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Latest on Transforming Rehabilitation Payment Mechanism

The Ministry of Justice responds to criticisms of its proposed payment mechanism for the new Transforming rehabilitation contracts and appears to be willing to make substantial changes. However, there will be no details until the "Invitation to Negotiate" stage of the procurement process...

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Is the MoJ listening?

Today (10 October 2013) the MoJ published its latest thoughts on the payment mechanism for the new Transforming Rehabilitation contracts.

It’s important to note that there is no new version of the payment mechanism yet.

So potential providers – especially voluntary sector and probation service mutuals – are still in the invidious position of trying to convince boards of trustees and social investors to commit millions of pounds without any definitive financial information.

The updated payment mechanism will only be available to potential bidders at the Invitation to Negotiate (ITN) stage of the procurement process – see timeline here.

The initial “Straw Man” payment mechanism prompted a huge response from potential providers, mostly critical.

Indeed, the MoJ admitted that some of the consultation responses were longer than the payment mechanism document itself.




A set of hurdles

Today’s document summarises the main areas of concern and what the MoJ is considering doing them.

They are:

  • A commitment to try to base predicted volumes of work on the previous year’s real figures
  • Adjusting the maximum volume adjustment levels from 100% to 50% and the minimum from 50% to 30%
  • Allowing bidders to include a learning curve discount into their bids rather than prescribing a set level
  • Making substantial changes to the payment by results framework by:
    • amending the binary hurdle or
    • removing the binary hurdle or
    • introducing a frequency hurdle
  • Narrowing the statistically significant parameters of reoffending rates to prevent providers from allowing reoffending to rise slightly
  • Measuring the frequency of offending annually instead of quarterly
  • Allowing a payment by results “holiday” at the start of the contract to encourage providers to make substantial changes to provision immediately on taking over Community Rehabilitation Companies
  • Providing more information on “mobilisation, transition and transformation funding”


As ever, readers are encouraged to read the document in full.

More thoughts on the impact of this document on the PbR mechanism to come in a future post.


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