Download Q - How do we protect investors so that they are only

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.
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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.
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What is the position where the investment required during live
running exceeds the original investment agreed?
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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
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Where Parent Companies are involved are Parent Company
Guarantees required?
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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?
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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.
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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)
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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.
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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
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we are concerned that DWP can terminate at short notice, this is
highly risky for contract holders. Is there no termination period?
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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
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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
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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.
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