I don't know about anyone else, but I've found it a real task to keep on top of all the new jargon and acronyms flying around since last week's Transforming Rehabilitation announcements and accompanying documents.

I appreciate most of our Members are busy doing what they do best (delivering vital services), so this short blog just aims to decipher some of the new language for you. We’ve covered the context and analysis elsewhere in our blogs, articles and briefings, so I'm going to try to keep this really basic.

If you've got any to add, or I've missed any, please use the comment facility at the bottom to share your knowledge and wisdom!

Community Rehabilitation Company (CRC)

Following the probation service split, CRCs will manage the lower and medium risk offenders, referring cases to the National Probation Service where there's an escalation of risk. CRC's will be run by Tier 1 providers, who are likely to include private sector organisations, large charities and probation mutuals. CRCs, therefore, will commission you if you’re engaging with Transforming Rehabilitation.

National Probation Service (NPS)

Following the split of the probation service, the NPS will oversee work with higher risk offenders. NPS will be run by NOMS.

Target Operating Model (TOM)

The TOM sets out how MoJ envisage the probation split working in practice.

Tier 1

Tier 1 is the name given to the prime providers, who will compete to run the CRC's. Tier 1 providers will commission services from Tier 2 and 3 organisations.

Tier 2

Tier 2 organisations will sub contract directly with the Tier 1 provider, and will probably have long(ish) term contracts, providing some security. Tier 2 is most likely to be medium sized charities and social enterprises who have the capacity and resources to work under contracting (and probably payment by results) arrangements and have a regional or sub-regional geographic delivery model.

Tier 3

Tier 3 will most likely be smaller, local organisations. Originally it was assumed Tier 3 organisations would work at the 'bottom' of the supply chain, with their services bought from Tier 2 organisations on 'spot purchase' arrangements. Recent developments, however, suggest that Tier 3 organisations will be grant funded directly by Tier 1 organisations, eliminating financial risk and deferred payments. Link: http://www.justice.gov.uk/downloads/rehab-prog/competition/tier-2-3-registration-process.pdf

Tier 2 and 3 registration

Registration on a new MoJ database will mean that if Tier 1 organisations include you in their supply chains they will have to use a standard partnership agreement and won't be able to ask you to partner with them exclusively. This will provide some protection in your contracting arrangements. Link: https://consult.justice.gov.uk/digital-communications/931f5f69

Probation mutuals

Earlier in the summer, groups of probation staff set up mutuals to enable them to bid as Tier 1 providers. Link: Mutuals Information Service

Expression of interest (EOI)

This common commissioning term defines a process in the commissioning cycle in which an organisation formally expresses an interest in bidding for a contract, usually by way of a short application form.

Pre-Qualification Questionnaire (PQQ)

This common commissioning term defines the process by which interested organisations complete a detailed form, set against the criteria of the contract, which establishes whether they are suitable to enter the full competition. This filters out unsuitable organisations, saving all parties time and effort.

Invitation to Tender (ITT) / Invitation to Negotiate (ITN)

Organisations that successfully pass the PQQ stage are then invited to tender for the contract. This will involve submitting the formal contract application.

Principles of competition

This document, released last week, provides guidance from MoJ on how Tier 1 providers can engage 'fairly' with Tier 2 and 3 providers. Link: http://www.justice.gov.uk/transforming-rehabilitation/competition

Supply chain

Building their supply chain is the process where Tier 1 providers will begin speaking to Tier 2 and 3 organisations so they can demonstrate the organisations they plan to work with to achieve the outcomes they will state in their contract applications.

Bid candy

This is the term used when Tier 1 organisations speak with potential Tier 2 and 3 organisations, name them in their supply chain as being ready, willing and able to help them achieve their goals, but then don't actually work with them when the contract is won. (Link: Third Sector article on charities as bid candy)

Spot purchase

Spot purchase is the ad hoc and unsecured purchase of services, usually by Tier 2 from Tier 3. It doesn't bring the guaranteed income over a period of time that a contract does, and as a result doesn't carry as much risk but also gives organisations less security.

Straw man

Straw man was the document the MoJ released in the summer which set out their proposed payment structures and mechanisms. The term ‘straw man’ refers to a document put out to provoke discussion about the flaws and disadvantages of an idea, with the aim of creating solutions and better ideas. Read our response to the MoJ’s straw man document here.

Payment by results (PbR)

A contracting arrangement whereby a provider is only paid in full if they achieve pre-agreed outcomes of their contract. This usually yields greater profit, but carries greater risk. In most cases only part of the contract is subject to PbR.

Fee for service

Tier 2 organisations have been arguing for a fee for service, paid up front, to cover start up and running costs, and to off-set the risk attached to working on a PbR basis. Organisations with low capital/reserves (who make up a large proportion of potential Tier 2 providers) would most likely be excluded from competing on PbR terms without a fee for service or similar upfront payment.

Contract Package Area (CPA)

CPAs are the geographical areas that are being put out to tender. There are 21 in all, each carrying a different contact value; with London being the highest at £58.9m – £72m and Norfolk and Suffolk being the lowest at £10.5m – £12.9m. Here’s a map showing areas and contract values:

Market cap

Tier 1 providers have been told they can’t bid for more than 25% of the total value of all CPAs, meaning, for example, if all the CPA values added up to £100m, no organisation would be able to bid for more than £25m worth. This has been reduced from 40% in previous communications.