FINANCIAL/BUDGET
IMPLICATIONS
18
There
are no direct financial implications of adopting the Compact Funding and
Procurement code. There are however, indirect implications including the
potential financial benefits that the Council receives whilst there exists a
viable and robust V&Cs. It is estimated that the Council spends
approximately £0.75 million annually with the V&Cs, and this would be
considerably more if the Council had to commission such services elsewhere or
provide them in-house. The role and value of the sector cannot therefore be
over-estimated.
19
The
Council will use its best endeavours to fund organisations appropriately but
the funding code makes it clear that the V&Cs cannot expect to have its
inflation costs reimbursed unless the Council is in a position itself to fund
its own increased costs.
20
Special attention is drawn to the following sections in the
Funding Code:
a. Section
7. Full Cost Recovery
b. Section
8. Inflation Costs
c. Section
11. Payment in advance
And in the Procurement Code:
a. Section 9. Contract and Payment Terms.
LEGAL IMPLICATIONS
21 There are limited legal
implications of the Code. The Council needs to demonstrate that it is achieving
Best Value in the procurement of its services, which is likely to be delivered
with a strong V&Cs to which this code makes a contribution. On a cautionary
note, the Council needs to be careful that it awards its contracts on the basis
of best value using “most economically advantageous” criteria – and in that
sense it must not unduly favour the V&Cs, but rather provide it with equal
opportunities to gain Council business and funding.
OPTIONS
22
Option
1 To adopt the Funding and Procurement code and ensure that it becomes
fully integrated into the everyday business of the Council
Option 2 Not to adopt the Funding and Procurement
code
EVALUATION/RISK
MANAGEMENT
23
Risks identified in not adopting this code are listed:
a. The principal risk to
the Council in not adopting this code is that the V&Cs will be put at an
unfair disadvantage when bidding for contracts and service level agreements.
b. If the V&CS is not
helped to build their capacity in providing public services this could
significantly diminish the choice of supplier, quality and number of services
offered to the community.
c. The CPA process will
take account of the progress the Council has made in developing the Compact in
line with national guidelines. If the code is not adopted it could result in
the Council receiving a lower overall CPA score.
|
RECOMMENDATIONS
24
It is recommended that the Executive :
i)
Adopt the Funding and Procurement Code.
ii)
Provides support and encouragement to other Island based public sector
service providers, (particularly NHS agencies, in the context of the
integration agenda) to adopt a similar approach to dealing with the VCS.
|
25.
BACKGROUND PAPERS
The National Compact Code of
Good Practice
“Towards a strategy for
working with the voluntary and community sector to deliver outcomes for
children, young people and families” (Department for Education and Skills)
“The Cross Cutting Review of
the role of the Voluntary Sector in public service delivery” (HM Treasury 2002)
“Think smart…think Voluntary
Sector” (OGC 2004)
A
Rural Strategy 2004 (DEFRA)
Guidance to Funders (HM
Treasury 2003)
“Draft procurement code” between
IWC and the VCS
The Community Strategy
The Corporate Plan
26.
APPENDICES
1.
Isle of Wight Compact
2.
Draft Funding and Procurement Code
Contact Point : Sue Chilton Ext 3632 [email protected]
Marian
Prowse (RCC), 524058 [email protected]
|
JOHN BENTLEY
Head of Corporate Policy and Communications
|
REG BARRY
Portfolio Holder for Resources
|
APPENDIX 2
Isle of Wight local Compact
between the Public Sector and the Voluntary & Community Sector
DRAFT FUNDING AND PROCUREMENT CODE
FUNDING CODE
1 Introduction
1.1 This code of practice
is a supporting document to The Isle of Wight Compact – A partnership between the Isle of Wight Council (IWC) and the Voluntary
& Community Sector (VCS). It will
also support any future Compact between the IW Health Trusts and the VCS. It aims to have a positive effect on the
funding and resourcing relationship.
