COMMITTEE FOR EMPLOYMENT AND LEARNING

OFFICIAL REPORT

(Hansard)

Steps to Work

8 October 2008

Members present for all or part of the proceedings:
Ms Sue Ramsey (Chairperson)
Mr Robin Newton (Deputy Chairperson)
Mr Paul Butler
Rev Dr Robert Coulter
Mr Alex Easton
Mr David Hilditch
Mr David McClarty
Mrs Claire McGill

Witnesses:
Mr Brian Doherty ) Departmental Solicitor’s Office
Ms Patricia McAuley ) Department for Employment and Learning
Mr Michael Watson ) Department of Finance and Personnel

The Chairperson (Ms S Ramsey):
We now move to the update from the Department for Employment and Learning and the Central Procurement Directorate (CPD) on the Steps to Work procurement issue. I take this opportunity to welcome the officials. Numerous papers have been tabled for members.

The Committee Clerk:
Four papers have been tabled today. One is a letter from the Minister to the Chairperson regarding the procurement exercise. We sought assurances from him that he was satisfied with the procurement, and the letter is in response to that.

Another paper is an extract with regard to procurement from the Committee’s first report on Training for Success. There is also a letter to the Chairperson from Alex Attwood that outlines some questions that he would have asked had he been present. Those are for members to use if they wish; otherwise, they will be sent to officials for answer.

The fourth document is an extract from the Steps to Work tender document that specifically deals with the evaluation criteria and weighting, to which members might want to refer. It indicates what the criteria were for those who responded to the tenders, and how they were weighted and broken down.

The Chairperson:
OK. Members also have some background on the issue of the Steps to Work programme. It will bring members up to speed and act as a reminder. We will go straight into the issue and we will open it for questions and answers, but we need to be very sensitive to ensure that we do not talk about specifics; only the general issue of procurement and the Department’s role in that.

Ms Patricia McAuley (Department for Employment and Learning):
If members are content, I will provide a very quick update on where we are at the minute, and I will then be open to questions. I welcome the opportunity to come here. I know that the Committee and individual members have concerns about Steps to Work and the process. I hope that we will be able to reassure the Committee on a number of those concerns today.

The Department for Employment and Learning’s focus is on providing the service to the clients. That is where we come from in all of this. We have been reviewing our adult return-to-work provision for approximately two years, and we started pilots of Steps to Work in four places in April 2007. It is a more flexible approach that is better tailored to help individuals overcome barriers to employment. In reviewing the process, we undertook a major rationalisation of contracts and delivery methods in order to reduce the Department’s overheads and create more viable contracts. Those were issues that concerned the Committee in its review of Training for Success.

The programme is very much demand led. Contractors must adjust resources in relation to numbers. In preparation for the contracts, the Department and CPD held three information sessions in January. The meetings, which were open to anybody interested in becoming a provider, explained the nature of the new programme — how the tendering process would operate, the fact that there would be 10 areas of operation, and so on.

In early April, the Committee heard how the process would be taken forward. At that meeting, and based largely on its work in relation to Training for Success, the Committee raised two specific concerns — about the confirmation of subcontractors and the availability of premises.

The Committee also said that paper submissions should not be accepted from lead contractors; that confirmation should be required from subcontractors. Those concerns were taken on board, and the tender documentation was amended in order to clarify several points. Prior to awarding a contract, the lead contractor is asked to confirm the identity of the subcontractors, who themselves are required to submit signed documentation. Contractors also have to confirm that they have suitable premises to which people could be referred from the date of the start of the contract. They have been granted four weeks to enable them to become fully operational. Because this is a programme that builds up, not everything has to be available from the first day of operation. However, premises must be available in order that people have somewhere to be referred to.

The Committee also raised the issue of track records. For tendering organisations that do not currently deliver in Northern Ireland, colleagues in England and Wales were consulted, because the organisations involved had contracts with, for example, Jobcentre Plus and the Welsh Assembly. Therefore, performance levels on existing contracts were checked.

