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Interserve - A Partner’s
Perspective
David Outram – Chief Officer, Public
Private Partnerships Unit and
Procurement Unit – Leeds City Council
Overview
• About Leeds City Council / PPPU
• Case Study 1 – Interserve and the Leeds BSF Programme
• Case Study 2 – West Yorkshire Police Operational Training
and Accommodation
• The Project Pipeline and Public Procurement Opportunities
About Leeds City Council / Public
Private Partnerships Unit
• Leeds City Council is the second largest metropolitan authority
• PPPU is the in house team who manage procurement of large
infrastructure projects for the City Council
• In house project management, commercial and business
management capability allied to external advisors
• Track record of delivery - 12 closed PFI schemes to date with 2
more to follow, circa £1.2billion of investment delivered
• PPPU acknowledged as a regional centre of excellence and work
with other authorities to deliver complex procurements
• PPPU nationally recognised and work with HM Treasury, Local
Partnerships, Education Funding Agency and others to share best
practise
• Also delivering Transforming Procurement Programme to ensure
best value for money achieved across all LCC spend
Case Study 1 – The Leeds BSF
Programme
• Leeds selected as a Wave 1 BSF authority
• Procurement launched July 2005-significant emphasis on design
• Mixed economy of PFI and Design and Build projects
• First contracts including Strategic Partnering Agreement signed March 2007
• Scope of procurement - Secondary School building works procured by the
City Council over the value of £100k, plus defined leisure facilities
• To date this programme or investment has delivered:
— 5 New Build PFI Schools (Funding Required circa £141m)
— 2 New Leaf PFI Leisure Centres (Funding Required Circa £31m)
— 1 Well Being Centre (Funding Required Circa £19m)
— 5 New Build / Refurbished Schools at a cost of circa £76m
— 4 New Build refurbished schools are still in construction with cost of
circa £66m
— And further small works contracts across the secondary schools estate
Working With Interserve on BSF
Key Lessons Learned
• Generally satisfied with designs and build quality
• Some challenges faced by the partnership include:
— Responding to reductions in the government funding for the BSF
Programme post 2010 election
— Delivering and demonstrating continued value for money in a changing
market
— A shared understanding of what work can be procured through a
partnership and what needs to be tested with the market
— Dealing with lots of different companies within the Interserve group all
with their own bottom line
— Resolving commercial differences between us
• Leeds are a strong public sector client – does Interserve say
yes too readily?
• The most significant part of our investment in the secondary
school estate is now complete and the role of the
partnership has evolved to manage the operational schemes
Case Study 2 - West Yorkshire Police
Specialist Operational Training and
Accommodation PFI Project
• First full PFI project to be managed by PPPU working with and on
behalf of another public sector Authority.
• Design Build Finance and provide hard and soft facilities
management services for 2 Divisional Headquarters 75 custody
cells, 3 firing ranges, public order arena, driver manoeuvring area
and training centre.
• From OJEU to Financial Close via Competitive Dialogue in 22
months with detailed designs for all facilities
• Very competitive field (12 bidders with a strong track record)
• Relatively new sector
• Tripartite approach to working with funders important
• Understanding due diligence requirements for funders at an early
stage in the procurement process important
West Yorkshire Police
Key Facts and Figures
• £100 million capital cost
• Circa £120m funding requirement
• AVIVA funded solution
• 25 years operations contract (+ 2 years
construction)
• £13.435m per annum Unitary Charge
• Contract signed on programme in May 2012
• Schemes operational November 2013 – March 2014
The Project Pipeline and Future
Investment Opportunities
• Leeds City Council and the Leeds City Region still have significant
infrastructure needs
• Funding support from central government departments for new
local infrastructure projects has reduced for the time being
• The Leeds City Region is working on a range of initiatives to lever
in additional investment including private monies (eg Revolving
Investment Fund, Transport Fund)
• Leeds City Council is now looking to regional collaborative
arrangements to efficiently procure and achieve best value for
money in major works projects (eg Yor Build)
• Past performance shows a track record of delivery but doesn‘t in
itself guarantee any future work
• There will be continued opportunities across the Leeds City Region
for those who can maintain consistency with efficiency in the new
environment.
