Analysis - Pathways to Work results

With confirmed contracts on Phase 1 and preferred bidders on Phase 2, it's about time we took a look at how things have panned out for the various bidders, and what it means for the industry.

Phase 1 Results
A consortium including Reed, Tomorrow's People and others did not clear the pre-qualification stage for this round.

Districtsort iconWinnerMin qualityMax qualityMin priceMax price
West YorkshireA4e4912512803106
South East WalesA4e10014114133264
NottinghamWorkDirections6112612503245
North & Mid-WalesA4e9814114383229
Lincolnshire & RutlandTNG6115214133249
Lambeth, Southwark & WandsworthWorkDirections6014114163529
Greater ManchesterShaw Trust5614013313097
Forth Valley, Fife & TaysideTriage Central4711812973255
Edinburgh, Lothian & BordersWorkDirections3911713933248
East & West NorfolkShaw Trust5713611853261
Devon & CornwallA4e9213313403105
City & East LondonWorkDirections5713913633497
Central LondonWorkDirections5714115003555
Black CountrySeetec641209992652
Birmingham & SolihullWorkDirections4714811902719

Phase 2 Results (confirmed December 07)
A4e did not clear pre-qualification for this round. Customer choice districts have had their total value split in half for each of the winners to reflect the likely individual contract value.

Districtsort iconWinnerContract valueMin qualityMax qualityMin priceMax price
West of EnglandWorking Links1340000021532790
The MarchesRemploy144000006412020952720
Surrey and SussexRBLI112000006313214533397
Surrey and SussexInstant Muscle112000006313214533397
South and South East LondonReed in Partnership210000005612422232724
North East Yorkshire and The HumberWorking Links100000005811913963160
North East Yorkshire and The HumberCarter & Carter100000005811913963160
North and North East LondonReed in Partnership231000007413422382779
Leicestershire and NorthamptonshireWorking Links180000009715419323132
KentRBLI1870000011014517552604
Hampshire and The Isle of WightShaw Trust179000006412020562561
Gloucestershire, Wiltshire and SwindonWorking Links126000007512921403132
Coventry and WarwickshireWorking Links101000009214519363114
Cheshire and WarringtonTNG53000005813614464135
Cheshire and WarringtonCarter & Carter53000005813614464135
Cambridgeshire and SuffolkReed in Partnership149000008913122042601
Brent, Harrow, Hillingdon and West LondonReed in Partnership183000007512621643127
Berkshire, Buckinghamshire and OxfordshireShaw Trust163000004812024943119
Bedfordshire and HertfordshireShaw Trust143000004612023383037

Charity begins at home
The biggest turnaround in the second phase results is in the balance of charity and private sector providers. In the first round, charities got 2 out of 16 contracts. This time, they've won 7 out of 19. Following on from the barrage of negative publicity launched by charities after the first round, and the promises made by Peter Hain that the DWP was committed to working with them, this isn't exactly surprising. However, given that both rounds were awarded through open and competitive tendering, with ostensibly no room for political influence, what changed between the first and second rounds?

There are two possibilities: Either they wrote better bids this time, or they benefited from portfolio management. The likelihood is that both of these played a role.

Better bidding builds business
Going into Phase 1, most charities had very little experience of welfare to work tendering, whereas winning (and delivering) government contracts through this medium is the primary income generator for their private sector competitors. The advantages of perceived trustworthiness and public-spiritedness, vast experience in helping people with disabilities and health conditions, and synergies with existing delivery counted for naught if they could not be effectively communicated in a document of 45 pages, with strictly defined parameters and marking criteria.

In Phase 2, charities had the experience of Phase 1 to motivate and guide them - they weren't going to repeat the TUPE mistake that was rumoured to have cost them so dearly. Remploy alone were rumoured to have 20-30 people working full time on bids. Additionally, some private organisations (WorkDirections?) had won so much work in Phase 1 that they may have lacked financial capacity to take on any more contracts.

A fair crack of the whip
Although tendering must not be subject to outside interference, it is acceptable to consider the wider implications of awarding contracts, rather than taking the best bid. A technique called portfolio management is sometimes applied in procurement to reduce risks and stop markets from becoming imbalanced. In this instance, not awarding enough contracts to charities would damage their ability to participate in future welfare to work contracts, thus weakening the government's 'contestability' agenda.

Update 24/10/07 - This document on the DWP website is a study of in-house procurement practices around the issue of competitive neutrality. 'Market Development and taking into account differences', section 6 page 14, clearly states that the DWP wish to 'level out' differences between public, third and private sector suppliers, and are exploring ways of doing so 'without contravening legislation'.