The Central Procurement Directorate led on the process. As a centre of procurement excellence with a quality-assured procurement process, CPD adheres to the 12 principles of public procurement in Northern Ireland that were agreed by the previous Executive in 2002.

Tenders were received and evaluated by a panel of officials from CPD and the Department. Preferred bidders were notified in August and asked to confirm — by 8 September — the subcontracting arrangements and, where appropriate, the premises that they had obtained. By that date, eight preferred bidders had complied with the required conditions and were awarded contracts in the relevant areas. The other two failed to meet the conditions. The contract and procurement process is continuing in those areas.

Contracts are now operating in eight areas. Visits have been made by the Department’s contract management staff to most of those contractors and to their premises. In all cases premises are operational, and many of the organisations are taking referrals from the local jobs and benefits office or jobcentre. In some cases, and in some areas, subcontractors’ premises are being used for referrals until the lead contractor gets his or her own premises.

The process in the other two areas is ongoing, and, therefore, we have put in place contingency arrangements: for example, we extended the existing New Deal contracts so that clients who are eligible for New Deal will have somewhere to go. We also made arrangements to enable clients who prefer the Steps to Work programme over New Deal to move to an area in which the former is being delivered to take up the provision. Throughout the process, our focus remains on the clients and on the provision of services to them. As with other contracts, the Department will continue to carry out monitoring visits to the contractors. In due course, the Education and Training Inspectorate will also carry out inspections of the provision.

That brings us up to date, and we will do our best to answer the Committee’s questions. However, as you mentioned, Chairperson, it might not be possible to answer all the questions, because the process is ongoing in two areas. There may be issues in the existing eight areas that we cannot discuss because to do so could prejudice, or be seen to prejudice, the outcome of the process in the outstanding two areas. Also, some information may be commercial and, therefore, cannot be disclosed at this stage.

The Chairperson:
We will not be too specific. I am conscious that the Committee has also played its part in the process, and I want to go through some of the points that you raised. It may be useful, if you do not have certain information with you today, for you to send it to the Committee.

You talked about confirmed bidders and the awarding of contracts, and you said that premises are available in most cases, but that the premises of subcontractors are being used in some cases. You also said that in most cases visits have taken place. Will you explain what you mean by “in most cases”? At this stage of the game, if only a small number of contracts have been awarded, and particularly given the concerns of the Committee, visits should have taken place in all cases. I would appreciate an outline of that situation.

You referred to using your contacts and obtaining information from colleagues in England and Wales. I would also appreciate a copy of their responses. I remember that, at a previous Committee meeting, the permanent secretary also mentioned that information on preferred bidders is sought from other areas.

The Department has a copy of the Committee’s report on Training for Success, in which one of our concerns was about preferred bidders. Are you convinced that the things that the Committee recommended should be put in place by the Department have been included in the procurement process? The report recommends that the Department:

“provides a programme of support to local prospective training suppliers aimed at improving their understanding of the tendering process particularly the tender requirements when competing at a pan-European level”.

Are you convinced that that is happening, following the problems with Training for Success?

Has the Department received any complaints on the tendering process? Again, if the Committee cannot get that information today, I would appreciate your sending it on.

I will have to be careful here, so please stop me if I have overstepped the mark. There is also an issue around the two areas in which the specified conditions of the contract have not yet been met, and where the tendering process is ongoing. Have extensions been granted to those contractors to allow them to put the required conditions in place? If you are saying that once the contracts and other issues such as premises have been agreed, and that four weeks later everything is supposed to be in place, does that mean that there is another extension to the time frame set by the Department?

Ms McAuley:
I can obtain information for you about the visits. As of last Friday, four of the six lead contractors had been visited. I am aware that in two areas, subcontractors’ premises are being used for the time being. Some of the contracts cover a wide geographical area. For example, there is one in the north-west that covers Strabane, Omagh and Dungannon. When I say that subcontractors’ premises are being used, I do not mean that they are being used across those areas, but perhaps in one of those towns. I will get that information for the Committee.

