Frequently asked questions: Working with the third sector

How can we find out about contracting opportunities?

All opportunities to tender are advertised on our website under Opportunities to Tender. This is to promote fair and open competition in accordance with public procurement policy and EU Regulations, and in line with that we welcome bid equally from the private, public and voluntary sectors.

Why do we have to compete for contracts?

It is vital that we do compete our contracts, on the basis of rigorous, objective and fair criteria, because we must make sure that we achieve the best possible level of service for our customers for the resources available to us. As a government department we have an obligation to ensure the contracts awarded using public monies offer the best value for money in terms of price and quality of services.

Does the DWP approach comply with Compact agreements?

Nothing in the Compact overrides the fundamental requirement for government departments to promote fair and open competition in accordance with public procurement policy and EU Regulations. Under this principle of “competitive neutrality” competition must be fair between different classes of market participants so that there is a level playing field between public, private, and voluntary sector providers of goods and services.

DWP procurement officials are therefore not allowed to discriminate in favour of any particular organisation or group. We are taking all reasonable steps to ensure that voluntary sector organisations have the opportunity to be involved in Jobcentre Plus programmes.

What is the procurement process?

We usually adopt a two stage tendering process. The first stage involves all interested bidders submitting a short Pre-Qualification Questionnaire (PQQ). These are then evaluated and the highest scoring bidders are invited to submit a full second stage tender proposal.

Using a two stage procurement process helps to ensure that only providers who are best able to deliver the service are asked to put time, effort and resources into producing full tender documents.

At the end of the procurement process preferred bidders are required to be formally accredited by an independent organisation, Momenta, before they can be awarded a contract.

This process involves checks of an organisation’s financial and legal status, health and safety policies, and compliance with equality and diversity requirements. Organisations that have been awarded DWP contracts have successfully passed those checks.

Does this approach squeeze out smaller organisations?

No. DWP actively encourages an innovative and competitive marketplace and works with larger providers to ensure that they understand the need to achieve diversity in the service delivery and that optimum use is made of the specialist services offered by smaller providers.

As part of the tender evaluation process, we ask bidders to tell us how they will fully meet the varied needs of all customers; it is unlikely that any one organisation could adequately demonstrate their ability to meet all of these needs without some specialist support.

In addition, we ask bidders to give details of all their sub-contractors in their tenders and we take into account the skills and experience of the sub-contractors during the tender assessment process. It is therefore in the interest of potential prime contractors to engage with suitable specialist organisations to enhance their delivery.

How do you ensure that smaller providers are treated fairly?

In order to ensure that smaller and voluntary sector organisations are treated fairly, DWP require bidders to set out whom they will be using to deliver the services and this will form part of their contract.

We also ask for details of how bidders will manage the relationships with sub–contractors to ensure that delivery is managed properly and this will be monitored as part of contract management reviews.

In addition, a signed declaration is required from every sub-contractor confirming that they are content with the terms offered by the prime contractors, and prime contractors are required to put in place arrangements to make payments to their sub-contractors within 30 days in line with our normal payment terms.

What is the definition of a “Prime Contractor”?

“Prime Contractor” describes an arrangement where DWP contracts with a single organisation to undertake the following three functions:

• to provide directly some services
• to sub-contract some services to other organisations; and
• to manage the payment and performance of the sub-contractors

The prime contractor model can also include a consortium arrangement where one organisation acts as a lead contractor on behalf of a number of providers in partnership.

How can faith-based organisations and the third sector identify Prime Contractors?

We have facilitated the interface between prime contractors and sub-contractors through specific provider events at the outset of procurement exercises and continue to do so through our website. The information on the website includes the Districts that providers have expressed an interest in covering.

What are the benefits of the Prime Contractor approach?

The prime contractor approach aims to offer a high quality service to all our customers. Larger contracts allow for greater investment in staff and the infrastructure of organisations enabling a more responsive service to our customers and raising the quality of provision.

