VONNE

Supply chain model

VONNE is one of a number of voluntary and community sector (VCS) organsiations that are working in partnership to develop a mechanism to help support VCS organisations in the contracting process, particularly in contracting with skills and employability funders. An outline of the proposed supply chain ‘hybrid' model for voluntary and community sector (VCS) is given below.

Information about the current progress of the development of the model can be found on the side of this page.

Latest News

At the meeting of the Task & Finish group held on 27 January 2009 (view the notes of the meeting) a new name for the VCS Supply Chain Hub was chosen following the "name the hub" competition.

The new name is Contracts Matter.  Congratulations go to Ross Cowan who made the original suggestion.

As well as the new name we are also pleased to announce that we have secured some funding to run a pilot 'matching service' to test the support and need for Contracts Matter.

The aim of the matching service is to notify third sector organisations of the potential opportunities available around skills and employability which they may want to tender for.  If those interested organisations want to work in partnership as part of a bid, the service will then be able to flag their interest to other like minded organisations.

The specific offer from the service is:

• Notification of contract opportunities around employability and skills that we become aware of.
• Upon request, notification and contact details of other organisations who are interested in working in partnership as part of a bid, for a specific opportunity.

The matching service provided by Contracts Matter will develop a database of interested third sector organisations who express an interest in working together as partners in a supply chain to undertake joint delivery of procurement opportunities.

The service will undertake a contracts and tenders search on a daily basis and notification of potential delivery opportunities will be circulated to those partners registered with for this service.

It is important to recognise that this is not a partnership brokerage service, we do not have the resources to be able to offer that service at present, and being part of this service will not guarantee that you will win more contracts or will form successful partnerships.  The formation of partnerships will be down to your individual organisations and not a responsibility of Contracts Matter or the matching service.  We are unable to offer any advice, at this stage, on bidding and the formation of successful partnerships.

This service is free to third sector organisations that are located in the North East of England and is being run on a pilot basis.

If you want to register for this service you will need to complete the matching service expression of interest form and send to Shirley Wardle who is coordinating this service on behalf of Contracts Matter: shirley.wardle@acumentrust.org.uk.

Matching Service Expression of Intrest Form (Word 42kB)

Background

In January 2008, over 80 individuals from across the sector in the North East got together to discuss how as a sector we could deliver on employability contracts. The two key drivers for this were the shift of the Learning Skills Council more firmly into the Skills for Employability agenda, and the increase in the scale of contracts, many of which cover entire regions.

Following that meeting a task and finish group was set up to explore options for a collective approach to VCS contracting with skills and employability funders in the North East. The Task and Finish group recommended that a supply chain 'hybrid' model be established in the first instance. The proposed model is effectively a 'hybrid' of a pure supply chain model along with elements of an independent legal entity to strengthen the degree of independence and central co-ordination. The purpose of this paper is to summarise how the supply chain 'hybrid' model would work in practice.

The overall aim of the contracting model would be to enable VCS organisations of all types and sizes to access a greater volume and value of contracts for the delivery of skills and employability services. Through collaborative working, it would enhance the ability of VCS organisations to compete effectively for contracts, helping to increase the share of total funding and delivery accounted for by the sector.

Current contracting arrangements

Newskills Consulting reviewed the current contracting arrangements between the Learning and Skills Council (LSC) and the voluntary and community sector (VCS) in the North East.

• In 07/08 LSC aims to support over 90,000 learners (excluding Further Education)
• The LSC has contracted with the VCS to support 4,953 learners (4.4%)
• In 07/08 the LSC budget was over £150m (excluding Further Education)
• The value of LSC contracts with VCS organisations is £11.9m (8%)
• Of which the value of contracts with sub-regional consortia is £2.1m (1.5%)

The full presentation that sets out the rationale for a new contracting support hub is available below:

Delivering LSC Funded Skills and Employability Services - Presentation 29 February 2008 (PDF)

Examining the options

At the first set of Task and Finish group meetings the criteria for VCS contracting support was examined and the best fit models were examined. The presentation (below) analyses four options against the criteria that is required. The four options are:

1. Independent Membership Model
2. Supply Chain Model
3. Joint venture Company
4. Building on existing Regional and Sub regional forums

Delivering LSC Funded Skills and Employability Services - Presentation 12 March 2008 (PDF)

Outline of the Model

The contracting model would be structured as follows:

Download: Outline of Recommended Contracting Model (PDF 56kB)

Funding bodies, such as the Learning and Skills Council (LSC), Department for Work and Pensions (DWP) - including Jobcentre Plus - and others, would issue invitations to tender in the normal way.