The Chairperson:
Did the contracts state that there would be premises in those towns?

Ms McAuley:
Premises are available for people to be referred to. They are to be fully operational by 17 October, but, in the meantime, subcontractors’ premises are being used so that individuals can access the service.

The Chairperson:
Does that mean that someone in Strabane might have to go to Omagh?

Ms McAuley:
No. That person will be able to go to the subcontractor’s office in Strabane, and a representative of the lead contractor will be available in that office to deal with any queries. The premises will not display the brand name of the lead contractor; the premises are owned by the subcontractor.

I will provide the Committee with the information from GB.

There are two sides to the question of providing information for potential bidders. We have done all that we can in the context of European law. We cannot provide briefing or assistance to one company that we would not give to another. We have run information seminars for interested parties. The majority of attendees at those seminars, which took place in January, were Northern Ireland-based providers. More generally, CPD runs seminars for potential bidders across Northern Ireland to provide information about the procurement process.

On the subject of complaints, we have received some correspondence in which questions have been asked about the tendering process.

In the two areas in which contracts have not yet been awarded, the companies concerned have not been granted time extensions in order to meet the initial conditions of the contract. We have gone back to those organisations. They were to provide us with x by 8 September; in eight cases that happened, and in two cases it did not. We awarded eight contracts, but declined to award the other two. We have not told them that they can have another four weeks to meet the conditions. We have told them that we will re-examine the process and reassess their bids. In one area, we have asked for bids to be resubmitted so that we can have another look at them.

The Chairperson:
I agree with that. You said that bids are resubmitted — does everyone resubmit their bids?

Ms McAuley:
Everyone who submitted an initial bid was asked to resubmit it.

The Chairperson:
I want to go back to the Committee’s report on Training for Success. I understand that you cannot give someone a leg up, and I would not expect you to do that, but I think that you need to read the Committee’s report again. It recommends that the Department:

“provides a programme of support to local prospective training suppliers aimed at improving their understanding of the tendering process particularly the tender requirements when competing at a pan-European level”.

Therefore, I am not talking about one specific contract. Has the Department accepted our report?

Ms McAuley:
I can only talk about what happened in relation to Steps to Work, because I only have information about that. We provided potential bidders with information on how the process would operate, the contract areas, and how it would all be taken forward.

The Chairperson:
I would also appreciate that information.

Did the assessment panel take any notes when the tenders were being assessed at evaluation stage?

Ms McAuley:
I do not know.

The Chairperson:
Will you find that out?

Ms McAuley:
Yes.

The Chairperson:
People have contacted me about the matter, and I want to get to the bottom of it.

Mr Newton:
The Chairperson made the point about the programme of support for local prospective training suppliers — does the Central Procurement Directorate have a programme in place, outside of Training for Success, to enable local companies to make bids for contracts advertised Europe-wide?

Mr Michael Watson (Department of Finance and Personnel):
Invest NI has a series of programmes that are aimed at encouraging Northern Ireland companies to try to market abroad. In fact, Invest NI organises visits to other European countries to identify and focus on business opportunities there. CPD does not run such a specific programme, but it participates in a wide range of programmes that are aimed at assisting local small and medium-sized enterprises and, particularly in recent years, the social economy sector. In fact, we have written a guide and attended workshops that are run by local councils, InterTradeIreland and some European funding initiatives.

We have two- or three-hour slots at those workshops, and we advise companies on: how European procurement works; where opportunities for business can be sourced; the various journals where they are advertised; how to screen those journals to suit themselves; the typical structure of a tender document; how to prepare a tender submission; what an evaluation panel looks for in a submission; how a submission might be evaluated; and how to receive feedback and use it to progress for future opportunities. We target a wide audience, and we welcome the opportunity to do that. We do not specifically target individual companies — we do it more publicly.

Mr Newton:
Were those seminars run specifically for the Steps to Work programme?

Mr Watson:
Three information seminars across the Province were run specifically for the Steps to Work programme. The Department gave an overview of the programme, how it had changed and what the Department expected. We gave an outline of the review of the contract model that had taken place, and of the need to rationalise the supply base to make it more efficient from the Department’s perspective. I then gave an overview of how the tendering process would work. I talked about what information we would look for, about not making assumptions about the tender, about the need to be innovative and creative in a tender submission, and about how the evaluation would take place.

Mr Newton:
And those seminars took place in three centres throughout the Province?

Mr Watson:
The seminars took place in Armagh, Belfast and in Limavady in the north-west.

Mr Newton:
Were you happy with the response to the seminars and the attendance at them?

Mr Watson:
The first two events were well attended. The last one tailed off, but that may have been because people had travelled to the seminars in Belfast or Armagh. [Interruption.]

The Chairperson:
Hearing that mobile phone ring should remind everyone to check that their mobile phones are off.

Mr Newton:
I missed the start of the meeting when the parameters of the discussion were set, so forgive me if I touch on an issue that is outside those parameters.

I understand that the word “recontracting” was used in information on the applications for the tendering process. However, my understanding is that Steps to Work is a brand new contract. Is that correct? Were you comfortable with the word “recontracting” being used in the documentation?

Ms McAuley:
I was comfortable with the word. We were recontracting for adult return-to-work provision in that, until that point, the New Deal programme was available. Although Steps to Work is a new programme, it encompasses what was contained in New Deal. Therefore, in that sense, we were recontracting for the adult return-to-work provision.

Mr Newton:
Can you see how someone reading that word might think “Why should I apply?” or that there would be a bias towards someone who had previously held the contract?

Ms McAuley:
I do not think that people should have read that into the situation.

Mr Newton:
Do you think that I am stretching it a bit by saying that?

Ms McAuley:
Yes, I do. I do not think that people would have thought that, particularly given that quite a large proportion of our existing providers attended the information seminars in January. Everyone was very well aware of how the process would work.

Mr Newton:
Are we allowed to talk about the selection of the panel that made the assessment?

Ms McAuley:
At this stage, I am prepared to say only that it comprises officials from the Central Procurement Directorate and the Department. The same panel will be considering the tenders in the other two areas, so I would prefer not to give that information to the Committee at the moment.

Mr Newton:
OK. Are you satisfied that that panel is robust enough to withstand any challenges?

Ms McAuley:
Yes.

Mr Newton:
Are we allowed to know which two contracts have not been awarded at this stage?

Ms McAuley:
I can tell you the areas involved: Foyle, which is essentially Derry; and north-west, which covers Limavady, Coleraine, Magherafelt and Cookstown. The contracts for all the other areas have now been awarded.

Mr Newton:
Are you happy enough that there is no perception that extensions — if I can use that word — have been granted in those two areas that would place one or other of the tenderers in a favourable position?

Ms McAuley:
The Department’s position was that, in those two areas, the contract conditions had not been met. In other words, we were not able to confirm that subcontractors were in place and that premises would be available from the date of the start of the contract. We did not extend the timescale to enable that to happen — we have gone back to try to get provision in those areas.

Mr Watson:
In the north-west, we have withdrawn preferred bidder status from the organisation concerned for not being able to secure agreements from all subcontractors. In that case, we have been able to revert to the next bidder, whom we have asked for confirmation of subcontractors, which we have received. Unfortunately, however, a complaint has been made regarding that area.

Ms McAuley:
There is potential for a legal challenge with regard to the north-west area, so we are not in a position to award the contract for that area. In the other area, we asked the organisations that had initially made bids to review their bids and resubmit them.

