On 22nd January 2014 the House of Commons Justice Committee published its interim report on the Government’s Transforming Rehabilitation Programme. This is the fourth and final post in a short series examining the report’s findings.
Creating a new market
The Justice Committee sets out the challenges the MoJ faces in developing a sufficiently competitive market for the new probation contracts. There were very few large private providers in the justice sector and, as everyone knows, the two companies with the biggest market share – Serco and G4S – were forced to withdraw because of their performance on other contracts.
The Committee records considerable scepticism from expert witnesses as to whether the Justice Secretary’s wish for a diverse market with equal partnerships between private and voluntary sector providers was realistic given the large value of the contracts and that organisations would need deep financial pockets to bid.
The Committee (which was largely split along party political lines) duly points out the steps taken by the MoJ to encourage a diverse market:
- Extending the number of contract areas to 21 (from an original 16)
- Facilitating access to the Cabinet Office support scheme for public sector mutuals – to enable probation staff to bid for their existing work
- Making the bulk of the payment mechanism a fee for service rather than payment by results (which normally requires substantial financial reserves in order to manage cash flow)
- Providing support for prospective voluntary sector partners and announcing that bidders with transparent and fair supply chains would be favoured
However, the Committee still expressed reservations and stated that they would be very concerned if the competition was dominated by large, private sector providers.
Confidence in the tender process
In discussing the Transforming Rehabilitation competition process, the Committee drew on its own experience and previous reports in which it had:
“repeatedly raised concerns about the capacity of the MoJ, and NOMS in particular, to manage contracts for outsourced services.”
The Committee expressed reservations that the MoJ would be able to run an effective competition process with the required level of transparency. It noted that a number of significant components of the programme had not been finalised. This issue was related to one of the Committee’s overall findings that the whole TR programme is being implemented too fast and without sufficient consideration and, where appropriate, piloting. Key issues still not decided include:
- The payment by results mechanism
- The balance between the fee for service contract income and that decided by PbR
- The budget for TR which will obviously be key in determining how competitive the process is.
Survey respondents were asked to identify the top three priorities and challenges for their own services. Nearly 60% said that funding and service capacity was a priority; and about one third were concerned about both the frequency and quality of the recommissioning process, and staffing levels and morale.
Committee not confident of success
Given the political divisions within the Committee, it is slightly surprising that their conclusion about the TR competition has a distinct negative feel. There is continuous wrangling between members about the exact formulation of conclusions, but in this case, the Committee’s scepticism shines through:
“It seems entirely feasible to us that as the competition progresses and details are refined, the attractiveness of these contracts might wane, resulting in incomplete or inadequate provision in certain areas or types of service.”
The Committee also cautions that the MoJ does not seem to have clear contingency plans in the event that there are not sufficient good bidders to provide services across all 21 Contract Package Areas.
It also makes a helpful recommendation, in the light of the Work Programme experience, that if new providers appear to be gaming the payment by results system, the MoJ should reserve the right to modify the payment metrics.
The TR competition is now entering its final phase; it will be interesting to see whether the Justice Committee was right to be concerned about these issues.
For basic details of the report – contents, members of the Select Committee etc. – see this post.