A support 'Hub' would hold a central database of all VCS learning providers who were members of the contracting model, recording the service specialisms of each. It would work with VCS organisations of various types and sizes to ‘broker' appropriate partnerships, bringing together the best possible combination of VCS providers to deliver on and win each contract. The ‘Hub' would also act as a co-ordinating body for private and public bidders seeking to develop partnerships with VCS organisations.

A lead provider would be identified for each bid, and the partnerships would effectively form a ‘supply chain', with the lead provider at the head of the chain. Bids would be written by the lead provider in consultation with supply chain partners.

There would be three categories of VCS organisation involved in the model:

• Lead VCS provider - These would tend to be large VCS organisations with the financial capacity and track record needed to lead bids and manage large contracts. They may also act as direct sub-contractors to large private or public providers seeking to deliver in partnership with the VCS.

• VCS sub-contractor - These would tend to be medium-sized and smaller VCS organisations that can deliver some elements of a contract but which lack the capacity to win and manage large contracts on their own. In some cases, they would be sub-contractors to lead VCS providers, in other cases they would be sub-contractors to large private or public sector providers.

• VCS suppliers - These organisations would not deliver learning or employability services directly but they would have an important role to play in the successful delivery of contracts. They may undertake the initial recruitment of learners or employability services clients, refer them on to other providers, provide community-based venues for learning, and offer other specialist services to learning providers (e.g. interpretation services, disability support etc).

Depending on the requirements of each contract, some aspects of delivery would be undertaken by the lead provider, and other elements would be sub-contracted to VCS supply chain organisations to deliver.

The model would be sufficiently flexible to facilitate delivery partnerships of all shapes and sizes and to support sub-contracting through various levels, depending on the requirements of funders. It could support VCS organisations to:

• Bring together delivery partnerships to respond to the full range of LSC contracting opportunities at regional, sub-regional and local level.

• Act as sub-contractors to the 'prime contractors' currently being appointed by DWP to lead very large regional and pan-regional contracts for Jobcentre Plus, New Deal and other provision.

• Respond collectively to opportunities from other funders, including local authorities.

1. What are the Key Aspects of the Model?

The key aspects of the supply chain 'hybrid' model are as follows:

• Uniqueness: The contracting model would differentiate itself as a unique partnership of VCS organisations of all shapes and sizes, capable of truly engaging the 'hardest to reach' priority target clients in skills and employability contracts on a major, regional scale.

• Sustainability and Financial Capacity: Every contract would be held and managed by a large VCS organisation (and in some cases private and public providers) with proven financial capacity to manage large-scale contracts, and the cash flow associated with them. This would give funders comfort that they were contracting with strong, viable organisations, while smaller VCS organisations would benefit from sub-contracting opportunities and receiving payments from the lead providers.

• Effectiveness: The model would be very responsive to contracting opportunities. Using the database of providers (VCS members), the Hub would broker the best possible VCS delivery partnership to respond to each ITT. In this way, it could be very attractive to funders and clients, demonstrating an ability to bring together providers of learning, employability support and services to meet the specific needs of a diverse range of clients across a range of service types and geographic areas. Effectiveness of delivery would be ensured by the lead providers who would have a strong vested interest in managing and supporting sub-contractors to ensure contracted outputs and outcomes were met.

• Scale and Leadership: With the potential to bring together all VCS learning providers in the region (large and small), the model could win and deliver contracts on a very large scale. It would create a powerful focal point, capable of competing with large private and public providers for large contracts. The Hub could provide effective leadership in the field of VCS contracting, encouraging VCS organisations to collaborate to win contracts from which they may otherwise be excluded. It has the opportunity to become recognised as THE VCS contracting entity for the region. The Hub would not have a lobbying role nor would it seek to be the ‘voice of the sector' on skills and employability issues; it would have a sharp focus on contract issues only. Lobbying and influencing would be the role of existing organisations, including the VCS Regional Skills Forum, Sub-regional Learning Consortia and VONNE.

• Membership and Independence: The Hub would be an independent legal entity in its own right (a company limited by guarantee or a CIC), constituted and owned by its members, who would be the VCS organisations in the supply chain. All members (regardless of size) would have an equal stake in the company. The Hub would be directed by the membership and would be independent from any single organisation or provider. However, it is implicit in the model that the large providers will have a strong influence over the make-up of delivery partnerships, and this is only right given that they will be taking on the ultimate financial risk for contracts. There would be three levels of membership: full members (who have achieved the quality standards required to deliver on LSC, DWP and other contracts); associate members (who are working towards attaining these standards); and supply / referral organisations (those organisations not interested in delivery but able to refer clients or provide a specific support service). Prior to establishing an independent legal entity, an intermediate step could be for the Hub to be hosted by VONNE or another independent organisation, to test its effectiveness and ability to win contracts.