Mr Watson:
In the Foyle area, we withdrew preferred bidder status from the same organisation for not being able to secure its subcontractors’ agreement. Unfortunately, the assessment of the other tender had scored poorly on several criteria, which indicated that the proposal on the table — their offer to provide services in that way — would not meet the Department’s requirements. Therefore, we were not prepared to make an award to that organisation either. We did not feel that it was worthwhile going back to the market after such a relatively short period to see whether there were any other bidders. We have given both organisations their scores and comments from the evaluation panel, and we asked them to reconsider those strengths and weaknesses and to resubmit proposals, so that we might identify a tender offer that will deliver value for money.

Mr Newton:
Have you received more complaints than usual about the process?

Mr Watson:
To date, we have received four complaints. Two of them were independently investigated, but there was no finding, and they were not upheld. One was withdrawn, and the last was not a complaint about anything that the Central Procurement Directorate or the Department have done, and it is being investigated elsewhere.

Ms McAuley:
Those were the four formal complaints that we received, but, in addition, we have received quite a few letters from organisations and others about the process.

Mr Newton:
Are they not classified as complaints?

Ms McAuley:
Not in that sense. Most seek information about the process, or how it was undertaken. They are not complaints in the sense that people complain to the Central Procurement Directorate about a particular outcome or process.

Mr Newton:
Have you received a higher-than-usual volume of feedback?

Ms McAuley:
We have received a substantial number of letters, yes.

Mrs McGill:
I welcome all three witnesses.

You referred to Strabane. I am sorry if I have misinterpreted what was said or if I am asking you to repeat yourselves. Are things all right in that area? Has everything been sorted?

[Laughter.]

Ms McAuley:
The short answer is yes. The contract in that area was awarded to South West College, which does not currently have an office in Strabane. It has one in Omagh, one in Dungannon and a third somewhere else, possibly Enniskillen. The contingency arrangements in place are that Customised Training Services’ (CTS) premises are used by the lead contractor, and someone from South West College will be there to take referrals until the college gets its own premises. There are two issues. People from the contract-management side of the Department have been out visiting contractors. Additionally, we have staff in the area who are quick to let us know if something is not working properly. The contract started a week ago, on Monday 29 September. Later in the week, we became aware that there was no referral mechanism in Strabane, but those arrangements are now in place, and people can now be referred to Steps to Work.

Mrs McGill:
Thank you, Patricia. I know South West College, people who work there and some of the young people who attend. Was it a condition of the initial tender that subcontractors would have premises?

Ms McAuley:
It was a condition of the tender that premises would be available from which to deliver the service. Generally, the lead contractor has premises in most places already. However, they might not necessarily have premises in some areas and, therefore, must make an appropriate arrangement with the subcontractor. It is important to provide people with a place to go and to ensure that people know where it is, whether it is a subcontractor’s premises or elsewhere.

Mrs McGill:
That is important. You said earlier that the system is working in Strabane and that people there know how to access the Steps to Work programme. Is that the case?

Ms McAuley:
The arrangement is now in place. Individuals who visit the jobcentre in Strabane will be referred to CTS. If you prefer, I can supply a note on that matter.

Mrs McGill:
No, that is not necessary. The tender document outlines the evaluation criteria and their weightings. In the first instance, who agrees those weightings? Is it the Central Procurement Directorate? Chairperson, is the Committee allowed to discuss capacity to deliver?

The Chairperson:
Yes, that is fine.

Mrs McGill:
A 30% weighting is attributed to capacity to deliver, whereas the proposed methodology of service delivery — as detailed in the terms of reference — receives a 40% weighting. Why is capacity to deliver given a lower weighting than the proposed methodology?

Ms McAuley:
The weightings were agreed after much discussion between officials in the programme and contracting branches in the Department and the CPD. The weightings are based on the judgement of those individuals at that time. The methodology was weighted in that way because we wanted to be clear that the organisation could deliver our proposals.

Mrs McGill:
I must press you on that matter. Methodology should follow the identification of a capacity to deliver. Is the capacity to deliver not more important? I accept that there is an overlap.

