Managing Department for Work and Pensions contracts A review of effective subcontracting arrangements This small-scale review outlines the practice of some successful Department for Work and Pensions prime contractors in managing their subcontractors. Inspectors visited 10 prime contractors where leadership and management had been judged good at the last inspection and performance was improving. The review identifies the key characteristics of successful practice and includes guidance questions that providers might use as a prompt for evaluation and to improve the quality of their work. Age group: 16+ Published: January 2010 Reference no: 080257
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Contents Introduction 4 Key features of effective practice 5 Recommendations 5 Survey findings 6 Strategic clarity 6 Operational effectiveness 7 Building capacity 8 Recent improvements in the management of subcontractors 11 Conclusion 11 Prime contract health check 11 Annex. Contractors participating in the survey 13 DWP Prime Contractors 13 Lead contractors from other sectors 13
Introduction In April 2008, the Department for Work and Pensions (DWP) introduced new contracting arrangements for its employability programmes and a more strategic approach to commissioning. A key feature of this strategy was to establish a stronger, more consistent base of top-tier providers who can work closely with regional and sub-regional partners to deliver sustainable jobs for unemployed people. 1 Prime contractors were established with responsibility for managing employability programmes over wide areas, working with a range of subcontracted partners. The DWP defines a prime contract as an arrangement where the DWP has a contract with a single organisation to undertake the following three functions: to provide some services directly to subcontract some services to other organisations to manage the payment and performance of the subcontractors. Inspections of DWP-funded providers, conducted since the introduction of the new arrangements, have frequently identified weaknesses in the management of subcontractors. The DWP therefore commissioned Ofsted to conduct a survey of effective practice in prime contractors management of their subcontractors in order to: inform contracting arrangements for future DWP provision promote and share good practice as part of the DWP s national quality improvement plan disseminate examples of effective arrangements across the network of providers. Between November 2008 and March 2009, inspectors visited 10 prime contractors where previous inspections had shown that leadership and management were good and that performance was improving. Inspectors examined how these contractors managed their subcontractors. They drew their evidence from interviews with the prime contractors and, where possible, with representatives from the subcontractors. They reviewed the findings of all inspections and monitoring visits to DWP-funded providers published between March 2008 and April 2009. In order to include examples of good practice from provision funded by the Learning and Skills Council, inspectors also visited two lead contractors not funded by the DWP: a manufacturing supply chain group and a Train to Gain consortium. 1 Department for Work and Pensions Commissioning Strategy, Cm 7330, TSO, 2008. 4
This review identifies the key factors leading to the successful management of subcontractors. It also includes guidance questions to help contractors evaluate and improve their practice. Key features of effective practice The most successful practice was characterised by: strong strategic leadership by the prime contractors which ensured that all subcontractors had a shared understanding of what was required of them common processes for self-assessment and action planning which ensured that all subcontractors had clear, shared goals for improvement shared management information systems that were aligned closely to the data requirements in the contract staffing structures that had been reviewed and revised to provide appropriate support for the management of the subcontractors effective communication systems and regular meetings to monitor the performance of the subcontractors and to ensure a sustained focus on improvement effective identification and sharing of good practice and the provision of professional development for all staff, including those employed by the subcontractors. Recommendations The Department for Work and Pensions should: highlight and promote the most successful arrangements for managing prime contracts consider the benefits of commissioning a common management information system for prime contractors to use. Prime contractors should: review their approaches to managing subcontractors in the light of the findings of this review use their inspection report and post-inspection action plan to promote improvements among all their partners review their strategies for improvement, for example by using prompts such as the guidance questions at the end of this review. 5
Survey findings Strategic clarity 1. In the most successful prime contractors, leaders and managers were very clear about what they were trying to achieve. They took the time to explain this in detail to all their subcontractors and involved them closely in identifying ways to meet key challenges and achieve high standards. One prime contractor worked with a number of small specialised subcontractors to provide a wide choice of job placements. Good leadership and support, clear direction and regular meetings ensured that every subcontractor felt part of a large team with a common purpose. As a result, they all achieved their developmental goals and the number of people gaining jobs improved considerably. 2. The most successful prime contractors set out high standards in all aspects of the prime contract and defined precisely what they expected of their partners. They conducted a detailed analysis of the standards of current provision across the subcontractors and made clear what improvements each one had to make to meet the requirements of the contract. One prime contractor produced a detailed service level agreement which identified specific expectations and standards for all its partners. To support this, it established a strong performance management system with clearly defined standards and targets. To promote consistency across all the partners, it also introduced a common format for development planning and performance reviews. 3. Some prime contractors had recognised that a lack of clarity about their own requirements led to confusion and poor performance on the part of the subcontractors, as in the next example from a visit to a manufacturing supply chain group. The prime contractor s experience of working in larger partnerships highlighted the difficulties that can result from a lack of clarity. To overcome this, it had worked with its partners to produce a detailed questionnaire that was completed by all parties, independently, at an early stage in the contracting process. The questionnaire focused on the contractual requirements relating to such critical aspects as performance standards, quality, scheduling and logistics. Analysis of responses to it highlighted any differences in perception which could then be resolved to ensure an accurate and common understanding of what was required. 4. A key feature in securing improvement was the use of a common process for self-assessment and action planning by all partners. The best action plans 6
