A level playing field?
When the MoJ lit the fuse on the Transforming Rehabilitation procurement process last week, as well as the OJEU (the formal contract announcement) and Target Operating Model, it also published a “Principles of Competition” document.
The document is divided into two parts:
- Competition Fairness
- Market Management
The market management half is the more interesting section and reflects two of the MoJ’s main concerns about Transforming Rehabilitation:
- That voluntary sector providers are treated fairly (a reaction to the negative press about voluntary providers’ experience of the Work Programme) which the government has sought to address by commissioning work to build the capacity of the sector to bid for TR contracts.
- Setting a cap on the proportion of the 21 new contracts that any one provider can win.
Voluntary Sector Supply Chain
Although the Pre Qualification Questionnaire (PQQ) doesn’t require providers to submit details about their supply chain, the PQQ guidance and Principles of Competition document both set out five key market stewardship principles that they expect Prime providers to abide by:
1: Appropriate management of risk in the supply chain
One of the main complaints of voluntary sector providers to the Work Programme was that they weren’t guaranteed referrals and, in many cases, received very few and therefore little income. The MoJ specifically states that Primes should not pass risk down supply chains disproportionately, including “the management of volume fluctuations”.
2: Alignment of ethos in the supply chain
Essentially, the MoJ is stating that the relationship between Primes and their supply chain members should be about a fair and sustainable relationship, not just a legal sub-contracting arrangement.
3: Visibility across the supply chain
Here the MoJ is requiring transparency both between Prime Provider and supply chain members and, I think, the Prime and MoJ.
4: Reward and recognition of good performance:
The MoJ is insisting that organisations in the supply chain receive appropriate reward for good performance. “Recognition of good performance should be shared across the chain and this should include the sharing of good practice.”
5: Application of the principles of the Compact in work with 3rd Sector organisations
The Merlin Standard Principles were supposed to govern fair behaviour between Primes and supply chain members in the Work Programme and were widely regarded as having provided little protection for voluntary sector partners. The MoJ has stated that the principles of the voluntary sector Compact (first agreed between government and the voluntary and community sector in 1998 and renewed in 2010) should apply for TR.
Market cap
When the MoJ first brought forward its proposals for Transforming Rehabilitation, it was mooted that no single provider would be able to win more than 40% of the business.
The negative press associated with large Prime providers – particularly the alleged behaviour of G4S and Serco in relation to electronic tagging and other contracts – has seen the final figure reduced to 25%, defined as:
“25% of market share based on the indicative contract values set out in the competition documentation”.
These values are shown in the graphic below, taken from the Target Operating Model:
