will be impossible to give a 100% guarantee that there
will never be any fraudulent claims for job outcomes. Yet they
are far from complacent;
(c) The levels of fraudulent claims are low and,
equally importantly, the systems in place identify and address
those isolated instances of individual or localised fraudulent
behaviour;
(d) Fraud on any level is intolerable, but the
reaction needs to be proportionate. The process needs to help
minimise other risks: genuine error; and obstacles to claiming
for valid outcomes. The challenge of retaining balance is illustrated
by comparing the handling of two recent situations:
(i) A once-only "off-benefit check",
to pay Pathways providers for hundreds of "backlog"
job outcomes they had achieved but could not prove through lack
of paper evidence, resulted in DWP paying out many hundred thousand
pounds to providers. This occurred "under the radar"
and there are no plans to repeat it;
(ii) The recently reported fraudulent claims
(where the sum repaid by providers was considerably less than
the sum paid by DWP for previously unclaimable Pathways outcomes)
provided no evidence of systematic fraud, though the story attracted
sustained press attention and triggered various policy responses;
(e) The main weaknesses of systems to prove job
outcomes have been: costs (around 10% of contract value); difficulty
in gathering the evidence; and burdensome requirements alongside
negative signals for employers. The move to off-benefit checks
should result in a scaling back of the collection of paper evidence;
(f) The ground rules and processes for contract
management and administration need to improve and modernise, to
drive better performance for customers and the taxpayer and to
become more closely aligned with welfare reform and the Commissioning
Strategy;
(g) Improvements are already underway, supported
not least by joint working over the past year by ERSA, DWP and
Jobcentre Plus. Our joint initiative on "creating the conditions
for high performance" has identified process changes which
would enable providers to achieve higher performance without exposing
DWP or providers to unacceptable risk. The DWP/ERSA Pathways Working
Group has streamlined processes to improve efficiency and customer
care;
(h) ERSA encourages the Select Committee to use
this Inquiry to fuel the momentum of continuous improvement, by
taking a "forward looking" approach in its findings
and recommendations;
(i) ERSA proposes guiding principles for contract
management and administration: promote teamwork; avoid stifling
innovation; weigh up the costs and benefits of processes; avoid
confusing policy with process; and hold providers accountable
for achievable targets. These guiding principles aim to drive
good behaviours by DWP, Jobcentre Plus and providers;
(j) Changes to DWP's Financial Appraisal and
Monitoring (FAM) are a good step forward, by aiming to add value,
develop alternative risk management techniques and strengthen
partnership;
(k) Gathering and analysing management information
consumes considerable DWP and provider resource. There is a need
to cut process costs and make the data more useful in answering
strategic questions, such as the economic and social return from
programmes;
(l) Stronger and more flexible teamwork between
DWP, Jobcentre Plus and providers is key to improving performance.
New ways of working and a rebalancing of the roles of DWP and
Jobcentre Plus have started to recognise this, but a sustained
culture change is needed;
(m) ERSA is working with DWP and Jobcentre Plus
to draw up a statement of customer care for contracted employment
programmes. This will fit below the DWP Customer Charter, setting
out a common customer care ethos, without stifling individual
providers' ability to innovate;
(n) The "Merlin Standard" work to ensure
adherence to the Code of Conduct, must start by gaining a better
understanding of what drives good partnering behaviour through
the supply chain. Given the pivotal influence of DWP and Jobcentre
Plus, ERSA recommends that any standard must test them as much
as it tests prime contractors and subcontractors.
ERSA URGES THE
COMMITTEE TO
USE ITS
INQUIRY TO
HELP DRIVE
CONTINUOUS IMPROVEMENT
2. ERSA (Employment Related Services Association,
representing independent providers of welfare-to-work services)
welcomes this Work and Pensions Select Committee Inquiry. The
Inquiry has the potential to help support and fuel a drive, which
is already underway, to improve the management and administration
of contracted employment programmes, by taking a "forward
looking" approach to drawing up findings and recommendations.
3. ERSA members span the public, private
and voluntary sectors and range from small local or specialist
providers to national or multi-national organisations. Our evidence
has been produced through consultation across this provider base.