1.2 This Code is based on guidance from national policy documents
such as:
The National
Compact Code of Good Practice
“Towards a
strategy for working with the voluntary and community sector to deliver
outcomes for children, young people and families” ( Department for Education
and Skills)
“The Cross
Cutting Review of the role of the voluntary sector in public service delivery”
(HM Treasury 2002)
“Think
smart…think voluntary sector” (OGC 2004)
A Rural
Strategy 2004 (DEFRA)
Guidance to
Funders (HM Treasury 2003)
It also
underpins the local “Draft procurement code” between IWC and the VCS
2 Aim
2.1 The
public sector bodies on the Isle of Wight recognise voluntary/ community
organisations as valued partners in delivery services an care. As such they are committed to fairness
across all contracted bodies, irrespective of whether they are public, private
or voluntary/ community sector organisations, and to deal in open partnership
with them in negotiating service contracts.
Where public sector organisations enter into Service Level Agreements or
contracts with the voluntary/ community sector (VCS) that have clear outcomes
and expectations.
2.2 The intention is to
ensure fair and equal access to funding, regardless of race, gender,
disabilities or age.
3 Key
principles
·
Acknowledgement that the VCS is independent
·
Fair and equal access to strategic, project and
contract funding
·
As equal partners, there should be a joint approach to
contract development, monitoring and evaluation
·
Clarity of funding conditions
·
Accountability of both parties
·
Consistency of approach across public sector bodies
·
Recognition of full cost recovery
·
Mutual desirability of long term financial and
organisational planning, including the aim to move to longer term contracts
·
Support for the VCS’s infrastructure
·
Value for money
·
The development of standard contracts
4 The Isle of Wight Compact
states that:
4.1 Funding includes: service level agreements, contracts or
grants.
4.2
The Public Sector will:
4.2.1
Allocate
resources to the VCS on the Isle of Wight against clear, transparent and
consistent criteria, taking account of priorities, Best Value and value for
money, and principles of equality, efficiency, effectiveness, sustainability,
accountability and quality
4.2.2
Inform the VCS
about its funding priorities and criteria
4.2.3
Support the
infrastructure of the VCS to help VCOs develop the capacity to respond to the
needs and priorities of service users
4.2.4
Be mindful of
the need for VCOs to plan and set their budgets by liaising with them in a
timescale that will facilitate good management and forward planning
4.2.5
Respect the
Voluntary & Community Sector’s independence and its right to challenge,
irrespective of any funding relationship that might exist
4.3
The Voluntary and Community Sector will:
4.3.1 Recognise
and respect the need for accountability and the principles of Best Value and
value for money.
4.3.2 Acknowledge
the constraints the public sectors work under and their dependency on
Government funding and direction on spending priorities.
4.3.3 Develop
quality standards for service delivery that are appropriate to each
organisation, without undermining the contribution and involvement of
volunteers.
4.3.4 Comply
with the accounting procedure for charities.
4.3.5 Work
in partnership to maximize grant income from central government and other sources.
(See IWC Compact Glossary)
5 Grants
5.1 Where possible, IWC are moving to contracts. This would allow voluntary/ community
organisations to plan for their financial and organisational requirements. Funding for innovative projects outside the
normal departmental criteria may be available if the application can show that
the project will enable the IWC to achieve priorities as set out in the
corporate plan.
6 Contracts/Service Level
Agreements
6.1 To be underpinned by the following principles:
·
Transparency of funding criteria
·
Funding programmes should support public sector
objectives and priorities
·
Whenever there are funding programmes there should be a
timetable showing when these become available
·
Documentation will be required in support of funding
applications; this will be appropriate to the value of the funding being sought
and the size of the organization
·
Monitoring to be appropriate to contract size
·
Action will be taken in the event of an under spend
·
Outputs will be required
·
In the case of large grants and annual funding, an
agreement will be issued and signed before payment commences
·
Development of standard contracts with common terms and
conditions
·
A named contact for both parties to be included in all
contracts
7 Full cost recovery
7.1 Core costs
All voluntary
and community organisations have fixed or overhead costs and the movement
should be towards full cost recovery.
