New approaches to commissioning through

consortium working

Neil Coulson

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)

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)

Consortia – overcoming barriers

• Scale

• Development of specialist tendering and contract management infrastructure

• Greater bargaining power

• Adding value at the frontline

• Building capacity

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

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

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

Different Contracting Forms

• Provider

• Managing Agent

• Managing Provider

• ‘Super Provider’

Provider

Contractor

Provider Provision of Services

Managing Agent

Contractor

Managing Agent

Sub-contractors Provision of Services

Managing Provider

Contractor

Managing Provider Provision of Services

Sub-contractors Provision of Services

Managing Agent/ProviderContract top slice

Percentage of contract to pay formanagement of sub-contractors:

Performance Quality Financial management

‘Super Provider’

Provider Provider

Provider Provider

Provider Provider

aka Formal Consortium

Collaboration Spectrum

Networks/ Loose consortia Formal consortia Mergers

Partnerships

How does it work?

• Incorporation to form new legal entity

• Providers become members of this company

• Hub and spokes operating model

Hub & Spokes operating model

Ownership & Management Structure

Social ownership

• Owned and controlled by the members

• 2 tier governance:

Council of MembersBoard

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)

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

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

Contract-Readiness Criteria

– Financial health– Quality systems– Suitable organisational policies– Suitable governance– Technical capacity

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

Challenges

• ‘Procurement-readiness’ - meeting the PQQ thresholds (especially smaller providers)

• QA and accountability

• Measuring social return

• Conflicts of interest – ensuring contestability

Critical Success Factors

• From culture of entitlement to culture of enterprise

• Business skills and entrepreneurial acumen

• Long-term vision

• Tenacity