.....by Emily Jolley, Director ACEVO Solutions
Note: Since writing this blog, Emily has left ACEVO Solutions to become Business Development Manager at Clinks members pact
Community Rehabilitation Companies (CRCs) are central to the reforms underpinning the Transforming Rehabilitation (TR) programme, but it’s not always obvious to supply chain partners what the impact of these organisations could be.
Quick notes on CRCs
- 21 Community Rehabilitation Companies have been formed following restructure from 35 probation trusts to CRCs aligned to the TR contract package areas and a National Probation Service.
- CRCs will be sold to successful TR bidders for a nominal sum that will be adjusted to take account of any positive or negative assets the company holds. This is the point of the procurement process referred to as ‘share sale’.
- CRCs will hold the TR contracts and CRCs will be owned by the successful TR bidders.
From a subcontractor’s point of view, they’ve submitted Expressions of Interest to Tier 1 bidders who may or may not offer them a contract. But who would that contract be with? The Tier 1 organisation, or the CRC? To what extent may commercial wrangling over CRC share sales hold up final supply chain negotiations? You might want to check this with your local Tier 1s; they may or may not know the answer.
One reason for establishing CRCs as distinct companies that are to be sold to preferred bidders is to sidestep some TUPE implications for Tier 1s. This doesn’t mean that TUPE won’t hit subcontractors however. Check out Clinks’ advice on TUPE and other legal issues around TR and take legal advice before you consider signing a contract.
It’s a fair assumption that the Ministry of Justice (MoJ) would like to see CRCs invested in and developed, for example by CRCs taking on additional complementary contracts. However, what are the incentives to do this?
- Would additional contracts sit with the CRC or the Tier 1?
- What would happen to those contracts when TR contract terms end?
- Would they transfer to a new owner following a re-tender?
- If the value of CRCs has been increased significantly by Tier 1 organisations by the end of the contract term will this make some CRC’s unviable to bid for (and buy) thereafter?
- What would happen if the CRC were to be wound up? What would be the implications for supply chains, let alone for future service delivery?
I’m sure it’s clear to you that I still have a plethora of questions. Unfortunately the answer to these questions is we don’t know. Tier 1s may have made some assumptions which they may be willing to share with you, but the guidance from the MoJ at this point is limited.
I was privileged to sit in on an early dialogue session with one Tier 1 bidder and MoJ officials and asked what would happen to CRCs, and the contracts they hold, at the end of the proposed TR contract terms. At that stage the MoJ officials didn’t know. I wonder whether this has been thought about since. As these are contracts of up to ten years, you might want to be thinking about the long term risks and realities.
The Transforming Rehabilitation programme has been ambitious, and has affected a huge amount of change within tight timescales. It is perhaps inevitable then that there have been shortfalls in planning and execution of the programme to date. Here’s just one indication of that; at a recent training event provided by the Cabinet Office on the new EU procurement rules (to be implemented this year... consultation out now!) the trainer noted that if a procurement team receives too many clarification questions it’s an indication that the procurement itself is flawed. By the time TR bids were being submitted, the log of clarification questions submitted by bidders to the MoJ procurement team ran to over 2,000!
So who cares about CRCs? Well, probation staff do. They’ve just lived through one massive restructure and staff consultation period, and those allocated as CRC staff will be expecting more of the same following share sale. In the meantime everyone else is so focussed on the on-going bidding (re-submissions were received by MoJ on the 5th of September which they’re currently evaluating) that the nature of the CRCs and their implications for future service delivery are probably at best a secondary concern. But we should all care about how the commercial structures that sit behind TR contracts could affect the provision of critical public services.
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