Public sector bodies on the Isle of Wight, in line with central
government guidance, recognize that it is legitimate for service providers to
include the relevant element of overhead costs within bids for service
contracts or service level agreements.
8 Inflation costs
8.1 The following principles will be used for funding inflation:
a. The public sector
recognises that providers from all sectors- private, VCS and public incur
inflationary costs in provision of services within contracts and service level
agreements.
b. Where such contracts
exist public sector contractors will seek to pass on to VCS contract holders
any inflation increases it receives through allocation.
c. Where cost efficiency
targets are included within the allocations received by public sector
organisations, the voluntary/ community and private sectors will work in
partnership with public sector organisations towards achieving such
targets. This may include either
additional activity within the given funding or reduced funding.
d. Inflationary increases
may legitimately vary between different organisations or sectors. Where this is the case the reasons and
principles should be explicit but should not breach commercial confidentiality.
e. Where inflationary
increases negotiated with voluntary/ community organisations (VCOs) differ from
those awarded to either private or public sector bodies the reasons for such
variation will be made explicit and publically stated.
f. Where the level of
funding (based on resources received from Government) falls below the level of
local inflation, discussions regarding the impact of this will take place, in
open partnership with all relevant parties, and consequences agreed.
g. Inflation funding principles will be
explicit within Compact Agreements.
8.2 The above would not
apply to grant funding where there are no specific contractual agreements
regarding activity/outcomes. Separate agreement would be required with regard
to grant funding
8.3 Funding principles will
be subject to regular review in light of any statutory or regulatory
requirements.
9 Duration
9.1 Because short-term
agreements affect the viability of VCOs, contracts or service level agreements
for the provision of services which meet well-established needs, are likely to
require a minimum of three years’ duration and consideration will be given to
inflation. The following principles
will apply:
9.2 The duration of a
service level agreement or contract should be made clear before any agreement
is reached. The duration should
reflect:
·
The availability of funding
·
The cost of re-tendering or re-contracting for all the
parties
·
The nature of the project or activity
·
The competitiveness of the provider market
·
A realistic assessment of the time it takes to develop
and establish projects or activities
·
Due regard to central government advice and policy
9.3 Notification
of an intention to renew or terminate contracts and service level agreements
will be given, six months in advance, so that proper arrangements can be set in
place for clients’ needs and staff contracts.
10 Disputes
10.1 Contract should set out a
fair and proper procedure for the resolution of disputes, brought by either
party, encouraging a resolution by mutual agreement. If this fails, the contract should make provision for the dispute
to go before an independent person, then to mediation, and finally
arbitration. The specific details of
the dispute process should be included in the standard terms of each contract.
11 Payment
11.1 Payment should be by either monthly or quarterly installments in
advance.
12 Termination
12.1 The circumstances in
which contracts or service agreements may be terminated before their expiry
date should be made clear before any agreement is reached. Contracts should provide a fair and proper
procedure for speedy termination in the event of default by either party.
13 In Kind Support
13.1 Advice and expertise
The Compacts
will help make the most of the wealth of knowledge, expertise and experience
available in both sectors.
13.2 Joint training
The Compact
Development Group will identify and develop ways of sharing and spreading
learning across the sectors, ensuring development and improvement in the way
the two sectors work together.
Activities might include joint training in areas such as IT, Best Value
and quality issues, Health and Social care workforce development, Child
Protection etc.
13.3 Premises and buildings
Both sectors
will assist each other with buildings, premises and equipment. Charges may be appropriate.
14 Monitoring and Evaluation
14.1 The following definitions
apply:
Monitoring is the routine collection and
recording of information, sometimes against statutory performance indicators,
on the activities of an organisation.
It provides information on what an organisation is doing, but makes no
judgement about the value of the outcome or results of those activities.
Evaluation is the assessment of the value of
a project, piece of work, or service.