It also draws on our joint work with DWP and Jobcentre Plus over
the past year, notably:
(a) Our "creating the conditions for high
performance" initiative to identify process changes which
would enable providers to achieve higher performance without exposing
DWP or providers to unacceptable risk. This work was set up by
the ERSA/DWP Overview Group, a senior level forum bringing ERSA
together with DWP officials responsible for policy, delivery and
commercial issues;
(b) The DWP/ERSA working group on Pathways, which
has identified measures to raise the performance of Pathways contracts;
(c) Dialogue to update and modernise DWP's standard
contractual terms for welfare-to-work contracting, to bring them
into line with the Commissioning Strategy and promote partnering;
(d) Ongoing discussions to promote more flexible
and stronger teamwork between DWP, Jobcentre Plus and providers,
to improve customer care and the management of customer journeys.
4. ERSA would emphasise a point that the
Work and Pensions Committee has rightly acknowledged in other
work: that we are in the early stages of an ambitious welfare
reform journey. ERSA supports the Commissioning Strategy and our
members who also work for other parts of Government are particularly
aware that the DWP's strategy is leading-edge. We should expect
continuous evolution and improvement in the administration and
management of contracted employment programmes, to support welfare
reform and fulfil the intentions of the Commissioning Strategy.
Indeed, ERSA is committed to help fuel the momentum of this evolution.
PROMOTING OUTCOME-FOCUSED
COMMISSIONING, VALUE
FOR MONEY,
RISK MANAGEMENT
AND ACCOUNTABILITY
5. The ground rules for the management and
administration of contracted employment programmes need to drive
good behaviours by all parties and support fundamental objectives,
namely outcome-focused commissioning, value for money, risk management
and accountability. To date, contracted employment programmes
have been characterised by detailed processes, which have sometimes
inadvertently acted against these fundamental objectives. The
Commissioning Strategy creates the requirement and the opportunity
to take a fresh approach. We encourage the Committee to use this
Inquiry to make the case for adapting management and administration
techniques and to support a culture change which has begun but
needs to become embedded.
6. ERSA suggests guiding principles which
would help to ensure that processes for contract management and
administration serve their intended purpose:
(a) Promote teamwork: consistently we find that
the key to improving outcomes and customer care in contracted
employment programmes lies in strengthening the teamwork between
DWP, Jobcentre Plus and providers. Contract management must promote
a "one team" approach and avoid reinforcing any "them
and us" mindset. For example:
(i) Legitimate data security concerns should
not thwart sensible sharing of customer data, so that Jobcentre
Plus and providers can share knowledge about customers' needs
and avoid asking customers to provide the same information repeatedly;
(b) Avoid stifling innovation: the Commissioning
Strategy usefully promotes "black box" specifications,
where DWP outlines key requirements and invites bidders to put
forward their own solutions. DWP needs to avoid "writing
out" the scope for innovation through prescriptive ground
rules. In return, providers individually and collectively need
to give DWP and other stakeholders the confidence that their solutions
will fulfil policy goals. This can be achieved through alternative
mechanisms. For example:
(i) The ERSA/JCP statement on customer care
in contracted employment programme, currently being developed,
will set common expectations about what customers can expect and
how they can make the most of support. It will establish a common
customer care or public service ethos, without stifling each provider's
innovation and organisational culture;
(c) Weigh up the costs and benefits of process
ground rules: effective contract management processes add value
for DWP and providers, for example by improving efficiency or
relationships. Conversely, some "tick box" processes
can inadvertently add financial or other costs, drawing resources
away from the front line, without any meaningful risk reduction.
Processes therefore need to be designed carefully, against a balanced
assessment of risk and value for money.
(d) Avoid confusing process with policy: guarding
the distinction between policy and process is key to creating
a climate where both can evolve. The processes first designed
to implement a policy can inadvertently be given the status of
policy itself and become difficult to challenge for fear of undermining
the policy or strategic intent. The joint DWP/ERSA work on Pathways
is instructive for having addressed this point, e.g:
(i) We demonstrated how introducing group-based
activities could complement one-to-one discussions to ensure that
Work Focused Interviews preserved the policy of personal customer
contact while also addressing customers' barriers of isolation
more effectively;
(e) Hold providers accountable for achievable
performance targets: where contracting processes drive providers
to over-promise on price and performance, they will have risked
creating the typical consequences of inappropriate targets, such
as skewed priorities and delivery techniques, but also isolated
instances of individuals fabricating results so that they hit
or come closer to the targets. For all these reasons, welfare-to-work
commissioners must now create a competitive framework where providers
can be fully confident that the winning bid will be a realistic
one, both in terms of targets and price.