included targets that were specific, measurable, attainable, realistic and clearly laid out to a timescale that was challenging but achievable. Operational effectiveness 5. The most successful prime contractors had established standard systems for collecting and collating data and management information. These were aligned to the requirements of the contract and used consistently by all partners, as in the following example. As part of its service level agreement, one prime contractor supplied each subcontractor with an electronic copy of its information system and gave training in how to use it. To ensure consistency, the data entry requirements for each month were clearly specified. This information was analysed centrally and shared with area managers who used it as a key focus of their monthly meetings with the subcontractors. Performance was regularly analysed in relation to the DWP s outcome targets and to chart the trends in the performance of individual groups. It was also used to identify groups that were under-represented. 6. Effective lead contractors and subcontractors in partnerships not funded by the DWP had also developed an open and transparent approach to gathering management information and reviewing performance against the contract. Subcontractors valued their association and membership of the Train to Gain consortium. They received good levels of support from the lead partner and, through monthly joint operational meetings, were able to share and discuss performance statistics across the group. These could be used as a benchmark for the performance of each partner. 7. The most successful prime contractors reviewed their staffing structures and, where necessary, established new roles to help to ensure the operational effectiveness of their partnerships. In one example, this had led to changes in the arrangements for quality improvement. The prime contractor established a key role to support subcontractors in developing their processes and practices, along with helping to develop their training provision. The support manager and area manager met each subcontractor, usually every five or six weeks, and discussed performance and areas for development. A plan for quality improvement was agreed. The support manager worked with the subcontractor, usually for a period of two to three days each month. Staff working for the subcontractors greatly valued this support. 8. Good communication and open discussion were crucial aspects of successful practice, with high levels of transparency about the performance of each subcontractor. In the best examples seen, monthly meetings between partners reinforced standards and focused on participants progress, performance and 7
quality improvement. This provided an important element of public accountability and also the opportunity to examine any particular challenges the subcontractors were facing. A staff member from the prime contractor chaired most meetings, with subcontractors participating fully as equal partners. The operations group included managers from each of the prime contractor s centres and one from each subcontractor. Outcomes included clear actions to improve performance. Discussions during these meetings included the detailed performance of each programme and each subcontractor. Good informal networks of communication were in place. The prime contractor received copies of any complaints received by a subcontractor. These were analysed to identify any trends across the provision so that any necessary improvements could be made. 9. Frequent and regular performance review meetings, which followed a published timetable and agenda, helped to establish a business-like and well-understood approach to managing operations. Consistency was a key element of highperforming arrangements. In one partnership, all the subcontractors had standard policies, procedures and systems for quality assurance. The contract manager visited each subcontractor individually for a formal monitoring meeting each month. These meetings had a standard agenda and covered performance, improvement plans, health and safety, equality and diversity, customer complaints and feedback, and any other matters. Additionally, the regional manager and contract manager made unannounced visits during the month to monitor delivery, and to hold informal interviews with staff and participants. The regional manager held formal contract review meetings with each subcontractor every six months. Building capacity 10. The most effective prime contractors promoted continuous improvement by sharing good practice with their subcontractors. In some cases, this involved organising job-sharing and job rotation across the partnership in order to disseminate good practice effectively. In others, staff from the prime contractors worked alongside colleagues from the subcontractors to introduce and develop systems and procedures for operating the contract and assuring the quality of what was delivered. 11. In the best instances, staff from the prime contractor paid routine visits to the subcontractors to interview staff and gain feedback on all elements of the provision. They analysed the information carefully to identify what was, or was not, working well and recorded this formally in a joint improvement log which 8
all parties could use to share good practice and reinforce the need for further improvement. 12. Successful prime contractors arranged regular, combined training sessions for their own staff and those from the subcontractors. In this way, they were able to share good practice, discuss common concerns and coordinate planning and delivery. One large national prime contractor conducted joint training events to share information related to the self-assessment report and quality improvement plan. Managers from each of the regions met regularly and provided a network of support to ensure good practice and improvement in the quality of provision nationally. Clearly identifying the areas for improvement and the action plans for achieving these improvements were key elements of good practice. 13. The prime contractors surveyed used a range of evidence to promote improvement and good practice, including Ofsted reports and post-inspection action plans. In the Train to Gain consortium visited, the starting point for the quality assurance process involved a review of the Ofsted reports on all the subcontractors within the consortium. Partners were encouraged to identify and share good practice at monthly joint operational meetings. They also benefited from development activities such as introductions to new aspects by guest speakers. Safeguarding, for instance, had been the subject of a recent presentation. The lead provider had developed a web portal that contained all required forms and records. It also kept subcontractors up to date with information on changes or new developments. 