14.2 Monitoring and evaluation are an important part of the
funding process because:
·
Public sector bodies need to ensure that the
organisation is doing what it is supposed to be doing – providing a good
service with value for money
·
The organisation providing the service will wish to
prove to itself and to others that it is providing the best possible service –
meeting needs, and delivering what it is funded or contracted to do
·
Review – the public sector bodies and the provider will
annually review jointly the purpose and outcomes of the service to ensure the
objectives are being met and developed.
(This applies to contracts and SLAs of 3 years or more)
·
Staff in funded organisations must be clear about the
agreed outputs and objectives, the extent of monitoring and evaluation in
connection with contract compliance
14.3Before
a monitoring process is undertaken, organisations will be told:
·
Who needs the information and why
·
The type of information needed and how it is to be
presented
·
Who is responsible for gathering the information
·
Agreed time and method for collecting information
14.4It
is likely that some or all the following areas will form the basis of the
monitoring and evaluation process:
·
The organisation’s work programme and projects; what
services it provides; who provides those services – staff, volunteers etc – and
in what way; how people find out about or access the service; what measures are
in place to obtain users’ views
·
How and when the money is spent; effectiveness of
financial information; how and when premises are used and by whom; what
facilities and equipment are available; what users think of them
·
How the organisation allocates time to various types of
work and how they fit together; how the time of paid staff and volunteers is
organized and how they contribute to the service
·
The organisation’s decision-making processes; who is
accountable to whom; the effectiveness of the organisation’s management
structures
·
How needs are being met and the level and nature of
unmet needs
·
Added value of contract
·
The monitoring and evaluation process will be
appropriate to the amount of funding and whether or not it is renewable
·
Monitoring requirements at each level need to be
established and agreed
·
Recognition of the value of outcome reporting
15 Financial Reporting
15.1 Financial
monitoring reports and their frequency should be commensurate with the scale of
the funding involved. Information
requirements should be clearly stated before funds are agreed, and include the
roles and responsibilities of each party.
16 Reserves
16.1 In assessing how much
assistance an organisation may require, public sector bodies will wish to take
into account the level of reserves held, the extent to which they are
unrestricted or restricted and the purposes for which they may be
restricted. Reserves are defined here
as any funds which are not required in order to cover the day-to-day running of
the organisation in the current year.
Reserves may be ‘earmarked’ – held for a specific purpose such as a
planned building project.
17 Inflation
See section 9
18 Accountability
18.1 Both the Voluntary &
Community Sector and the public sector bodies have a shared responsibility for
the expenditure of public funds.
18.2 Responsibilities of the public sector bodies
The above must
provide for the effective protection of and proper accountability for public
money and seeks evidence of procedures that support good regulation. Individual departments in relation to budget
demands, determine the amount of business to be awarded to voluntary and
community sector providers. Individual
applications for support would be considered.
18.3 Responsibilities of the Voluntary & Community Sector
The VCS
recognises that receipt of public funds carries with it responsibilities to the
funding body and to the public who benefit from the services provided. The sector undertakes to pursue good
practice in the use and administration of public funds appropriate to the scale
of funding and operation covering:
·
Clear and effective policies
·
Effective and proportionate systems for the management,
control, accountability, propriety and audit or examination of finances
·
Compliance by organisations that hold charitable status
with the accounting framework for charities and appropriate guidance from the
Charity Commission on funding
·
Systems for planning and implementing work programmes
·
Systems for monitoring and evaluating activities
against agreed objectives
·
Systems for quality assurance and accountability to
service users, including complaints procedures
·
Promotion of examples of good practice
19 Mediation
19.1 As far
as possible disagreements over the application of the framework of the Isle of
Wight Compact and this Code of Practice should be resolved directly between the
parties involved. However, where there
is still disagreement, both parties have access to the Compact Mediation
Procedure.
20 Conclusion
20.1 It is intended that this
document will evolve as the working relationship between the two sectors
develops. Reference can be made to the
Compact Development Group if it is considered that this code has been
breached. Also, the complaints
procedures for each public sector body are available.
