Frequently asked questions by prospective members:
Why have a consortium?
To save on their commissioning costs, funders may have fewer but larger contracts, forcing smaller providers to have to bid jointly to win these. Having a voluntary sector consortium:
• provides a ready vehicle for such bids and pools resources and expertise rather than fragmenting through separate consortia struggling to be viable
• enables tenders to be submitted on behalf of the sector in competition to larger commercial providers
• provides a sector-wide mechanism for developing shared service design and potentially ‘pipelining’ with the statutory sector
• enables economies of scale on some back-office functions rather than all providers trying to do this separately
Will it help me to survive?
If your organisation needs to secure public service contracts in order to survive, the consortium could be a route to such survival. This is because it is about putting local voluntary sector organisations in a position to work collectively to win large scale contracts and then divide these up into small slices and allocate them, via sub-contract, to member organisations. However, the consortium will not be a panacea for all the problems that local voluntary sector organisations face. Some members might still face financial problems even though they have secured sub-contracts. Also, member organisations will have to strive hard to get the most out of membership, making sure that they meet the consortium’s requirements, e.g. around monitoring and reporting and quality assurance.
Why do I have to meet all the criteria?
The board have set these criteria because the consortium is a business venture (as opposed to an open partnership structure or forum). Having eligibility criteria is part of a necessary due diligence process. Without this, we wouldn’t be able to demonstrate to the council and other commissioners that we are ‘contract-ready’.
Why is there a ‘top-slice’ at a cost to my organisation?
A small proportion of any contract funding needs to be allocated to the consortium’s central management functions (the hub) and this is what the top slice pays for. These functions include bidding for contracts, contract management, financial management etc. Without these functions the consortium wouldn’t be able to operate.
The vast majority of the funding (c. 90%) will be distributed to members to deliver frontline services on sub-contract and only a small amount retained. This is part of the founding members’ commitment to ensuring that as much money as possible gets through to the frontline and especially vulnerable and disadvantaged service users, and this, in turn, will be essential in the current climate of austerity and rationalisation.
Of course, this top slice is only applicable if you have secured a sub-contract in the first place (you wouldn’t pay it otherwise).
Also, there will be a commitment to outsourcing consortium management functions, where feasible, to the consortium members and thereby reinvesting the top slice monies into the membership (see point below).
If I am an associate member, what will you do to support me to become a full member?
The consortium will have a close working relationship with VAWD and other VCS support agencies. We will be able to draw these organisations’ expertise to build the capacity of associate members. Capacity building interventions will need to be targeted explicitly at those aspects that move the organisation forward in terms of contract-readiness. For example, this might include guidance on externally validated QA systems.
Will the consortium be dominated by the big players?
No. On the contrary, it will be essential to involve smaller organisations in all aspects of the consortium and its work, including board members/trustees. As a large scale umbrella structure the consortium will need to develop the local market of voluntary sector suppliers (including small, niche providers) on a continuous basis, otherwise it might be accused of being a closed circle of collaborators (monopoly) and this would be detrimental to its chances of winning contracts.
Also, because of aggregation (lots of smaller contracts being bundled up into one large contract), there will be a tendency for the resultant contract frameworks to be broad ranging or holistic in scope. This will require larger providers to work with smaller, niche providers in order to ensure full coverage of all service requirements. This is likely to be accentuated by the drive towards patient-led commissioning/personalisation, which focuses on ‘whole person’ needs.
Isn’t the consortium just creating another layer of bureaucracy?
No. Staffing of the consortium will be kept small, and has a very specific function around bidding for and managing contracts. The consortium is in close contact with the various VCS infrastructure bodies and aims not to duplicate or complicate current arrangements.
Can associate members be involved in governance?
Yes. In fact they would be actively encouraged to become thus involved. The current Directors are investigating a board structure that will encompass a blend of stakeholder perspectives – a balance of full and associate members, alongside external, independent people, e.g. from the local authority and local business sector. This will enable us to reflect the balance of the core need to win and deliver contracts on a commercial basis (full members’ primary perspective) with the equally important need to build the capacity of smaller providers (develop the internal market in the interests of ‘ensuring contestability’) [associate members’ primary perspective], at the same time as building in a conflicts of interest-proof firewall into the governance structure (independents’ primary perspective) – see point below.
The consortium will be owned and controlled by the membership. This entails the constitutional power to vote at the AGM and to stand for election to the board.
What about conflicts of interest and in-fighting?
A conflicts of interest-proof firewall will be built into the governance structure (see point above).
At the same time protocol has been developed in the form of a trustee manual (which sits alongside the Mem & Arts). This embodies the codes of conduct and rules of engagement for the consortium.
It is obviously unrealistic to think that conflicts of interest or internal competition will never happen. In fact, one method for allocating contracts – internal tendering – will be based on the concept of internal competition (see point below). However, the mechanisms referred to will help the consortium to manage these conflicts effectively and efficiently.
Will the consortium take my existing contract?
The consortium per se is not a provider in its own right. Instead it will simply build on the track records of existing frontline providers in the voluntary sector.
The consortium will be about trying to safeguard and strengthen the existing contracted provision within frontline providers where this meets clear community need and best value principles. However, the local authority (or another commissioner) may decide to change its commissioning strategy (e.g. by bundling lots of small contracts into a single, larger contract) and it may only be possible to accommodate this (e.g. bidding for larger contracts) via the consortium structure.
Has this got anything to do with the cuts?
Yes. The consortium is a strategic response to the government’s deficit reduction campaign. Due to having less money at their disposal, there will be increasing pressure on commissioners to make savings. One obvious way of doing this is to reduce down their ‘transaction costs’ associated with having to manage lots of small scale contracts by aggregating or bundling those contracts. The consortium represents a strategic mechanism on the supply side of the market to act as the receptacle for the resultant large scale contracts/funding agreements (via whatever method – pipelining, negotiated commissioning or open and competitive procurement).
As well as being a ‘defensive’ mechanism the consortium will also focus on new market opportunities as public services get increasingly transferred to the voluntary sector in the future.
Isn’t this just a way of getting us to cut ourselves?
The overall amount of funding for public services is reducing so there will be a natural expectation for the voluntary sector to deliver services effectively but with less money (‘the more for less’ agenda). There is no way of avoiding this.
The consortium is not the instigator of this – it is simply a response to the situation and a concerted attempt to safeguard the sector through the challenging times ahead.
If we didn’t have the consortium the cuts would still be with us and we would be much more exposed to competition from the private sector and big national players. Without the consortium we might be forced into mergers in order to create efficiency savings. Via the consortium, we can rationalise but without having to surrender our independence and autonomy.