1. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley Jim Carley, Managing Director Carley Consult Ltd Lessons on Effective Negotiations with Lead Contractors

2. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley “End to End” Delivery of the full customer journey for the full period for which they are on programme “Partial” Delivery of one element of the customer journey over a fixed number of weeks “Specialist” Delivery of expert interventions to address a specific work barrier (e.g. debt or disability) What type of supplier are we? Delivery to a all referred customers in a specific locality Delivery only to those customers who face this barrier Typically based on Payment by Results Typically a fixed fee per intervention

3. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley Where can I find out about subcontracting opportunities? Supply chain opportunities are not subject to EU rules, so may not be advertised in the same way. Build networking relationships with as many likely prime bidders as you can – get on their radar! Monitor prime bidder web sites - this is where they will most likely advertise partnership opportunities. Some prime bidders already have general partner registration pages which you can sign up to. Prime bidders may also promote opportunities through intermediaries such as ERSA or CESI.

4. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley How much time and resource could the process involve? Most primes will likely ask you to complete some form of Expression of Interest ERSA has produced a Standard EoI, although some primes may require extra information reflecting their own internal selection processes and criteria. Likely that most bidders will run sourcing exercises over a similar timeframe within the competition. This will likely mean an intensive period of submissions for prospective subcontractors. You may need to dedicate specific resource to apply to as many prime bidders as you can.

5. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley Why would a prime bidder choose us as a partner? Identify and emphasise your key points of difference which make you best placed to deliver the aims of the Steps 2 Success programme. Demonstrate how your expertise complements and adds real value to, rather than simply duplicates, the competencies of the prime bidder. Be flexible – offer the provision which the prime bidder wants to buy, not necessarily the provision you would prefer to deliver. Treat the process with the same seriousness and effort as you would when bidding directly for public funding.

6. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley Do established NI providers have a fair chance? Any successful prime bidder should demonstrate tested community and employer links across NI. Arguably impossible to do this without the inclusion of proven local suppliers within the supply chain. This may include good NI organisations who are not currently delivering DEL employment programmes. Like any tender round, no prime bidder or prospective subcontractor is a “safe bet”. Some market entrant primes may reasonably propose an element of direct delivery.

7. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley How can I be certain of contract size and costs? Start with your eyes open – the financial risks are clearly different to previous programmes. Be clear on what your actual costs of delivery are. Be clear on exactly what you are being asked to deliver for the agreed price. Volumes won’t be guaranteed, so carry out your own analysis on likely referral numbers. Be clear on how your referrals are defined: A fixed percentage of total contract volumes? All referrals from specific jobcentres? Referrals made at the discretion of the prime contractor?

8. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley Should I expect the same deal as other providers? Prime bidders are not obligated to offer all subcontractors the same deal. Some may offer better deals than others - don’t expect prime bidders to match each other. Viability is key – even if the offer may not be as good as that tabled by other primes. Don’t be afraid to ask what the prime bidder’s “management fee” does and does not include. Some primes will tend to offer a fixed price, others may invite you to table / negotiate a price. Primes might agree better terms than they receive from DEL, but only where there is a clear case. The final agreed price will influence the prime bidder’s overall price to DEL, so stay competitive.

9. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley What is working with a prime contractor really like? Good primes should afford you capacity building assistance to drive quality and performance. Prime may require you to adopt their own data and MI reporting systems - a challenge if you are working with more than one prime. Prime is responsible for monitoring your quality against both DEL’s and its own standards. Prime may share MI to inform your relative performance against its other subcontractors. Primes are ultimately empowered to more readily remove underperforming subcontractors.

10. www.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carleywww.carleyconsult.com/ukjcarley@carleyconsult.co.uk@Jim_Carley How do I know that my prime contractor is committed? Supply chain practice and behaviours have professionally evolved in employment services. Most prime bidders who are operating in GB will already hold DWP’s Merlin Standard. DEL are looking at comparable Code of Conduct in relation to Steps 2 Success. Ask to see the prime bidder’s dispute resolution process – they should have one! Recognise your own obligations – failed relationships are not always the prime’s fault. Ultimately its about trust – are you confident that you can work together to find mutual solutions?

11. Playing your cards right: lessons on effective negotiations with lead contractors A Lead Contractor’s Perspective Josie Scholey Business Development Director Interserve Working Futures

12. Principles of Effective Supply Chain Management Code of Conduct Merlin Principles ERSA/ACEVO/NCVO “Perfect Partners Good Practice Guide”

13. Founding Principles for both Lead & Subcontractors Due Diligence – scope, financials, risks Culture is critical Trust and integrity are key to effective delivery Accept that there will be winners and losers in any bidding round Mutual interdependency

14. Key Considerations Outcome performance level expectations ▪Are these within reach? ▪How will you increase performance to deliver a new programme? Financial terms including cash flow Volumes and infrastructure ▪Are the volumes manageable – too many/not enough? ▪What are the risks if volumes change? ▪End to end versus call-off contracts Impact of new customer groups and new business model ▪Staff competencies ▪Interventions required

15. Management Fee Management fees vary – and should do if the level of service is different Key factors to consider ―IT requirements ―Access to specialist services for participants ―Referral handling ―Delivery management ―Best practice sharing and capacity building ―Business support functions

16. Negotiations Be willing to negotiate – trust and integrity of negotiations are key to ensuring you are able to articulate any unacceptable areas of risk Prepare you strengths – know what you are good at and what value you can add to the Lead Contractor, ensuring you play from a position of maximum strength, but be realistic Understand the volumes you need for financial stability Keep your mission statement and organisational aims at the forefront of decisions

17. Work Programme Lead Contractor Perspective Significant development of supply chain management practices over the past 3 years Examine your delivery model against the specification Treat the lead contractor as the commissioner The lead contractor is facing significant competition so they will all be aiming to meet what the commissioner wants to purchase Engage, engage, engage! It is in the leads interests to develop sustainable payment models based on the funding they receive It is in the leads interests to develop viable supply chains that deliver strong performance

18. Lead Contractor Challenges Commercial sensitivity Competition Timescales Resources Lead Contractors may also be pursuing sub- contracting opportunities

19. Tomorrow’s People is a voluntary sector subcontractor on the Work Programme. It began the process of decision making about prime/lead bidders from an informed position, undertaking research into each bidder’s circumstances. It developed its own benchmarks in terms of cost, cash flow and overall viability against which it was able to consider subcontract offers. During negotiations, they remained assertive yet flexible. Importantly, each of the bidders with which they agreed to work agreed to variations, including revised payment terms, allowing them to create a stable financial model. They were not afraid to turn down unattractive contracts. At the post contract award stage for the Work Programme they had 6 firm contract offers, but only proceeded with 4. Since then they have been offered a contract extension from one prime contractor, which they did not accept, deciding instead to limit their financial exposure at that time.

20. Case Studies from Interserve As a Lead Contractor: Revising volume offers for some of the Work Programme subcontractors to enable operational viability Agreement to take the TUPE liability for a delivery partner who was facing the management of redundancies from the end of the Pathways programme Contract Summaries were produced alongside the main contracts As a Sub Contractor: Negotiating increased delivery volumes as part of the Serco supply chain in South Yorkshire

21. Further Reference Points DEL http://www.delni.gov.uk/index/consultation-zone/steps2success-ni- consultation.htm ERSA Supply Chain Support Materials http://www.ersa.org.uk/articles/read/36/supply-chain-support- materials Merlin Standard http://www.merlinstandard.co.uk/