One of the advantages of the prime contractor approach is that as the contract delivers, there is flexibility to change aspects of delivery as a need is identified. The prime contractor, as the single main contractor, can act more responsively and flexibly, and with a greater degree of innovation, than could be achieved with many separate contracts, all of which would require individual agreement to change.

In the past, feedback has suggested that SMEs, voluntary and community sector organisations and other small providers have had difficulty in submitting full tenders and dealing effectively with management information and payment/audit requirements.

This approach enables small providers to get involved in delivering part of the Jobcentre Plus programmes but without the administrative burden. Larger providers generally have well developed administrative systems and are used to working with sub-contractors.

What criteria are used to evaluate bids?

The criteria for the evaluation of bids are published on our website at the very outset of any competition so that all potential bidders are aware of the basis on which the tenders will be scored.

Typical evaluation criteria are:

• Performance, Skills and Experience of Prime Contractor, Partners and sub-contractors and Proposals for Delivery
• Organisation Infrastructure Management and Capacity
• Human Resource and Quality Standards and Evaluation
• Implementation Plan and Premises
• Record Keeping and Administration

The bids are assessed thoroughly by experienced and professionally qualified procurement specialists.

What are the funding arrangements?

Our long-term aim is to move away from the current arrangements we have of paying providers on existing look-up table rates (payments are made per individual for each week they are on provision) and instead to pay for the service that is delivered. This would provide contractors with an element of fixed income irrespective of the number of customers accessing their provision.

At the start of any new procurement exercise, the available funding is published to all potential bidders.

Regardless of the funding arrangements, it is the responsibility of providers bidding for competitive contracts to submit bids on not less than a full cost recovery basis. Voluntary sector organisations in particular need to ensure that they do not unwittingly bid on a loss-making basis. You therefore need to be clear about the costs involved in providing services, and wherever appropriate you will need to negotiate prices with prime contractors.

Any funding arrangements made between prime contractors and sub-contractors are, of course, a commercial matter between the organisations involved. DWP however requires evidence that all potential partners and sub-contractors are aware of their roles and that they have agreed the proposed payment arrangements with second stage bidders.

Prime Contractors often quote third sector organisations in their bids, but then once the contract is approved they don’t use the third sector organisations.

DWP acknowledges there are lessons to be learned regarding this issue. This is something we need to address during Post Tender Clarification (PTC) with successful organisations prior to contract award, ensuring there are clear lines of engagement as indicated within their bid and clear evidence provided for any change of plans including potential sub-contractors/partners.

Putting third sector organisations into a sub-contracting role is a step backwards, also third sector organisations are only paid on job outcomes which means they are taking more of a risk.

DWP do not dictate any particular funding model prime contractors must use to pay their sub-contractors, and depending on the service to be provided and the status of the sub-contractors this may actually be beneficial to organisations. All sub-contractors need to negotiate with the prime contractor how they will be paid for the service they provide. However, we do try and spread good practice such as insisting on signed letters of intent between prime contractors and sub-contractors that terms have been agreed and prime contractors are required to pay invoices within 30 days in line with our normal payment terms.

DWP has a lot of targets, but sometimes our clients need ‘soft outcomes’ such as increasing their confidence, which is not a real target or outcome.

As a Department our role is to move people closer to, or into the labour market. Our own targets to be reported back to Government are job outcome related. Our contracts with the Private and Voluntary Sector are to help individuals overcome multiple barriers to enable them to eventually move into work. We recognise that this may be a long process and each element along the way is a vital step for which specialist and niche providers will need to negotiate appropriate funding from prime contractors.

People over 50 are experiencing a great deal of discrimination, which is not related to their skill levels, the education of employers is also important.

Many employers are now recognising the valuable contribution that older workers can bring to their organisations e.g. Asda and B&Q. It is vital this good practice is disseminated with other and smaller employers.

How do we ensure Prime Contractors will use third sector organisations, and not just build their own sections within their organisation to do the work?

All organisations need to operate in the most cost effective way. Therefore it is essential that small specialist providers market their services to potential prime contractors demonstrating the value for money and additionality, such as local expertise that they could bring to any contract.

