Barnet Council needed to achieve significant financial benefits in its education support services provision in order to meet its funding projections, whilst at the same time maintaining the current high performance. In early 2015, IMPOWER were asked to market test alternative delivery models across school support services as part of Barnet’s ‘commissioning council’ approach to addressing its financial challenges. IMPOWER were able to bring to the table our extensive commercial experience of negotiating complex, large-scale contracts. As champions of the public sector, during this journey IMPOWER have been negotiating to achieve the best long term outcomes for both the council and Barnet’s citizens.
Exploring the options
Barnet’s school support services included schools catering, school improvement and statutory services such as the allocation of school places. In the first phase, IMPOWER used its knowledge of alternative delivery models to explore and evaluate the options, and engaged with possible suppliers.
As a result of IMPOWER’s groundwork, Barnet decided that a partnership between the private sector, the Council and schools would be the best option to drive efficiencies as well as help the council to generate more income from these services. IMPOWER were called upon to support the council through the next phase; the procurement and tender processes that selecting a private sector partner would require.
We worked in close collaboration with the excellent team that Barnet had constructed of internal resources, contracted specialists and other professional advisers (such as lawyers and insurance experts) to present a consistent and unified face to the market.
Project and methodology
Once the ground work had been done to assess the various options and choose a partnering approach, there were some clear, definitive steps that needed to be taken to effectively bring in a private sector partner. In this instance, the first step was to work through the procurement exercise; initially writing a prospectus of what the opportunity was and including that information on the European procurement portal. IMPOWER and Barnet then filtered out the inappropriate candidates against published criteria and conducted a competitive tendering exercise with remaining providers.
However, the real chemistry happened when IMPOWER and the council took the time to think through and really understand the possible benefits of involving a private sector partner. IMPOWER used this insight to shape the deal and get the best offer. This included having a more outcomes-based approach to the partnership; focusing on what success for Barnet and its citizens would look like (such as schools operating at a high standard with Ofsted recognising this). We also worked with the council to understand what providers would be expected to gain from the deal and how we could create a contract that allowed providers to come up with innovative and inventive solutions to achieve the best outcomes whilst fulfilling their needs – for true long term success all parties must be able to benefit.
When it comes to efficiency savings, it is easy for providers to talk a good game. However, as part of the tender process IMPOWER insisted on seeing the details of how efficiency savings will be made, and checking their credibility. Councils are ultimately responsible if a provider is not able to deliver a service at the standard and price agreed (or there is a risk they will cut corners to make sure that they do), so we saw it as an important part of the process to understand the deal at a deeper level to ensure it worked for both parties in the long-term.
Working with the council our team came up with several approaches to ensure that both parties would get what they wanted from the contract. These included:
- Meeting key service standards: We designed a performance regime to make sure the focus was on the key indicators the council and its citizens value
- Outcome based measures: For example, the number of schools rated by Ofsted as ‘outstanding’. If the provider fails to meet these target, then the council will receive financial compensation
- Financial benefit through growth: Rather than an approach based on financial cuts and job losses the deal was structured to encourage growth, making use of trading to generate more income, support more jobs and provide shared financial benefit
- Building on success: Barnet runs very high performing schools and schools support services and trades some of these services profitably. The deal will ensure that this success is maximised and profitable services are traded more widely benefiting the Council and schools through a contractual profit share
Barnet signed their contract with their chosen provider – Cambridge Education – at the end of March 2016; it will run for at least seven years and secures over £10m in savings in line with the Council’s medium term financial strategy, with more potential financial benefits through profit share. The contract contains performance safeguards to help ensure that high standards are maintained and indeed improved, and links the supplier’s payments to valued outcome measures.
As a result of IMPOWER and Barnet’s work, the £70million 7-year contract will guarantee Barnet financial benefits of over £10m as a result of both service efficiencies and trading. In addition to the guaranteed benefits, there is also a profit-share agreement in place which could result in more income for the council, the provider and schools.
Council outsourcing is neither new nor innovative. But outsourcing done well, that is outcome-based with financial and commercial benefits for both parties, can feel few and far between. Working with the Council’s team and other advisors, IMPOWER were able to use our commercial expertise, contract experience and passion for the public sector to arrive at the best deal for Barnet – embedding service quality, guaranteed savings and achieving a sensible allocation of risk.
IMPOWER were able to bring new ideas and experience to the team to ensure the council were equipped to ‘take on’ the bidding teams from providers who negotiate large contracts on a daily basis. As a result of this contract, Barnet schools and citizens should see improved services and outcomes, and the council will make the efficiencies it needs in a sustainable way to meet its financial challenges.
To discuss IMPOWER’s work on alternative delivery models, please contact Jason Walton at email@example.com
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