DWP are on the cusp of launching their new competition for their new Employability & Health Related Services Umbrella Agreement (EHRSUA). The initiative shares many hallmarks with DWP’s current “brolly” framework, used to procure the Work & Health Programme. This time, however, competition is set to adopt different tier levels, reflecting different contract value thresholds.

 

In simple terms, this means one framework for high value contracts worth over £5m per year, and others for medium and lower value contracts. At face value this makes some sense. Big “primes” don’t always see a business case to bid for lower value provisions in specific geographies, but which may instead be ideal for their smaller, local counterparts. For the logic of this to work, however, you need to have a lot more suppliers in the lower tiers.

DWP have suggested a cap of 5 providers in each of seven Lot areas across Great Britain, in each of it’s 3 proposed EHRSUA tiers (with respective annual contract values of £5m+, £1m to £5m, and sub £1m). The seven Lot Areas reflect DWP’s existing core contracting regions, namely Central England, North East, North West, Home Counties, Scotland, Wales, and Southern England.

So, what does this mean in practice? Well, Lot 2 (North East England) covers an area from the East Midlands to the border of Scotland. This means that if you are a small provider from Derby who has secured a place in the sub £1m tier for Lot 2, you may also be expected to bid for lower value business in Newcastle upon Tyne, some 160 miles further north. It is hard to see how any smaller provider could give DWP an unconditional commitment to bid for every available Lot contract on this basis.

There is also the question of market specialism. DWP’s needs are varied, covering everything from self-employment support to very specialist health related services. This highlights a need to have a much broader pool of providers to be available at the bottom of the pyramid to cater for such varied needs. The alternative is that we will simply see DWP carrying out more purchasing outside of the EHRSUA, which arguable defeats its primary purpose.

This in turn raises the question as to whether the same selection criteria will be valid for each tier. For example, providers delivering contracts valued at over £5m p/a are more likely to wish to subcontract part of this provision, creating a need to test their competency in supply chain management. Providers delivering contracts worth less than £1m p/a will very likely prefer to directly deliver the full contract value, making supply chain management a far less relevant competency to test.

And what about the top tier? If 5 providers per Lot is insufficient in the lowest value tier, is it equally the right number per Lot for the highest value contracts? 5 bidders would result in a manageable level of competition and should always produce a capable and competent winner. Recent years have, however, been defined by market mergers and acquisitions. Furthermore, many of the same “big” names could be selected in both Tier 1 and Tier 2 for each Lot, further restricting market choice in practice. A little more depth in the top tiers may help better futureproof EHRSUA for the longer term.

If nothing else, the competition is bound to be compelling to follow, and there is lots for DWP to digest.

If you are considering applying to join the EHRSUA, and perceive that you may need help in preparing a winning application, or if you just want to find out more, please feel free to e-mail us at info@carleyconsult.co.uk or call us on 01302 361630.