The big winners
When looking at who won what, it's important to remember that prime contractors for Pathways to Work often subcontract large proportions of delivery to other organisations. From a first analysis, the top four organisations in terms of total contract value appear to be:

  1. Reed in Partnership
  2. Shaw Trust
  3. A4e
  4. WorkDirections

The future - can they deliver?
With hundreds of millions of pounds of public funding going into very large scale contracts, the success or otherwise of Pathways to Work will strongly influence decisions about opening up other aspects of Jobcentre Plus delivery in this way. And hopefully, they'll help lots of people with health conditions, who would otherwise have languished on Incapacity Benefits until death or retirement, to move back into work.

One possible fly in the ointment is around the job entry and sustainment targets that the newly selected providers will face. The base targets are substantially higher than Jobcentre Plus has been able to achieve with in-house Pathways delivery, and given the competition on price in the bids, it's very likely that the payment per customer will also be lower. If providers hit target, they will be doing far better than their Jobcentre Plus counterparts have managed. It does raise the possibility of a repeat of the New Deal performance issues we looked at here.

We'll be refining this analysis as we receive further information and feedback. It takes a while for Freedom of Information requests to come through, but when they do we should be able to give full details of bidding throughout the entire process.

Agree? Disagree? E-mail me your comments, and I'll publish them on this page.

Comments

Any comparison between Pathways Providers and DWP performance is likely to be incorrect and to give a false view of the real situation.

Since 2001 DWP staff have been under instruction to refer any job ready clients or those clients closest to the labour market to private providers running New Deal for the Disabled. Neither have they had access to the kind of funding (Return to Work Credits) envisaged in the current program. This situation has allowed DWP staff to concentrate on the "harder to help" customers and those with signifant health and social problems.

With the rollout of Pathways to Work this situation will alter greatly. Those clients closest to the labour market (ie likely to move into employment within the next 12 months) will be screened out and will not be referred to the Pathways providers.
I should also mention that DWP has been running its own "Jobcentre Plus-led Pathway to Work" project,in some pilot areas. This has had access to the kind of fincancial incentives that the current Pathways programme will have and will provide a much fairer comparison on performance. On current evidence the private provision is falling far short----mainly due to lack of experienced staff within their organisations and the fact that they have subcontracted the provision to much smaller organisations.

It remains to be seen exactly what and how this welfare to work package will be delivered by the private sector, at what level of performance and at what fincancial cost. It must, however, result in a significant reduction in the number of people claiming sickness related benefits to be seen to be worthwhile.

Note to the user who submitted this comment - you put an invalid e-mail address when you joined the site! Message me or create a new login to sort this out.

What is the source of this data? Are the contract values available for Phase 1? Do the contract values for Phase 2 relate to the 3 year period? What does min and max quality mean? Do providers of Pathways to work typically use subcontractors?

The winners have been publicly announced. Most of the remaining columns came from a FoI request, and as such have that strangely unhelpful quality that FoI requests seem to generate.

Min and max quality are the lowest and highest quality scores for bidders in each area. Min and max price are the lowest and highest price scores for bidders in each area. Contract Value is total contract value assuming no extension of contract length and on-target performance.

Pathways providers typically use subcontractors for specialist delivery, such as the Condition Management element. Specialist disability support primes may also use more employment-focused providers, although I have no information to confirm this.

As the first volunteer for [provider] Pathways to work, in [location]. I"slipped through the net" from the DEA Supervisor at the local J.C +.
30 years as an aircraft engineer, a broken an ankle 2 years ago, made worse by surgeons error,now registered disabled.
2 Years later I am still waiting for my initial inteview, even after I have proactively arranged meetings and formally complained on their official web page.

A calaogue of errors,more like lies deciet and ineptitude, combined with a lack of product knowledge.

Yet no one seems accountable or accepts resposibility for their organisations failings, for a system that is inherantly flawed.

Not bitter or twisted, just ignored and let down, contrary to all the self fulfilling propaganda and booklets on their abilities.

I will overcome my disability and find a new profession, but it will not be thtough any Government organisations intervention, if past actions dictate.

Regards
Joe Dorrian

[Moderation - Hi Joe. We generally don't let these kind of criticisms get associated with particular providers. This is partly for legal reasons, but also because it creates an incentive for providers to trash each other. Anybody could write anything without any way of checking validity]