Source · Select Committees · Justice Committee
Recommendation 15
15
Paragraph: 81
Although we recognise that contract values and volumes are indicative, we share in the concerns...
Recommendation
Although we recognise that contract values and volumes are indicative, we share in the concerns expressed by some of our witnesses, that in some instances projected volumes are lower than those that various organisations are currently working with. Given that contract value is based on projected volume, discrepancies in these figures, may prevent organisations from participating in the Dynamic Framework. For those that do participate, underfunded contracts may cause financial and operational issues later down the line which could affect the quality of service provision. The potential for contracts to be underfunded is of significant concern to the Committee and we recommend that The Ministry of Justice set out how they are modelling projected volumes and contract values, and also what is being done to ensure that contracts are sufficiently resourced and deliverable according to the funding that is available.
Paragraph Reference:
81
Government Response
Acknowledged
HM Government
Acknowledged
Agreed We have awarded fixed price contracts for rehabilitative services commissioned through the Dynamic Framework, with a volume cap (with volume bands applying only in larger contracts) to mitigate financial risk to suppliers as a result of volume movement. The caseload volumes were calculated using historical caseload data, estimating cases that meet the eligibility criteria for services under the Framework, and then projecting those volumes forward based on future caseload forecasts, to give volumes for each year of the contract. These projections also take account of the additional increase in caseload estimated from increasing numbers of police officers. For the larger competitions, a volume band approach was used with four different scenarios applied to the projected caseload volumes described above. This resulted in a high and low caseload estimate for each of the four different scenarios or bands, each with an associated contract value. These volume bands allow for a guaranteed minimum income for suppliers if actual caseloads during the contract are lower than our estimates and allow for economies of scale where volumes are in line with or greater than estimates. Contract values were calculated by taking the volume estimates and multiplying by the unit costs of each service under the Framework, taking account of intensity (low, medium or high) for expected cases, and adjusting for the available budget. To ensure contracts are sufficiently resourced regional contract management and commercial teams will have responsibility for managing the performance of suppliers against contractual obligations to deliver the specified services. They will work closely with regional operations teams to assess the actual volume of referrals against estimates and implement actions to manage volume flow accordingly.