DEMONSTRABLE ACCOUNTABILITY
FOR CONTRACTUAL
SPENDING AND
SAFEGUARDS AGAINST
FRAUD
7. ERSA supports the fundamental principle
that there must be safeguards against fraud and demonstrable accountability
for public spending, simply to show that public money is being
spent as intended. Providers' own systems and DWP's contract management
and administration procedures have long been designed around this
principle. These systems include: providers' internal audit and
whistle blowing policies; tight rules on what constitutes valid
job outcome evidence; DWP's Financial Appraisal and Monitoring
(FAM) function; and DWP's arrangements for coming into to review
and scrutinise providers.
8. Providers are realistic enough to accept
that it will be impossible to give a 100% guarantee that there
will never be any fraudulent claims for job outcomes. However,
they are far from complacent. The levels of fraudulent claims
are low and, equally importantly, the systems in place identify
and address those isolated instances of individual or localised
fraudulent behaviour.
9. As DWP said at the time, the cases of
fraudulent claims that attracted media attention recently had
been identified by providers and DWP much earlier and were being
addressed:
(a) DWP spokeswoman, Observer, 28 June 2009:
"Specialist employment organisations help 200,000 people
back to work every year. Unfortunately our audit processes have
uncovered some specific cases of fraud involving particular individuals
who have since been sacked and money paid back. Our investigations
found no evidence of systematic abuse."
10. A4e's statement in response to its case
was typical of the reaction of ERSA members to any case of fraud:
(a) A4e: "All the matters raised in the
article are known to both A4e and the DWP and have been the subject
of both an A4e investigation and a DWP led investigation. These
investigations have resulted in the departure of both individuals
from the company and the ceasing of all activity with the employment
agency concerned. It is disappointing that the actions of two
individuals in one office have diverted attention away from the
achievements of the thousands of colleagues in A4e who are passionate
about supporting long term unemployed people back into work."
11. ERSA would not see the cases recently
reported in the press as grounds for judging that the current
safeguards have failed. However, fraud on any level is intolerable:
these cases are a salient reminder of why safeguards are necessary
and serve as a prompt to learn lessons and build these into continuous
improvement.
12. We would urge Parliament and DWP to
guard against responding to these cases with measures that, in
practice, have little impact in further eliminating fraud but
create significant extra cost and other downsides for effective
delivery. Rather, we would recommend process improvements that
would achieve "more for less", by improving efficiency,
creating better conditions for performance and managing the risk
of fraud more effectively. The answer lies in using techniques
that drive good behaviour, eg a partnering approach that that
generates robust challenge and support between the parties and
targets that are challenging yet achievable.
PROVING JOB
OUTCOMES
13. To date, the main weakness of systems
to prove job outcomes has not been that fraudulent claims were
being paid. Rather, the problems have revolved around:
(a) The cost of collecting and submitting the
evidence, with this activity accounting for 10% of providers'
costs and also using significant DWP resource. The process has
also created delays in providers being paid;
(b) The significant volume of job outcomes genuinely
achieved but unpaid. Causes have included:
(i) Restrictions on valid evidence, which
have made it impractical to prove job outcomes, eg the employer
representative who signed the first document may not be available
to sign the second one and the signatures must match; some businesses,
such as a fish and chip shop, may not always have print material
such as headed note paper to hand;
(ii) A six week tracking period (within
which providers can claim job outcomes once a customer leaves
provision) being tight when recruitment processes take time, eg
in the public sector;
(c) Unhelpful requirements and damaging signals
for employers. For example:
(i) Employers are currently reluctant to
make a public commitment that a job will last for 13 weeks,
because they are worried about redundancy risks across their businesses;
(ii) Temporary jobs, which could be the
ideal next step for some customers given current labour market
conditions, are undervalued through a legitimate policy goal of
sustainable employment;
(iii) The "signing rules" for
employer evidence can inadvertently imply a lack of trust in employers
who are in reality strong partners with Jobcentre Plus and providers
in helping those furthest from the labour market to find and keep
work.
14. ERSA has been working with DWP over
the past year with the aim of addressing these types of "downsides",
without increasing risks to DWP or providers. Progress has included:
(a) An extension in the tracking period to 13 weeks
for some programmes;
(b) More clarity on what constitutes valid evidence,
to: help providers seek the right proof; make it easier for all
types of business to prove they had employed someone; and help
reduce inconsistency between the approaches of different DWP FAM
teams in evaluating evidence;
(c) Support for Pathways contracts, eg speeding
up outcome payments and a one-off "off-benefit" check
to pay providers for around 800 job outcomes achieved previously,
for which the paper evidence had proved impractical to collect.
That resulted in DWP paying providers around £800,000 for
"backlog" outcomes.
