SUPPLY CHAIN DEVELOPMENT & SUB-CONTRACTING POLICY

Version 1

11March 2014

1.Introduction &Scope

1.1 This policy covers the Peterborough Plussupply chain development and sub-contracting process, including internal tender protocol.

2. Supply chain development and sub-contracting process

2.1 The default option for both ‘negotiated commissions’ (i.e. non-competitive) and contracts won by competitive tender is that these opportunities should be offered to Peterborough Plus members only, except in exceptional circumstances at the discretion of the Board.

2.1.1 Members are welcome to make a case to the Board as why a particular non-consortium member should be included within resource allocation procedures.

2.1.2 There may be occasions where the Board wants to make an exception, on a case by case basis. This would encompass the inclusion of public and private (i.e. non voluntary sector) providers in the supply chain where there is clear evidence of (a) a gap in the Peterborough Plus supply base and (b) the potential for such supply chain extension to add value to the consortium supply base.

2.2There are 2possible primarymethodsin the context ofsupply chain development and sub-contracting:

-Joint Delivery Planning (JDP)

-Internal Tendering (IT)

2.3The JDP primary method has a competitive variant, ‘Competitive JDP’[1], which incorporates certain of the features of the IT approach.

2.4The consortium Board will need to use its discretion to judge which is the most appropriate approach to adopt on a case by case basis, based on a range of internal and external environmental conditions.

2.5 The use of different commissioning techniques by the statutory agencies (e.g. non-competitive/‘negotiated commissioning’ or more open and competitive approaches) is deemed to be neutral in effect. In other words, the adoption of a particular supply chain development/sub-contracting method within Peterborough Plus is not intrinsically linked to the choice of commissioning technique by the commissioning body.

2.6 What each method entails, and the environmental conditions that would influence the adoption of a particular method, are outlined in the table overleaf:

Method / Indicative environmental conditions
External / Internal
Joint Delivery Planning
What this entails:
A single JDP is agreed by consortium members and used as the basis for drafting the Peterborough Plustender submission / Nature of service specification requires or at least clearly lends itself to a unified or joined up approach by providers, e.g. there is a requirement for a single client gateway or referral point
There is a good lead-in time for bidding, therefore allowing sufficient time to bring member organisations together to produce a JDP
There is no insistence by the commissioner on ‘second tier procurement’ or contestability-based sub-contracting / The level of interest expressed by members can be accommodated within the stated contract value and aligns with the service profile
Peterborough Plus is confident that all relevant members will be included in the JDP process
Internal Tendering
What this entails:
Contract is won in advance of determining supply chain
Members are invited individually to submit internal tender proposals
Individual sub-contracts are awarded on strength of internal tender proposals / Nature of service specification does not require or clearly lend itself to a unified or joined up approach by providers, but instead can be readily, and without detriment to outcome delivery, disaggregated through multiple sub-contractors functioning consistently but more or less discretely
There is a limited lead-in time for bidding and therefore insufficient time to bring member organisations together to produce a JDP
There is insistence by the commissioner on ‘second tier procurement’ or contestability-based sub-contracting / The level of interest expressed by members cannot be accommodated within the stated contract value and does not align with the service profile
It is clear that all relevant members cannot be included in a JDP process
Competitive Joint Delivery Planning
What this entails:
Members are invited to collaborate to produce multiple JDPs on a competitive basis
One JDP is then selected to form the basis for drafting the Peterborough Plus tender submission / Nature of service specification requires or at least clearly lends itself to a unified or joined up approach by providers
There is a good lead-in time for bidding, therefore allowing sufficient time to bring member organisations together to produce a JDP / The level of interest expressed by members cannot be accommodated within a single JDP framework

2.7A prerequisite of all3 approaches is the development and maintenance of a comprehensive central database of member organisations’ (a) ‘contract readiness’/PQQ (Pre Qualification Questionnaire) information (i.e. the information that has been generated through completion of the membership application form) and (b) individual service profile (resulting in a Joint Directory of Services). This database will provide the consortiumhub with the information needed to be able to complete relevant PQQ and ITT documents, and to support consortium members to engage in Joint Delivery Planning exercises.

3.Joint Delivery Planning

3.1 Indicative Process

Tender opportunity is advertised/announced

Expressions of interest are sought from contract-ready consortium members

Assuming that the level of interest expressed can be accommodated within the stated contract value and service profile (see section 5 on Competitive Joint Delivery Planning for alternative process where the level of interest outstrips the extent of funding available andfails to align with the service profile), a meeting/working group of interested members is convenedin order to respond to the tender opportunity

At this meeting the partners would work through a JDP template (see Appendix 1 for an outline framework for this)

The resultant JDP would be submitted to the consortiumhub and the hub would overlay the plan with the contract management and wider, added value functions that Peterborough Plus would input:

Accountable body functions

Area-wide strategic overview

Providing links into other initiatives etc

Tender proposal is submitted by Peterborough Plus, based on the JDP

If the proposal is successful, Peterborough Plus establishes sub-contracts with the partners to the JDP, based on the schedule of provision set out within that plan