Ms McAuley:
That is a valid point. However, I approach it from a different angle. I assess what must be delivered, how that should be delivered and, subsequently, whether we have the capacity to deliver it. Your point is equally valid, but that is how the weighting was agreed at that time.

Mrs McGill:
I accept your point; you could argue both ways. However, in that case, should the weightings not be equal?

Ms McAuley:
Again, that is a valid view. Although many of the elements of the New Deal programme were included in the service, it was a new service. Therefore, we felt that it was slightly more important to set out the way in which it would be delivered, because of the new elements. A judgement call — based on the fact that it was a new programme — was made at the time, and we felt that that was where the focus should be.

Mrs McGill:
A 30% weighting was given to the need for a successful track record in delivering similar services. I would have thought that that would have been more important than the proposed methodology. The proposed methodology relates to how the service would be delivered in the future, and the successful track record relates to how it was done previously. I suppose that is a subjective view.

Ms McAuley:
We were looking for something different in the methodology; we did not want the same programme again. We were interested in whether people had new or different ideas about how the service could be delivered. That was one reason why methodology was weighted slightly more than the other criteria. The weightings were 40%, 30% and 30% — there was not a huge gap between them, but they were based on the judgement that we made at the time.

Mr Butler:
Thank you for your presentation. The report on Training for Success that was compiled by the Committee for Employment and Learning highlights the Committee’s concerns that, on completion of level 2 courses, individuals have to move to another institution to do level 3.

Furthermore, the Committee was concerned about the geographical distribution of contracts. Unless a bidder is successful in winning a contract for the whole country, the geographical area from which he or she can recruit trainees is restricted. What have you done to address that? I assume that you have read the report.

Ms McAuley:
Steps to Work is an employment programme, and, as such, it is less concerned about what qualifications people might have or might gain. Through Steps to Work, we are trying to do whatever needs to be done to get people into jobs. Sometimes, qualifications are important in that context; sometimes they are not. Much depends on the individual’s barrier to work, which might be a lack of skills or something completely different.

The availability of qualifications will be relevant only where an individual requires a specific qualification to get a job. The majority of qualifications that will be offered will be at level 2; it is rare for Steps to Work to include level 3 courses. However, I am not sure about that, and I will come back to the Committee with clarification.

As we informed the Committee back in April, we looked at trying to secure areas that would be viable from the contractor’s point of view, because, until September, many New Deal contractors were complaining that they were not getting enough clients to make it worth their while to be in business. That was particularly pertinent in some areas in which there was a drop-off in unemployment. We wanted to look at viable units, so we divided Northern Ireland into 10 areas — for better or for worse. Those areas were based on information that we had regarding such issues as jobseeker’s allowance and incapacity benefit claimants, and so on. That gave us an impression of what the client group was likely to be.

When the tenders were put out, organisations were informed that they could apply for one, two or all areas. No organisation applied to provide the services right across Northern Ireland. However, that option was available for any organisation that wanted to avail of it.

The contracts in each area were assessed separately. Therefore, if a particular organisation was at the top of the list in area A, that did not necessarily mean that it would be top of the list in area B, because that would depend on the competition that it faced in area B.

The Chairperson:
Patricia, I asked you for some documentation. Perhaps we could also access the evaluation in order to see what evidence it contains. It was suggested to me that an initial evaluation was carried out but that no notes were taken, and scores were given two months down the line. I would be grateful if you could assure me that that did not happen.

The Committee will return to this matter when it has all the information and decides how to proceed with regard to any policy issues that it must examine — not specifically Steps to Work.

This meeting is being reported by Hansard. I need members’ approval to place the transcript, once it is cleared, on the Committee’s web page.

Members indicated assent.

The Chairperson:
Thank you for appearing before the Committee and answering our questions. I would appreciate your providing the Committee with the requested information as quickly as possible.

Ms McAuley:
We will do that. Thank you.