14. The most successful prime contractors promoted participation in crosspartnership workshops and staff training events, as in the following example. The prime contractor s staff training activities involved all subcontractors. The topics included equality and diversity, good practice workshops on lesson planning, differentiation, and preparing for the observation of teaching and learning. These activities were well attended and supported local managers in their improvement initiatives. Subcontractors accessed the appropriate lifelong learning sector s initial teacher training qualification as part of the prime contract arrangements for improvement. Further training initiatives included awards in disability awareness. 15. In another example, a prime contractor made considerable progress in raising the standard of teaching and learning. It arranged for an external team to work alongside its own staff on joint observations of learning sessions. All the tutors received detailed feedback and the prime contractor was confident that teaching improved as a result. For example, it reported that tutors adopted a wider variety of approaches than previously and reinforced learning by using 9
information and communication technology and relating what was taught to real-life contexts. Managers and tutors were supported in producing action plans for improvement which were monitored thoroughly. Relevant professional development was provided for all staff, including those working for the subcontractors. 16. Successful training organisations in other sectors also promoted the development of expertise among partners. One lead contractor had high levels of expertise in business improvement techniques which it used particularly effectively to train and develop subcontractors staff. Through practical problem-solving activities, they developed skills in value stream mapping that enabled them to identify which areas would give the greatest improvements to a process from beginning to end. 2 17. The most effective prime contractors placed a considerable emphasis on teambuilding and developing a shared understanding of common objectives. In addition to organising training events, one provider held regular meetings for all subcontractors. This improved the subcontractors understanding of each other s work so that they were in a better position to refer clients to the most appropriate service within the group. Such approaches, together with regular telephone calls and email exchanges, ensured excellent communication between the provider and the subcontractors. 18. The most successful prime contractors focused on sustaining improvements over time, for example by taking a more direct role in driving change across the whole partnership. One provider identified that, in some of its subcontractors, after an initial surge of enthusiasm, the focus on improvement diminished. This was partly because of a lack of skill in managing change. To overcome this, the provider arranged for a member of staff within each subcontractor to be trained to take on the role of change agent and to ensure that strategies to improve performance were firmly established within each organisation. 2 Value stream mapping charts what is necessary in order to provide what a customer needs, in the sequence in which activities need to happen. 10
Recent improvements in the management of subcontractors 19. Inspections conducted since 2007 have shown that a recurring weakness among providers has been the management of subcontractors. Subsequent monitoring visits have shown that most had improved in this area. The measures leading to these improvements included: revising contracts to ensure that the expected outcomes and quality of provision were clearly defined introducing a common framework for self-assessment and action planning for all subcontractors producing standard operational manuals to ensure common practice across all subcontractors developing more formal monitoring and quality assurance arrangements, including monthly meetings with subcontractors ensuring that performance data were shared across all agencies monitoring subcontractors progress in matching participants to suitable work placements. Conclusion 20. There is no single solution which can be guaranteed to bring about improvement in the management of subcontractors. Where it is done effectively, it is frequently as a result of a combination of measures which are matched well to the local circumstances of the participating organisations. This small-scale review has identified a range of commonly found features in successful practice, from which providers may select those likely to be most beneficial in securing improvement in their own context. 21. Prime contractors might wish to review which, if any, of the following are required in their organisations and take action accordingly. Prime contract health check Do written agreements with the subcontractor detail expected performance and monitoring arrangements? Are the following aspects identified clearly: roles and responsibilities for achieving high standards and improving participants experiences the parts of the programme for which the subcontractor is responsible expected qualifications and experience of the subcontractors staff measurable performance objectives/targets requirements for promoting and monitoring equality of opportunity health and safety requirements access to reports from external bodies such as external verifiers 11
financial monitoring and review details arrangements for discussing participants progress with the subcontractor arrangements for monitoring the quality of the subcontracted provision arrangements for self-assessment, action planning and continuous improvement the expectation to take part in common self-assessment activities and external inspection? Are there clear systems for collecting, collating and analysing data and for monitoring performance against explicit criteria? Are relationships good and communications effective, and is there regular formal and informal contact between all partners? How does joint staff development and the sharing of good practice across the partners contribute to improving performance? 12
Annex. Contractors participating in the survey DWP Prime Contractors Business Employment Services Training Ltd (Leeds) Career Development Group (Hampshire and Isle of Wight) Future Skills Dudley Norfolk and Waveney Enterprise Services (Norwich) PeopleServe (formally Biscom Resource Management Limited) Pertemps Employment Alliance Steps to Work (Walsall) Ltd TBG Learning Limited (TBG) TNG Workfirst (Coventry and Warwickshire) Lead contractors from other sectors Society of Motor Manufacturing and Trading (SMMT) Industry Forum Worcester College of Technology Three Counties Train to Gain Consortium 13