3.2 Key Features

-Membership-driven

-Lends itself to unified service model

-Cluster of members agreeJDP in response to published tender opportunity

-JDP sets out pattern of supply that subsequently becomes inscribed within the tender proposal and, if successful, the sub-contracts

3.3 Perceived Advantages & Disadvantages

Advantages

-Led by members

-Work of sorting out delivery is done up front

-Avoids internal competition

-Lends itself to unified service model and more likely to encourage joined up services

-More likely to encourage innovation at the frontline

-Good way of offsetting what might be limited human resource capacity within the consortium hub

-Patterns of supply (and associated supply chain links) are set out clearly, transparentlyand unambiguouslywithin tender proposal

-Could up-skill members

Disadvantages

Relies on:

-Alert and proactive membership

-Members possessing negotiation skills, along with real commitment to the ‘give and take’ of a joint negotiation and bargainingprocess

-There being sufficient time within the tendering process for members to come together to agree a joint approach

-There being sufficient funding available so that don’t end up with excess of internal supply/suppliers

-The buyer not prescribing ‘second tier commissioning’as desired outcome

Also:

-Might end up de-skilling the consortium hub

-No guarantee that joint delivery planning will be a fair, open and transparent process – certain of the more proactive members could end up dominating, ‘delivery cliques’ could form, approaches adopted could be inconsistent and unsystematic

Summary of strategies for addressing disadvantages

Provide training for members in negotiation and bargaining skills

Deploy the consortium hub to provide facilitative interventions

Influence commissioners to extend tendering timelines

Ensure the process is fair, open and transparent through the application of rigorous protocol and the use of hub-led facilitative interventions

4. Internal Tendering

4.1 Indicative Process

Tender opportunity is advertised/announced

Expressions of interest are sought from contract-ready consortium members

Where feasible (accounting for time constraints), consortium hub holds consultation exercise with interested members on the sorts of activities that might be delivered through the contract (NB this is not joint delivery planning but a brief consultation on broad parameters); this exercise could involve a face-to-face meeting or could be email-based

Peterborough Plus submits tender proposal, based on outcomes of consultation exercise and high level management information contained in the Joint Directory of Services/database

If the proposal is successful, the consortiumhub drafts a follow-on members’ Invitation to Tender (ITT), which includes the specific criteria against which resultant internal proposals will be assessed

This internal ITT is ratified by the Board (or at least the Chair of the Tender Approval Panel – see below) before circulation

The internal ITT is circulated to all members and sub-tender proposals invited

The consortium hub receives and collates resultant proposals

The consortium hub convenes aTender Approval Panel (TAP), consisting of disinterested (i.e. non-tendering)consortiumBoard members/wider consortium members, and possiblyexternal, independent stakeholders; this TAPoperates as a sub-group of the consortium Board and is vested by the Board with the delegated authority to make recommendationson which consortium members should be awarded sub-contracts

The TAP is chaired by a disinterested consortium Board member

Internal tender proposals are appraised by the TAP, based on a clear, objective and transparent scoring system

A tender evaluation report is drafted by the consortiumhub, including recommendation of highest scoring proposals for approval

The tender evaluation report is submitted to the consortium Boardfor ratification, with the Board making the ultimate decisions on the award of sub-contracts

Consortium hub announces who the successful bidders are

Sub-contracts are agreed with successful bidders, based on the respective schedules of provision set out within the internal tender proposals

One-to-one debriefing surgeries are organised for failed bidders, with the consortiumhubmeeting with a representative of the bidding organisation and providing detailed written and oral feedback on why the bid failed, areas that need to be addressed and other opportunities that the member might benefit from in the future

4.2 Key Features

-Hub-led

-Based on agreed protocol that embodies certain principles and values, e.g. objectivity, impartiality etc

-Precise pattern of supply is determined post-tender

4.3 Perceived Advantages & Disadvantages

Advantages

-Contingently, may be the only option open to the consortium, given (a) lack of time within the tendering process, (b) limited funding (leading to over-subscription) or (c) the buyer’s desire for a ‘second tier commissioner’ approach

-If protocol is adhered to rigorously, then guarantees fairness, openness and transparency

-Competitive system could sharpen up practices of consortium members, improving quality and output in the process

Disadvantages

-Could end up with vagueness and ambiguity in describing patterns of supply (and associated supply chain links) within tender proposal

-Based on internal competition

-Less likely to encourage joined up services

-Less likely to encourage innovation at the frontline

-Relies a lot on what could be limited human resource capacity, especially in start-up phase, within the consortium hub

-Doesn’t up-skill members

Summary of strategies for addressing disadvantages

Ensure Joint Directory of Services/database contains good quality, up-to-date information about services on offer through the membership and use this to cite concrete examples of proposed service provision within the tender proposal

Ensure that expressions of interest and consultation exercise (when undertaken) generate clear, robust and relevant information

Deploy the consortium hub to provide facilitative interventions; thereby building the capacity and commitment to deliver innovative and joined up service delivery