15. These types of improvements have been
welcome and demonstrate the potential for increasing efficiency
and effectiveness without risking reduced accountability or increased
fraud. However, overall, the process for proving job outcomes
remains costly in financial and non-financial terms.
16. ERSA welcomed the Government's commitment
to introducing "off-benefit" checks as the central technique
for validating job outcomes. However, it is now clear that, while
"off-benefit" checks will be used to validate invoices,
providers will still need to collate the paper evidence as before
to meet FAM requirements, representing a continuation of the heavy
administrative burden and cost to providers and DWP.
17. ERSA encourages the Work and Pensions
Committee to recommend:
(a) A clear policy of using "off-benefit"
checks wherever they can technically prove job outcomes;
(b) Continued joint work by DWP and ERSA to review
the value of the other types of evidence still required to sit
alongside "off benefit" checks;
(c) Further review of the evidence ground rules
and processes for those scenarios where "off-benefit"
checks will not work technically;
(d) The aims of further gains in efficiency and
effectiveness alongside better risk management.
FINANCIAL APPRAISAL
AND MONITORING
18. ERSA welcomes the conclusions of DWP's
review of the Financial Appraisal and Monitoring (FAM) function
that provides assurances to DWP's Accounting Officer about contracted
employment programmes. Key actions being put in place from 1 October
include:
(a) Operating to consistent standards at a national
level, so that providers have a single point of contact and a
clear understanding of the criteria against which they will be
assessed, thus allowing DWP to focus on ensuring that providers'
systems are effective.
(b) Focusing more strategically on value for
money in contracted employment programmes, as opposed to the previous
remit which focused more on validation of payment.
(c) Moving line management from Jobcentre Plus
Finance to DWP's Delivery Directorate, to connect the FAM function
more directly into contract management.
(d) Regrading of the posts within the FAM function
to recognise the change in scope and the technical expertise and
level of judgement now needed in the decision making process.
All personnel working in the new function will either have or
be working towards the Institute of Internal Audit's Certificate
in Internal Auditing qualification.
19. These changes create the potential for
the FAM function to add more value and to develop alternative
risk management techniques, which would give DWP the confidence
to streamline the current processes which are costly. In particular,
it paves the way for DWP to gain a more effective insight into
providers' policies, systems and techniques and to build stronger
partnerships with providers, through which they can offer more
robust challenge and support. ERSA encourages the Work and Pensions
Committee to welcome this development and to encourage DWP and
providers to harness its potential.
MANAGEMENT INFORMATION,
INSPECTION AND
SCRUTINY
20. A considerable level of DWP and provider
resource goes into gathering and analysing management information
and scrutinising performance, at local, regional and national
levels, in terms of: progress of customers; uptake and delivery
of provision; contractual performance (including financial monitoring
and external quality inspection); and outcomes achieved.
21. The range of activities is extensive,
including: FAM; the performance data "returns" that
contractors submit throughout contract delivery; Quality Framework
and Ofsted/Estyn inspections; Star Ratings; and provider accreditation.
22. All this detailed work demonstrates
the attention that is given to measuring the performance of contracted
employment programmes. The various tools have developed and evolved
over time. The recent review of FAM is a good example of a tool
being "modernised"; yet in overall terms the toolbox
needs rationalising and the tools need sharpening.
23. In essence, there is a need to improve
the efficiency and effectiveness of management information, to
reduce the cost of collection and analysis and also to make the
data easier to interrogate and more useful in answering strategic
questions, such as:
(a) The value for money obtained, calculated
on an "economic and social return on investment" basis;
(b) Comparative performance of different programmes
and providers and also comparative performance over time;
(c) Capability of the provider base;
(d) Outcomes achieved over the long term including
the distance travelled by those furthest from the labour market.
24. ERSA is keen to work with DWP and others
to ensure that management information tools are fit for purpose
in the context of the Commissioning Strategy and welfare reform
agenda. ERSA members can offer insights from delivering contracts
for other parts of Government, such as learning and skills where
common data sets are more established. Moreover, many ERSA members
have developed their own good practice, eg to track customer outcomes
and demonstrate the economic and social return on investment from
their provision.
CONTRACT MANAGEMENT
25. To date, detailed ground rules have
governed how providers should deliver contracted employment programmes
and report on their performance. The Provider Guidance documentation
(available on the DWP's website) illustrates this clearly. The
Commissioning Strategy commits to moving to a "black box"
approach, giving providers more freedom to design customer journeys.