• Capacity Building, Quality and Continuous Improvement: The Hub would co-ordinate the delivery of capacity building services to VCS organisations within the supply chain. The emphasis of the support will be very clearly on constantly striving to raise the quality of the service offered by all providers in the supply chain, rather than simply bringing all providers up to a minimum standard and stopping there. The role of the Hub would be to co-ordinate (as opposed to deliver) capacity building. It will assess the specific development needs of each VCS organisation and arrange for the most appropriate specialist organisation to provide the required support. This would include accessing existing capacity building programmes and quality improvement funds, as well as managing a flexible fund of money to buy in specialist support on a case-by-case basis. Continuous improvement support would be available to all VCS organisations, regardless of size, geographic location or existing capacity.

• Contracting Intelligence: The Hub would act as a central point to receive ITTs for skills and employability contracts issued by LSC, DWP and other relevant funders. It would disseminate this information to VCS organisations in the supply chain and use the database of VCS providers to broker partnerships to respond to each ITT.

2. How Would the Model Be Paid For?

In the first instance, the model would need external funding to support its running costs. However, the strategy would be to keep the support Hub very small and focussed, with the minimum possible number of staff and limited overheads. Costs could be further controlled by bringing in staff on secondment from partner organisations and by accessing the services, funds and facilities offered by other existing organisations (e.g. there are lots of existing quality improvement services for learning providers that the Hub could use to support its capacity building activities, at little or no cost).

To support the essential core costs in the first 2 to 3 years of the model, bids could be submitted to key funders with a track record in supporting VCS development, including Future Builders (or its successor body, the Adventure Capital Fund), Big Lottery Fund, Northern Rock Foundation etc. A bid to Future Builders would include an element of loan funding which could be used by the support hub to create a fund to help lead providers manage the cash flow of large contracts, although this idea requires further development.

In the medium to long term, the intention would be for the Hub to charge providers in return for support services (e.g. back office support for smaller VCS organisations). However, this would not be introduced until the Hub has had the opportunity to prove to VCS organisations that it is effective in helping them to win and manage contracts.

3. How Would the Regional Skills Forum and VCS Learning Consortia Fit with the Model?

The Regional Skills Forum (RSF) and VCS Learning Consortia would not be core elements of the supply chain model, but may play a valuable support role.

The RSF could retain its lobbying role, working alongside VONNE and other VCS partners to influence and inform policy and funding organisations on skills and employability issues. Members of the sub-regional VCS learning consortia would be able to sign-up as members of the supply chain model, at the same time as retaining their membership of sub-regional consortia. The sub-regional consortia could act as local ‘clusters' of VCS providers, supporting members to form partnerships to bid for appropriate local funding opportunities, through the supply chain model.

The future arrangements for the RSF and sub-regional consortia are currently being reviewed, and when the findings are available further consideration can be given to how they may complement the supply chain model.

4. How Could the Supply Chain Model Evolve into an Independent Contracting Entity?

The aspiration of the Task and Finish Group is that this supply chain model should evolve, through a phased approach over time, into an independent legal entity capable of holding some contracts in its own right.

In this model, the support Hub could evolve into a fully fledged independent contracting organisation. In some cases, it would bid for and manage contracts directly itself, in others it would continue to play a brokerage role, developing partnerships that would be managed by lead providers. This model is attractive as it would create a genuinely independent VCS-led organisation, with the track record and credibility to win and manage contracts directly on behalf of its members, without the need to place contract management in the hands of lead providers.

However, it is accepted by the group that establishing such an entity now is not a realistic first step, as it would not have a track record or financial capacity and consequently funders would be unlikely to contract with it.

By starting out with a supply chain model, the VCS should be well placed to win more contracts by building partnerships around strong lead providers with an existing track record and financial capacity. Over time, as the supply chain partnership builds a reputation with funders for effective delivery, it would be better placed to convince funders to contract directly with the support Hub.

The establishment of the supply chain model is an essential intermediate step in the process of moving towards a truly independent VCS-led contracting organisation.

5. Next Steps

A follow up event was held in April 2008, at which VCS organisations had the opportunity to discus the recommended model. At that meeting almost 50 organisations endorsed the model and expressed an interest in joining as members once the model was up and running.

A second task and finish group was established to work out the detail, and they have produced a business plan (which can be found on the left of this page) which set out their proposednext steps.

Further information on the development of the model, will be published on these pages in the future, however if you have any questions or comments please contact John Main, Policy & Development Officer at VONNE.