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Innovation Fund Urgent Q&A Log At the ITT event on 28 September, bidders raised a number of important concerns regarding issues such as the contractual terms and the risks for investors. We have taken this feedback very seriously and taken steps to address/mitigate wherever possible. The following table covers what we think were the most urgent issues/questions. We will publish a further list of questions and answers later this week, covering all other points raised. 1 Question The documentation currently indicates that investors will have unlimited liability. This would be a major risk in securing investors as they should only be liable for the amount they have agreed to invest. 2 What is the position where the investment required during live running exceeds the original investment agreed? 3 DWP Terms and Conditions indicate that the contract holder (intermediary/investor) will have unlimited liabilities. Is this the case? Answer We agree this is an unacceptable risk and will change our documentation to reflect that an investor is only liable for sum they have agreed to invest, eg an investor who agrees to invest £20,000 will have a £20,000 cap on liabilities within their Deed of Guarantee. The contract holder i.e. the intermediary or a lead investor will need to ensure they secure sufficient investment at the outset and have contingency plans in place in the event further funds are needed later on. We will be seeking further assurances at the preferred bidder stage on how the contract holder will ensure there is sufficient investment, cover any subsequent shortfalls and ensure delivery partners receive the payments they are promised. We have listened to concerns and have capped the liabilities as follows; Contract values up to £1m - liability £1m; Contract values £1m - £2m - £2m liability and; Contract values £2m - £3m - £3m liability. The principal is that the liability will be appropriate to the 1 4 Where Parent Companies are involved are Parent Company Guarantees required? 5 Can the outcomes and contract value we submit at the ItT stage be revised and therefore be different to those submitted in the Initial Application Form. Bidders are being asked to estimate outcomes up-front - how much can we vary on these? 6 We don’t want to be in a position where we might have to steer young people in a certain direction because of these figures, rather than providing the support that would be more advantageous to their needs at that time. contract value, for clarity this will be the sole liability of the contract holder, i.e. in the case of multiple investor models this will be either an intermediary or lead investor. Parent Company Guarantees will not be required by DWP. All contract holders will be required to provide a Deed of Guarantee. Bidders can submit different outcomes to those given at the IAF stage, however the bidders delivery proposal must not differ to that submitted at the IAF stage. There will be a maximum contract price, based on the total maximum value of your estimated outcome payments. However, we will not be capping the numbers of specific outcomes you can claim for, so you will have flexibility to deliver outcomes which meet the needs of your participants, rather than being driven by your initial estimates on the numbers of each specific outcome. There is a cap of on the total cost of outcomes payable for each participant - £8200. The contract will, however, contain your estimates on the type and number of participants you expect to support and the numbers of each outcome you expect to achieve. This will allow us to monitor and understand any significant fluctuations and ensure that the level of services and support promised within your tender is being delivered in live running. In the unlikely event we believe that a variance is due to inappropriate provider behaviour rather than being driven by customer needs, we will take firm action. 2 7 The Specification now details more prescriptive payments, because of this we might now need different delivery partners and equally some might not wish to go ahead. Can we change delivery partners in light of these changes? Paragraph 14 of the ITT Instructions to Bidders' document states that: "the Investor / Intermediary and Delivery Bodies and the nature of the proposal must not have changed from those detailed in the IAF. Once the ItT Form has been submitted no changes are permitted to the relationships and nature of the proposal. Any changes (e.g. changes to Delivery Bodies), will result in automatic elimination from this competition.” Due to the innovative nature of this competition and the additional information on outcome payments now provided in the ITT Specification it has become evident that some bidders may wish to make some minor changes to their delivery partners. At the IAF stage, in the IAF, bidders were asked to specifically name, and provide details of, all delivery partners who would be delivering 20% or more of the services to the customers (“the Main Delivery Partners”). When submitting a bid at ITT stage, bidders cannot replace, remove or otherwise amend any of the Main Delivery Partners but bidders may: (a) reduce the percentage of services that a Main Delivery Partner will deliver, provided that it does not alter the nature of the delivery proposal (e.g. if in the IAF Delivery Partner A was proposed as delivering 30% of the services, Delivery Partner A’s delivery contribution (as described in the bid to be submitted at ITT stage) 3 may be reduced to 16% of the services to the customers); or (b) increase the percentage of services that a Main Delivery Partner will deliver, provided that it does not alter the nature of the delivery proposal (e.g. if in the IAF Delivery Partner A was proposed as delivering 22% of the services, Delivery Partner A’s delivery contribution (as described in the bid to be submitted at ITT stage) may be increased to 30% of the services to the customers). In the event that: (c) a bidder does replace, remove or otherwise amend any of the Main Delivery Partners (contrary to (a) or (b); and/or (d) any change made by a bidder pursuant to (a) and/or (b) above does, in the opinion of DWP, alter the nature of the delivery proposal DWP shall be entitled to eliminate such bid from the competition. 8 The Terms and Conditions do not indicate a termination period, In addition some bidders chose to name delivery partners who would be delivering less than 20% of the service at IAF stage, even though this was not a requirement. DWP will permit changes to these delivery partners. The termination clause (H 3.1) within the contract will be 4 we are concerned that DWP can terminate at short notice, this is highly risky for contract holders. Is there no termination period? 9 10 12 months. However, where applicable this could be revised as appropriate to the length of the contract (so contracts shorter than 12 months could have a shorter termination period). ESF provision includes complex families. For the Innovation Fund Whether a young person is on the Innovation Fund or a young person could already be engaged at 16 but by 17 they ESF problem families, provision should be based on an may no longer be part of the family, or wish be included as part of assessment of the individual’s needs. It is possible for a the family, can they be included on the programme? What young person to be on both ESF families provision and happens to those young people taken into care whist on the ESF the Innovation Fund. However, this should only be the programme. case in situations where delivery bodies feel strongly that a young person would benefit from support of this nature. In Annex 2 where it shows the interactions with the IF and other provision, you speak of customers moving to and from the ESF Families with Multiple Problems provision. One of our proposals appears to be in an area that may conflict with a bid going through under the DWP/ESF provision. Can young people be on 'ESF problem families' provision and the Innovation Fund? Can we talk to Jobcentre Plus to get local information? Yes, there is a specific Jobcentre Plus Innovation Fund contract who you can speak to if you have specific questions relating to the area in which you are bidding. These are: Scotland Elaine Boyce, 0141 636 8325 Wales Huw Thomas, 02920 804055 5 Southern England (including Devon and Cornwall, Hampshire and Isle of Wight, Surrey and Sussex, Thames Valley, Wessex and Gloucestershire) Yvette Naylor, 0117 945 6726 Centrel England (including Birmingham, Derbyshire, East Anglia, Leicestershire, Nottinghamshire, Lincolnshire, Staffordshire and Shropshire) Jo Cranston, 0121 452 5414 London and Home Counties (including Bedfordshire and Hertfordshire, Essex, London and Kent) Sujit Ray, 0207 342 3841 North East (including Durham and Tees Valley, Yorkshire, Northumberland Tyne and Wear) Sarah Gosney, 0113 307 8144 11 It is very difficult for Intermediaries to secure investor commitments in the 5 weeks we have to complete the ItT. With this in mind can we bring in additional investors after ItT submission? North West (including Cumbria and Lancs, Manchester and Merseyside) Jackie Mason, 01928 853708 At ItT stage DWP would like the investors to be agreed and named as far as possible. However, DWP will give preferred bidders the opportunity to update their investor information, providing additional investor details if required. Any new investors at preferred bidder stage will be subject to the full FVRA as detailed in the ItT guidance. 6