Yet it is clear that a considerable degree of detailed prescription
will continue. The provider guidance for Flexible New Deal remains
a weighty tome, though there has been an effort to scale back
the text.
26. There is a growing recognition that
effective contract management is about much more than administrative
processes to collate and review data. The strength and depth of
partnership working between DWP, Jobcentre Plus and providers
is key. The trust that lies at the heart of successful partnerships
promotes flexible ways of working, unlocks innovation, supports
objective assessments of performance and fuels continuous improvement.
Such trust also gives all parties the confidence to expose risks
and problems early on, so that they can be managed and solved.
27. Contract management is evolving to strengthen
partnership working. In particular:
(a) The "New Ways of Working" initiative
is enabling and encouraging Jobcentre Plus to work more flexibly
across all its activities, including through building more flexible
teamwork with providers. Instances of good practice include:
(i) Jobcentre Plus delivering services from
providers' premises (and, to a lesser extent, vice versa), while
in the past there was a prevailing impression that this was not
permitted;
(ii) Jobcentre Plus and providers teaming
up to improve customer journeys, particularly to improve referrals.
Customer care is improved through Jobcentre Plus introducing the
customer to their new provider, instead of saying "a provider
will contact you";
(b) Provider Engagement Meetings have been introduced,
whereby Jobcentre Plus meet with providers individually or collectively
to discuss the issues most affecting performance. The agenda can
range from external factors such as the local labour market, through
issues of teamwork between JCP, providers and other agencies to
internal issues for providers. These sessions are outside the
contract management regime run by DWP but are intended to help
JCP and providers together to manage down risks and grasp opportunities
to improve performance;
(c) DWP is strengthening the emphasis it places
on supplier relationship management in its approach to contract
management and has also been restructuring its management of the
delivery of contract employment programmes, to break down silos
and address fragmentation;
(d) Ongoing work between DWP, JCP and ERSA regularly
throws up lessons about how DWP, JCP and providers each create
conditions that affect how the other parties can perform. This
interplay has not always been well understood, but we are now
learning more about how best to pull together for the customer
and taxpayer.
28. All these developments are at an early
stage and:
(a) DWP, JCP and providers are still building
the techniques to put the principles into practice;
(b) Although the culture change has begun, a
sustained drive from all those in leadership positions is needed
to embed the new approaches throughout DWP, Jobcentre Plus and
the provider base.
29. ERSA encourages the Work and Pensions
Committee to use its report to help raise the momentum of these
initiatives to stimulate: culture change; stronger partnership
working on the ground; and a clearer sense in the design of contract
management arrangements of what makes for the optimum teamwork
between DWP, Jobcentre Plus and providers.
30. The move to outcome-focused commissioning
must also frame the further evolution of contract management.
Public procurement and contract management techniques, developed
and embedded over the past 10-15 years, have been designed
for procuring outputs. As a nation, we are at the early stages
of a new era of commissioning for outcomes; and welfare-to-work
commissioning is at the leading edge of this development.
31. The techniques for output-based procurement
revolve around:
(a) Optimum risk transfer, ie assigning each
risk to the party best able to manage it, to achieve the optimum
risk allocation;
(b) Increasing certainty and predictability of
the result (eg on-time and on-budget);
(c) A contractor/client split, reflecting the
client's strategic "outsourcing" of the activity.
32. By contrast, outcome-focused commissioning
of welfare-to-work services needs to achieve:
(a) The best possible joint management of risk,
because so many outcome-focused risks, eg customer needs, labour
market conditions or the economic climate, are outside either
party's individual control or at least can be best managed jointly;
(b) Flexibility to enable change and uncertainty
to be managed as effectively as possible;
(c) A one-team approach, whereby DWP and Jobcentre
Plus see themselves as "bringing in" providers to be
part of their delivery network, because that is the only sensible
basis for managing down risks and grasping opportunities.
33. Hence, there is a need over time for
a radical redesign of established contract management techniques.
The evolution is likely to take a decade for the principles to
"sink in", the techniques to be developed and good practice
to spread.
34. We encourage the Work and Pensions Committee
to acknowledge the need for this evolution and to help create
the climate where it can take place, for example by: promoting
a "can do" attitude; committing to learning the lessons
constructively about what is working well and what needs to change;
and by framing its detailed proposals in a "forward looking"
way that supports the required direction of travel.
35. One specific issue where more effective
ground rules are needed is the handling of staff transfers. To
date, DWP's focus has been on offering limited advice to providers
on the application of TUPE (Transfer of Undertakings: Protection
of Employment regulations) and ensuring that the department does
not "overstep the mark" in terms of interpreting this
piece of employment law.
