Commercial Masterclasses

Exercise packs two days

Bingo

Payment by Results

Spin-out

Preferred Provider Framework

Social Value Act

Right to Challenge

SROI

Merlin Standard

Big Society Capital

Social Impact Bond (Peterborough Prison)

Exercise one: Perceptions and motivations

Refer back to the commissioning and supply chain model. As a group and in your designated role discuss and write down on flip charts: a. How do you see yourselves? (Your culture, values, concerns, attitude towards getting involved?) What are your motivations? b. How do you see the other groups? (Their culture, values, concerns, attitude towards getting involved?) What are their motivations? Be prepared to feed back to the whole group.

Exercise two: Making it work

Again referring back to the commissioning and supply chain model and still in your group and in your designated role, discuss and write down on flip charts: a. What are the risks in this model for you? b. What do you need most from the other groups to make this model work? c. What might they need most from you? Be prepared to feed back to the whole group

Exercise three: Valuing relationships

Referring to the diagram on the slide, in pairs imagine you are about to bid for a contract from this prime in nine months. Discuss and record: a. Which two individuals would you target your time on influencing?

b. Given you have limited resources but nine months to have an effect: i. What action would you take to influence the supply chain manager? ii. What measures would you use to chart you success / failure in influencing the supply chain manager?

Exercise four: Assessing opportunities

In pairs, discuss and write down: a. What are the variable factors in a supply chain?

b. Given limited resources, which factors do you prioritise learning about before you commit to a contract?

Be prepared to feed back to the group

Exercise five: Governance

Get into groups with those whose organisations are of a similar size and therefore may have comparable governance structures and strength. Imagine you are considering entering into the supply chain of the prime described below.
Example prime This particular organisation is driven by results. Because what - and who - get the best results get them the best financial return. This is great but has a number of implications: This organisation 'sector blind' or 'sector agnostic': that you are a charity gives you no advantage, no dispensation if others outperform you. This is harsh, but this is the reality of a 'market' efficiency model of public services. If you achieve the best results for users, it doesn't matter who you are to the state. The 'result' this organisation is interested in is that set out in the contract (i.e. relatively short term, and absolute). If you're working towards having an impact, or an impact which isn't tangible by the terms of the contract, there isn't any commercial reason to support or develop your work. Except... when it's clear a little investment of time and support could turn you in to a high-performer, and where their current supply chain is weak and needs to be challenged or replaced by new entrants. But from their perspective there would

need to be a clear return on their efforts - so again, a clarity that you'll deliver the commercial rewards is essential. Data is king. This isn't just about getting results but about proving them. Something we've seen to not always be easy, and not always be honest.

This is not a sympathetic environment, and there's no covering for that. These are different terms (more competitive, higher-stakes, less tolerant) than many charities delivering public services are used to. What is difficult is the sudden nature of the change and that our sector has to a large extent been helpless to influence the way it happens. The potential lack of support for emerging organisations is a significant barrier to diversity of innovation, uservoice, and competition. Performance Management The process by which this organisation manages their supply chains is highly appropriate for an efficient, competitive market. The rule is this: the best performers get more business; the weakest get kicked off. There are two parts to this: 1. Picking the right providers to start with. This is key. This organisation don't base their decisions on which subcontractor submits the best tenders, recognising that tenders just indicate how good you are at writing, not at delivery. Instead they focus on site visits as the means to evaluate and decide on subcontractors. Within this of course sit certain stipulations on capacity etc. forced by the contract terms itself - i.e. PQQ measures on capacity and size. 2. Performance management requires sacking. This organisation are unrepentant in sacking underperforming organisations to make way for the higher performers to expand, or new organisations to be brought into the supply chain. Sacking (expensive and unpleasant) is obviously the last resort of a stepped process of performance management.

Consider the implications for your governance. Discuss and record on the flipcharts: a. What governance procedures would you want in place to manage performance risk in this regime? b. How would you need to reconfigure your resources (skills, capacity, information) to implement this governance approach? Be ready to feedback

Exercise six: Financial risk modelling

Criterion Size of opportunity % profitability of opportunity Capital as % of turnover Cash-flow implications Risk profile Fit to our capabilities/aspirations Likelihood of winning Likelihood of signing a contract Cost of bidding
Opportunity A 100m M 3% -1m H M M H H Score Opportunity B 200m L 5% -3m M M M H H Exceeds criteria Broadley meets criteria Does not meet criteria Score Opportunity C 50m H 2% -0.5m L H L H M Score

In pairs discuss which opportunity you would accept A, B or C and state you reasons why. Be prepared to feedback on your reasoning.

Exercise seven: Negotiation

The scenario For this scenario, imagine you are a VCSE organisation about to negotiate to a contract to enter the new supply chain of two different primes. This is a contract being let on a regional level and is being contracted as a prime-sub supply chain for the first time. It consolidates a number of current contracts, including a number of services currently delivered in house by the public sector. Your organisation has the following characteristics: Income of 750k of which 1/3 is traditionally from the contract that is being retendered You are a known specialist in your area, well-established and with a SROI report of 1:8 Reasonable relationships but little service partnership experience with similar VCSE specialists elsewhere in the contract region No experience working with this prime or in supply chains A cautious board Reserves of 200k

Questions to consider Here are the features of the contract, payment terms and specification you may wish to negotiate Payment terms Price Quantity 6

Flow Monitoring Approach Brand Communications Location Delivery methods Intellectual Property Rights TUPE Anything else?

Negotiating positions of the two primes:

Prime A will not negotiate on Price Approach Communications Monitoring

Prime B will not negotiate on these: Quantity Monitoring Approach Location Delivery methods Intellectual property rights Payments terms

Prime A may negotiate on Payments terms Quantity Scale Branding

Prime B may negotiate on Price Brand Communications All other areas are up for negotiation.

All other areas are up for negotiation.

Use the negotiating position of the two primes to record on the MOSCOW chart: a) Your priorities absolutes that you must not negotiate on b) Those terms you should be able to negotiate on c) Those terms you could negotiate on Be prepared to feedback and discuss your reasoning.

Exercise eight: bid gates

Reflecting on the discussion about appropriate use of gates, create an action plan that looks at your own organisation and records: a. What the gates should be in organisation b. Who should be responsible for each gate c. What action / decision should be made at each gate 7

Be prepared to feedback to the group.

Gate

Responsible Party

Action / decision

Notes