PROCUREMENT CODE
For Isle of Wight public sector authorities to acknowledge with regard
to the Voluntary & Community Sector as potential public service providers
1 Why consider the Voluntary
Sector as a
provider/supplier of services?
·
Specialist knowledge and experience
·
Independence and freedom from institutional
or shareholder pressures
·
Innovation
·
Responsiveness – alert to
change in markets, lack of bureaucracy
·
Economies of scale
·
Niche markets
·
“Heineken” effect – touches
the parts others do not reach
2 Increasing VCS
participation in the procurement of services
2.1 The public sector bodies
will:
2.1.1 Consult
early with suppliers when policy is first being formulated
2.1.2 Seek
supplier input in developing policy outcomes/outputs as services are being
shaped
2.1.3 Endeavour
to develop clear procurement strategies
2.1.4 Develop
straightforward tender documents and provide support where necessary
2.1.5
Give feedback post contract to ensure continuous
improvement
2.1.6
Develop mechanisms for
publicising tender opportunities with the VCS
3
Developing the Supplier Base
3.1
The public sector
bodies will:
3.1.1 Maintain
a dialogue with suppliers – get to know their capabilities and interests, and
perceived barriers in bidding for and gaining contracts
3.1.2 ‘Meet the Buyer’ events will take place and
use will be made of existing networks such as those managed by the local
Council for Voluntary Services (CVS) at the RCC
3.1.3
Inform VCOs
about other organisations which could help them
3.1.4 Produce
a ‘How to do business with the IWC’ guide providing potential suppliers with
the information they need to bid effectively for contracts. This guide will be accessible via the IWC
website and through other mechanisms
3.1.5 Assess
thoroughly all applications from VCOs wishing to become a supplier and where
possible a meeting or visit will be arranged
3.1.6 Name
a contact, which will be published for VCOs making general enquiries about
procurement. Enquiries will be dealt
with promptly and positively.
4 Establishing Policy and Defining the
Need
4.1
The public
sector bodies will:
4.1.1 Ensure
early supplier involvement when planning new policies and programmes
4.1.2 The
CVS networks will be used for informal consultation with VCOs to test
viability, tap knowledge and expertise, establish the extent of existing
provision, and generally gain a supplier perspective to help shape policy and
procurement strategy
4.1.3 VCOs
will understand that no potential provider will be given an unfair advantage in
competing for a specific contract
4.1.4 Sub-contracting
will be permitted and encouraged thus making provision for specialist
services. This will also have the
benefit of helping smaller VCOs to break into the public sector marketplace and
gain confidence in dealing with public procurement
4.1.5 Where
it is relevant to the performance of the contract, tenderers will be asked to
set out any proposals for engaging with local bodies such as VCOs
4.1.6 Careful
attention will be given to the optimum length of the contract. Consideration will be given to whether or
not a longer-term contract or partnership would best achieve the desired
programme outputs. Normally, a minimum
of three years will be considered a sensible length of contract.
5 Publicising Contract
Opportunities
5.1 The public sector bodies
will:
5.1.1 Provide
as much notice as possible of forthcoming procurement activity. A section about
future tenders will be posted on the council website
5.1.2 Publicise
opportunities widely, particularly lower value ones, utilizing the trade press,
local press and relevant websites and also send emails to suppliers who are
known to us, alerting them to the advertisement
5.1.3 Provide
information about sub-contracting opportunities for the Voluntary and Community
Sector, by encouraging prime contractors to advertise opportunities for
sub-contracting and partnership work on the website
5.1.4 Use
a supplier list where appropriate. If
procurements are below EC thresholds, then use of a direct approach can be a
simple and cost effective strategy. The
list will be refreshed regularly, and the process will be an open one, making
it easy for new suppliers to join
5.1.5 Publish
a named contact point where suppliers can get information about both current
and forthcoming tenders.