36. Good handling of staff transfers in
public procurement does not simply require compliance with employment
law, ie TUPE legislation; it also requires the public sector to
adopt procurement policies and procedures that support employees
through the process, promote fair competition, manage down risk
and ease the tendering process. ERSA is keen to work with DWP
to develop the appropriate ground rules in the context of welfare-to-work
commissioning.
CUSTOMER CHARTER
37. ERSA welcomes the recently published
DWP Customer Charter, setting out mutual expectations between
DWP and its customers. It is useful to have this generic document
that applies to all DWP's activity, including benefits, welfare-to-work
support and pensions. The research into customer priorities and
attitudes has been informative. Jobcentre Plus is also leading
useful work on standards of customer care for its operations.
38. ERSA has taken the lead to initiate
work to produce a statement of customer care for contracted employment
programmes, working in partnership with DWP and Jobcentre Plus.
39. The statement will give confidence to
customers and other key stakeholders, notably Ministers and Parliament
about the core customer care ethos at the heart of independent
provision of welfare to work services, without stifling the ability
of individual providers to innovate and differentiate their offering.
40. We are designing the statement to fit
beneath the main DWP Charter, covering consistent issues (right
treatment; right result; on time; easy access). We are interpreting
these generic pledges in the context of contracted employment
programmes. As with the DWP-wide Charter, this would set out the
mutual expectations on customers and providers to convey, for
example, that providers will develop a personalised service for
customers and will need customers to help by openly sharing their
needs and aspirations. We will be discussing the aims and content
of this statement at the ERSA Annual Conference on 20 October.
PRIME CONTRACTOR
MODEL
41. The successful implementation of the
Commissioning Strategy depends heavily on effective supply chain
partnerships, where prime contractors, mainstream providers (eg
aspirant primes) and smaller local or specialist providers can
all play to their strengths and deliver a joined up service for
the customer and taxpayer.
42. The prime contractor model continues
to develop, with primes contractors and sub-contractors as well
as DWP and Jobcentre Plus gaining experience and expertise.
43. ERSA welcomed the Code of Conduct and
indeed was part of the driving force to establish it. ERSA agrees
that work is needed now to ensure adherence to the code and to
develop best practice. But the envisaged solution—the "Merlin
Standard" on adherence to the Code of Conduct—must
not be a "badge of honour" for providers, which adds
more cost and bureaucracy, creates confusion given other inspection
tools (eg Ofsted, Star Ratings) and fails to drive good behaviours.
44. ERSA has recommended that the Merlin
Standard initiative must not start with the practicality of designing
any accreditation process, but rather by reaching a clearer understanding
of what successful supply chain relationships look like and how
to secure them. This initial phase should focus on:
(a) Reaching a better shared understanding by
DWP, Jobcentre Plus, prime contractors and subcontractors what
drives good behaviours from all parties;
(b) Ensuring that every phase of commissioning
any programme (establishing the business case and budget for the
programme, determining the specification, selecting bidders, finalising
contract terms, awarding the contracts and managing them through
delivery) must be designed so as to drive good supply chain relationships.
45. In particular, we emphasise that the
pivotal role of DWP and Jobcentre Plus because their handling
of every stage of the commissioning cycle and the terms of their
engagement with prime contractors overwhelmingly determine the
ability of prime contractors and sub-contractors to work together
as envisaged under the Code. For example:
(a) Delays in DWP awarding contracts to their
prime contractors then intensify the time pressures on primes
and subcontractors to finalise their contracts
(b) Where volume risks are high, ie referral
numbers are particular uncertain, and DWP largely transfers this
risk to providers, it can be a challenge for prime contractors
to manage that risk and an even greater challenge for subcontractors
(c) The joint work by DWP and ERSA to improve
the processes for delivering Pathways to Work, eg to improve the
referral process, promote flexible teamwork between Jobcentre
Plus and providers and speed up payment once job outcomes have
been achieved, has started to bear fruit. With the benefit of
hindsight, if we had begun this earlier, we may well have helped
to protect subcontracting relationships that broke down when the
conditions for delivering Pathways were less conducive to achieving
job outcomes and safeguarding commercial sustainability.
46. Given the driving influence of DWP and
Jobcentre Plus, ERSA has recommended that the Merlin Standard
must test or evaluate DWP and Jobcentre Plus just as much as it
tests or evaluates prime contractors and subcontractors.
October 2009
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