A voluntary sector perspective

New Philanthropy Capital (NPC) recently published an interesting document – a write-up of a round table discussion with representatives from the voluntary sector who unsuccessfully bid to be prime providers of the new probation contracts under the government’s Transforming Rehabilitation initiative.

The discussion was held under Chatham House rules – in other words, it was confidential with participants encouraged to speak their minds in the knowledge that they would not subsequently be quoted.

As most readers will know, private sector led partnerships won 20 out of 21 competitions (the exception is the probation staff “mutual” led partnership which was successful in the Durham and Teesside CPA) while none of the charities who bid to run CRCs themselves were successful. Some voluntary sector organisations are named as partners at the Tier 2 level, or are currently ‘in conversation’ about possible Tier 3 subcontracts, but on the whole voluntary sector involvement in the new probation service is very limited.

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Why the voluntary sector participated

The voluntary sector organisations that submitted bids to run CRCs were all well established, successful enterprises with experience of the criminal justice sector and of managing large public contracts. They were attracted to the idea of running a CRC because they wanted to draw on their experience to improve the delivery of probation services. There was also the feeling that the voluntary sector should be represented at the highest level of the bidding process because it represents such an important part of the system as a whole.

The Justice Secretary, Chris Grayling, was at pains to encourage voluntary sector participation throughout the TR process.

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Why the voluntary sector participated

Feedback given to voluntary sector organisations on their unsuccessful bids suggests that they lost on technical and commercial grounds. In short, decisions were made on the basis of price and minimising risk rather than quality or any other aspect of the bids.

From the perspective of participants, the result of the TR process exposed a tension within Government between:

• the policy rhetoric and stated commissioning intentions—which sought voluntary sector involvement; and
• procurement teams who sought to apply strict commercial terms.

Ultimately, it seems that the interests of the MOJ commercial and procurement teams prevailed and the choice was made to minimise financial risk to Government and to get the best economies of scale available—while quality assessments were superficial and had less influence on the decision made.

A particular problem for voluntary sector participation was the ‘Parent Company Guarantee’ (PCG) which required bidders to have a ‘parent company’ that would stake assets equivalent to the size of the annual contract value as a precondition for ownership of a CRC.

While this minimised risk to the Government, it was also a major problem for the voluntary sector bidders who, being smaller organisations than private sector competitors, did not have the necessary capital. This meant that voluntary sector bidders were reliant on third parties to provide the guarantee, which is fundamentally more expensive and brings a range of complicating factors around how the third party minimises their own risk. This barrier proved to be insurmountable, and we were told that at least two voluntary sector bids were deemed technically non-compliant because of aspects of their PCG, before the quality of their bids was even considered.

Voluntary sector organisations were particularly frustrated by the PCG since the details of this requirement were refined late in the bidding process and the requirement itself seemed unnecessary.

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Problems with the TR competition

The round table participants identified four broad criticisms of the TR competition process:

• They found the process very chaotic and confused, with questions unresolved, deadlines and key aspects changing right up to the later stages of the competition. The final details of both the PCG and the payment mechanism were only available at a late stage in the process.
• The process was felt to be much more complex than it needed to be. Bidders needed to get to grips with vast amounts of documentation and detail.
• The MOJ did not appear to have the capacity to run or support an effective tendering process. Bidders who passed the PQQ stage received around four days of support from officials, but our participants estimated they needed three or four times that to resolve all issues and questions they had. The calibre and experience of officials supporting the bidders was described as ‘inconsistent’; some did not seem to understand their own processes and participants cited examples of contradictory information being given by different officials.
• The specification offered limited scope to describe the quality of bidders’ proposed approaches. More generally, our participants concluded that considerations around quality, vision, and innovation were largely irrelevant to the final decision of whom to commission.

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Conclusions

NPC concludes:

The Transforming Rehabilitation tendering process was an unhappy experience for the voluntary sector. Despite the hope that it would be different to previous government outsourcing programmes (a hope strongly encouraged by the Government itself), the sector again finds itself left with slim pickings and an uncertain future. Meanwhile, the opportunity for a probation system led by established criminal justice organisations has largely been eschewed in favour by private companies with limited direct experience or track record.

However, it may be that many of these voluntary sector providers would have been neither able nor willing to deliver probation services at the prices eventually set by the MoJ. Indeed, some of the successful private firms may already ruing their good fortune as they wrestle with the “winner’s curse”.