6 Pre-Qualification
Procedures
6.1 The public sector bodies
will:
6.1.1 Ensure
that the information required at the pre-qualification stage is proportionate
to the size and complexity of the contract
6.1.2 Request
only two years of accounts in accordance with Government guidance. Other appropriate information will be
considered if the above is not available
6.1.3 Acknowledge
that the largest suppliers with the most extensive track record are not the
only options. Suppliers will be
selected on the basis that they are financially sound and capable of delivering
the solution.
7 Drawing up the
specification
7.1
The public
sector bodies will:
7.1.1 Focus
on outcomes not on how they are to be delivered. The achievement of outcomes will be used as a key indicator of
success in service delivery
7.1.2 Involve
relevant stakeholders in the development of a specification to ensure it
properly reflects the requirements for delivering the service
7.1.3 Consult
with suppliers. Consultations will not
lead to a specification that favours a particular supplier
7.1.4 Be
alert to how the specification is assigning risks. Risk needs to be handled properly and sensibly and will be
allocated to the parties best able to manage them. Decisions on where risk best lies should not be made without
appropriate research and consultation
7.1.5 Use
clear and concise language, avoiding jargon.
8
Invitation to Tender
8.1
The public
sector bodies will:
8.1.1 Explain
the procurement process and timetable, and what will be required from
suppliers, at the outset
8.1.2 Consider
offering training to potential suppliers who may be unfamiliar with the
tendering process. This will give them
a better chance of preparing a competitive tender
8.1.3 Ensure
tender documentation is concise and jargon-free
8.1.4 Ensure
that the procurement is based on a sound business case, approved budget and
appropriate stakeholder buy-in to avoid an aborted or delayed procurement
8.1.5 Set
a realistic timetable informed through appropriate consultation with suppliers.
9
Contract and Payment Terms
9.1 The IWC will:
9.1.1 Consider
whether advance payments are appropriate particularly where start up costs need
to be covered
9.1.2 Consider
the use of frequent milestone payments linked, for example, to stages of
completion or the achievement of particular outcomes
9.1.3 Pay
promptly in accordance with arrangements stipulated in the contract
9.1.4 Ensure
that the contract terms are proportionate to the scale and complexity of the
contract and that they will not be likely to exclude VCOs unnecessarily
10 Evaluation and clarification
of tenders
10.1 The IWC will:
10.1.1 Inform tenderers
about the evaluation process at the outset
10.1.2 Regard the
clarification process as an opportunity to work with all bidders to address any
misunderstandings or omissions in their bids
10.1.3 Allow the VCOs the
freedom to determine their own price in competition in the same way as the
private sector
10.1.4 Be aware of any
special factors that may affect pricing or contract terms – for example,
recognizing the logistical difficulties of delivering services in rural
locations.
11 Award of Contract
11.1
The IWC will:
11.1.1 Feedback – this
should be as helpful as possible and designed to promote future improvement
11.1.2 Inform VCOs that
feedback is available.
12
Managing the Contract
12.1
The IWC will:
12.1.1 Seek early
supplier involvement in the design of contract management procedures to ensure
viability and effectiveness for both sides
12.1.2 Make arrangements
for contract management clear in the tender documentation
12.1.3 Focus management
reporting on measuring key outputs/outcomes, not burdening VCOs with onerous
reporting requirements relating to processes or frequent contract review
meetings
12.1.4 Be sensitive to
the impact that changes in the requirement can have on VCOs and allow realistic
timescales for the implementation of changes in the contract requirement
12.1.5 Encourage and
incentivise VCOs to come forward with ideas for better ways of working which
can lead to benefits for both parties.
After a contract has been awarded and services have been delivered for a
while, often improvements and cost savings can be identified
12.1.6 Encourage prime
contractors to make sub-contracting opportunities available to the VCS
12.1.7 Develop a good
working partnership with the supplier and try not to escalate problems
unnecessarily. Ensure that the contract
allows for user friendly and cost effective mediation or alternative dispute
resolution
12.1.8 Acknowledge the
framework of the Compact as the philosophy for good partnership working.