How does the Department ensure that contractors reflect the diversity of the customer groups?

Through the external accreditation system, all providers are subject to a series of checks, which include their equality and diversity policies, prior to them being awarded a contract. We also include a contractual requirement that providers report on an annual basis on the make up of their workforce, in terms of ethnic minorities, those with disabilities etc.

How do you ensure diversity in the sub-contractors?

We hold provider briefing events to facilitate the process of partnerships and networking. Details of bidders are also published on the web to enable small specialist organisations to make contact with them regarding potential partnership opportunities. Assessment criteria are published at the outset of any procurement exercise and to score well against the assessment criteria bidders will need to ensure their tender accurately reflects the requirements and needs of our customers in each locality. Therefore it is in the interest of bidders to engage with the organisations that will best help them to achieve this.

Would you consider imposing the same diversity requirements on DWP in terms of the percentage of contracts awarded to each type of group?

We need to balance our different objectives. The department is bound by public procurement law and European law, and as such cannot specify proportions of successful bidders by organisation type. We are also guardians of public money and must ensure that we achieve the best value for money in all procurement exercises.

Is it possible to provide a breakdown of contracts by faith-based groups, and within that, what type of faith-based groups they are?

We won’t hold this information, as we do not categorise any of our contract holders by race, sex or religion.

Why does the Department want to work with faith-based groups?

Faith-based and third sector groups have a lot to offer in terms of working with customer groups that the DWP does not easily reach. It is a Ministerial imperative that we work with such organisations and we recognise the service that can be offered working with the local communities.

Will the Department work with smaller organisations to help them build their capacity?

These events were held so that organisations can suggest useful ways in which we can work with them in the future. It may be that there is more that the Department can do in terms of capacity building, and we welcome any valid ways we can do this. However, our future contracting strategy around competitive tendering for fewer, larger contracts will remain.

The same big name organisations consistently win Prime Contracts – how will you make sure that smaller organisations are not discriminated against in the procurement process? For example in terms of the completion of tender documents.

All our tender documentation reflects the provision we need to buy for our diverse customer groups. Anyone that can meet the criteria can bid. Organisations need to be realistic when considering submitting bids in their own right if they can meet, or demonstrate their ability to meet, the requirements of the competition. Where organisations decide to bid, it is essential that the questions are fully answered including examples of previous success etc. DWP will only award contracts from the written documentation, not what may be known about the organisation elsewhere e.g. reputation etc. This tender documentation is your opportunity to sell the benefits of your organisation.

Provider briefing events walk through the completion of the tender documentation at a high level. Where bidders are unsuccessful detailed feedback is given.

Smaller organisations are not always aware of the opportunities to work with prime contractors. Could a pot of money be made available to prime contractors specifically to build relationships with sub-contractors at the local level?

In putting together bids, potential contractors are required to demonstrate that they will meet local requirements. Prime contractors do have the flexibility to change sub-contractors to reflect local requirements as they arise, and we would expect there to be changes in the range of organisations and delivery partners working with prime contractors throughout the life of the contract. To protect sub-contractors, once the contracts are in place, prime contractors are not allowed to change sub-contractors without permission from their contract manager.

Sub-contractors would have found it easier if there was a brokerage system with prime contractors to raise awareness about sub-contractors.

It is the responsibility of all organisations to take a pro-active approach to seeking out opportunities. We recommend organisations regularly check the partners page of the website which will advertise all the current procurement exercises and give information on what is happening nationally and within your local area.

What funding will be available for ex-offenders, and should the local Jobcentre Plus office be able to provide details on where to find funding?

There are specific facilities available for the harder to help customer groups through Jobcentre Plus. For example, progress2work and progress2workLinkUP are programmes running in all Districts aimed at those with an offending background and newly released prisoners. There may also be funds available locally through the Deprived Areas Fund (DAF), a pot of funds for specialist provision administrated by the District Managers in areas of deprivation. We can provide contact details for these teams upon request.