Ensure inputs are properly quantified and costed

Solicit pro bono board input into the process, where feasible

Ensure appropriate mix of supply chain development methodologies to encourage skills development within the membership

5. CompetitiveJoint Delivery Planning

5.1 Indicative Process

Tender opportunity is advertised/announced

Expressions of interest are sought from contract-ready consortium members

Assuming the level of interest outstrips the extent of funding available and fails to align with the service profile (see section 3 on Joint Delivery Planning for an alternative process where the level of interest can be accommodated within the available funding envelope and service profile), interested members are invited to form working groups to draft competing JDPs

The consortium hub receives and collates resultant JDPs

The consortium hub convenes a Tender Approval Panel (TAP), consisting of disinterested (i.e. non-tendering) consortium Board members/wider consortium members, and possibly external, independent stakeholders; this TAP operates as a sub-group of the consortium Board and is vested by the Board with the delegated authority to make recommendations on which JDP should be selected as the basis for Peterborough Plus’s tender submission

The TAP is chaired by a disinterested consortium Board member

Competitive JDPs are appraised by the TAP, based on a clear, objective and transparent scoring system

A tender evaluation report is drafted by the consortium hub, including recommendation of highest scoring JDP for approval

The tender evaluation report is submitted to the consortium Board for ratification, with the Board making the ultimate decisions on the award of sub-contracts

Consortium hub announces which JDP has been selected to form the basis of Peterborough Plus’s tender submission

The consortium hub overlays the selected JDP with the contract management and wider, added value functions that Peterborough Plus would input:

Accountable body functions

Area-wide strategic overview

Providing links into other initiatives etc

Tender proposal is submitted by Peterborough Plus, based on the selected JDP

If the proposal is successful, Peterborough Plus establishes sub-contracts with the partners to the JDP, based on the schedule of provision set out within that plan

Where feasible, group-based debriefing workshops are organised for failed JDP bidders, with the consortium hub meeting with representatives of the bidding organisations and providing detailed written and oral feedback on why the JDP failed, areas that need to be addressed and other opportunities that the members might benefit from in the future

5.2 Key Features

-Membership-driven

-Groupings of members formulate JDPs in response to published tender opportunity

-Element of managed competition as a result of over-subscription

-Successful JDP sets out pattern of supply that subsequently becomes inscribed within the tender proposal and, if successful, the sub-contracts

Advantages

-Led by members

-Work of sorting out delivery is done up front

-Lends itself to unified service model and more likely to encourage joined up delivery

-More likely to encourage innovation at the frontline

-Good way of offsetting what might be limited human resource capacity within the consortium hub

-Patterns of supply (and associated supply chain links) are set out clearly, transparently and unambiguously within tender proposal

-Could up-skill members

-Competitive dimension should increase potential for JDP process to be fair, open and transparent – reducing the chances of ‘delivery cliques’ forming and of approaches adopted being inconsistent and unsystematic

Disadvantages

Relies on:

-Alert and proactive membership

-Members possessing negotiation skills, along with real commitment to the ‘give and take’ of a joint negotiation and bargaining process

-There being sufficient time within the tendering process for members to come together to agree a joint approach

-The buyer not prescribing ‘second tier commissioning’ as desired outcome

Also:

-Involves element of internal competition

-All round, most complex and time-intensive methodology

-Might end up de-skilling the consortium hub

Summary of strategies for addressing disadvantages

Provide training for members in negotiation and bargaining skills

Deploy the consortium hub to provide facilitative interventions

Influence commissioners to extend tendering timelines

6. Performance management

Irrespective of which approach (joint delivery planning [competitive or non-competitive] or internal tendering) has been adopted, the consortiumhub will be responsible for collecting relevant monitoring and performance management information from sub-contractors on a regular basis, collating this to form a single, unified monitoring report for the commissioning body.

The hub will design suitable, fit-for-purpose monitoring/performance management systems for this purpose. These systems will need to reflect the requirements within the prime contract.

The aim will be for systems to be email-based to aid ease of information/data transfer (backed up, as necessary, by paper-based documentation as supporting/auditable evidence).

The payments model will reflect an appropriate balance of financial and cash flow risk between the consortiumand the individual sub-contractor.

Appendix 1: Framework for Joint Delivery Plan

Details of Partners Involved

All partners will need to be able to demonstrate that they meet relevant PQQ criteria (this could be based on a ‘passporting arrangement’ linked to the central PQQ database maintained by the hub).

Description of services/activities to be provided by each partner (Schedule of Provision)

This should also include description and quantification of the resultant outputs (e.g. number of service users benefiting), outcomes and projected wider impacts

Implementation plan

This should include a timeline, key milestones and nominated responsibilities

Description of agreed pricing strategy

Overview of delivery risks and challenges

Approved by the Peterborough Plus Board

Approval Date: XXX

Renewal Date: XXX

1

Peterborough Plus: Supply Chain Policy (v1/11 March 15)

[1] Expediently, there is no inverse collaborative variant of the IT primary approach, due to the lack of time once the contract has been won to factor in collaborative approaches to internal tendering.