New Ways of Delivering Services: Consortium Formation Neil Coulson

Key Trends Part 1 (deficit reduction and heightened competition) Deficit reduction New forms of private sector competition New forms of social economy competition through ‘externalisation’ of public sector human resources

Key Trends Part 2 (changing dynamics) Radically changing dynamics within the commissioning arena The ‘more for less’ agenda – downward pressure on unit price and greater focus on outcomes Reduction of ‘transaction costs’ through aggregation (joint commissioning, bundling) -> devolved commissioning

Key Trends Part 3 (political reform) Big Society – shift from state to non-state provision (White Paper, Localism Bill etc) Personalisation Local level - LCC commissioning framework Growth of voluntary sector consortia, management companies, special purpose vehicles

Different Contracting Forms Provider Managing Agent Managing Provider ‘Super Provider’

Provider Contractor ProviderProvision of Services

Managing Agent Contractor Managing Agent Sub-contractors Provision of Services

Managing Provider Contractor Managing Provider Provision of Services Sub-contractors Provision of Services

Managing Agent/Provider Contract top slice Percentage of contract to pay for management of sub-contractors:  Performance  Quality  Financial management

‘Super Provider’ Provider

aka Formal Consortium Collaboration Spectrum Networks/ Loose consortia Formal consortiaMergers Partnerships

How does it work? Incorporation to form new legal entity Providers become members of this company Hub and spokes operating model

Hub & Spokes operating model

Ownership & Management Structure

Social ownership Owned and controlled by the members 2 tier governance:  Council of Members  Board

Examples VC Train  Established 2000/operational 2002  120 members  c. £30m Sheffield Well-Being Consortium  Established 2007/operational 2008  62 members  c. £1m

Here2Help (H2H) Coventry VCS Consortium ‘Pipelining’ as well as competitive tendering Involvement in all aspects of the commissioning cycle – co-design through to allocation of resources ‘Co-commissioning’ through collegiate board structure

Membership eligibility criteria Universal criteria –Sector (not-for-profit organisations and social enterprises) –Provision of services for the vulnerable and hard-to-reach –Area of operation –Commitment to consortium working –Commitment to sharing expertise via a time bank

Contract-Readiness Criteria –Financial health –Quality systems –Suitable organisational policies –Suitable governance –Technical capacity

Benefits Scale Efficiency gains Negotiating power Joined up working Innovation Capacity building

Challenges ‘Procurement-readiness’ - meeting the PQQ thresholds (especially smaller providers) QA and accountability Conflicts of interest Ensuring contestability Measuring social return

Critical Success Factors From culture of entitlement to culture of enterprise Business skills and entrepreneurial acumen Long-term vision Tenacity

Process Consortium working group Seed corn/set up funding 3 Year Strategic/Business Plan Membership Prospectus Membership recruitment Incorporation (creation of interim board) Grant aid/investment finance for ‘baseline’ hub? Win tenders Deliver

Partnership agreement How the collaborators inter-relate Building block for formalisation Ultimately sits alongside Mem & Arts

What might the consortium look like? Children and young people Lancashire wide Internal clusters  Locality-based  Thematic/community of interest-based Membership-owned and controlled