Frameworks
• Infrastructure Funds Vs Bank Finance
• Greater competition for every tender
• YORbuild- almost £0.5 billion to the end 2013
Capital Markets Day
Michelle Manson: Managing Director, Interserve
Working Futures
17th October 2012
Market Overview
13
Welfare market overview
Welfare Reform Agenda
Welfare Market Rationalisation
Larger, broader scope contracts
Increased economic alignment
Value for Money and Payment By
Results (PBR)
Joint Commissioning
Models
DWP & MOJ joint funding of the
Work Programme for ex-
offenders
Entry of International
Players
Maximus
Sarina Russo
Staffline
DWP Framework Models
for Welfare & Benefit
Assessment
The Work Programme
Work Capability & PIP
Assessments
PBR Models
DWP, MOJ , DFE
Universal Credit
Larger Contracts
Competitive element
e.g. The Work
Programme
Supply Chain Design &
Management
Managing Agents (Serco/G4S)
Prime/Sub Models
The Merlin Standard
Accountability, Quality
and Performance
Employer Led Delivery
Models
Competitive Environment
PRIMEPRIME
PRIME PRIME PRIMEPRIME PRIME PRIME PRIME
PRIME PRIME PRIME PRIME PRIME PRIME PRIME PRIME PRIME
T1 T1
T1
T1T1
T1T1 T1
T1 T1T1
T1T1
T1T1
T1 T1 T1T1
T1T1
MWA
MWA
MWA
MWAMWA
MWA
MWA
JCPSC
JCPSC
JCPSC
JCPSC
JCPSC
JCPSC
JCPSCJCPSC
JCPSC
JCPSC JCPSC JCPSC
WC
WCWC
WCESF-TF
ESF-TF
ESF-TF
ESF-TF
0
2
4
6
8
10
12
14
16
18
20
CP
A
Provider
DWP - W2W Competitors
PRIME T1 MWA JCPSC WC ESF-TF
• Prime Contract
• Tier 1
• Mandatory Work Activity
• Jobcentre Support Contract
• Work Choice
• DWP ESF Families
118 97
117
120
103
71 69
8263
97
112
99
107
116
81
61
69
165
142
72
105
88
75
50
5855 44
101
84
90 90 9071 70
76
65
48
43
40
40
0
100
200
300
400
500
600
700
800
900
£mWP Prime Rank by Contract TCV
CPA 18: North East Yorkshire and the Humber
CPA 17: South Yorkshire
CPA 16: West Yorkshire
CPA 15: Coventry, Warwickshire, Staffordshire & The Marches
CPA 14: Birmingham, Solihull & the Black Country
CPA 13: Wales
CPA 12: Gloucestershire, Wiltshire & West of England
CPA 11: Devon, Cornwall, Somerset & Dorset
CPA 10: Surrey, Sussex & Kent
CPA 09: Thames Valley, Hampshire & Isle of Wight
CPA 08: Scotland
CPA 07: North, West & Greater Manchester, Cheshire & Warrington
CPA 06: Merseyside, Halton, Cumbria & Lancashire
CPA 05: North East
CPA 04: East London
CPA 03: West London
CPA 02: East Midlands
CPA 01: East of England
Total Contract Package Area (CPA)Value
Service Delivery
• Established in Leeds in 1988
• To work with those people most disadvantaged in
the labour market
• To tackle worklessness within local communities
• To deliver Government policy - Department of
Work and Pensions, Skills Funding Agency,
Department of Communities & Local Government
• Currently operate from 11 branches across
Yorkshire, with 350 staff
Context
Mission Statement
To deliver effective training and recruitment
solutions, providing a positive economic impact
across our communities.
• Currently servicing 69,000 customers between RJF
and IWF
Customers on Programme
Customer Group % receiving
support
Funding per person
Young people 18-24 22% £3,500
Long term unemployed
and older workers 25+
55% £3,500
Ex offender (Mar 12) 1.5% £5,000
People with disabilities 8% Up to £13,500
Early access & NEET 13.5% £6,000
Jobs Outcomes
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
JSA 18 to 24 5% 30% 40% 40% 40% 30% 10%
JSA 25 and over 5% 25% 30% 30% 30% 25% 5%
ESA Flow 5% 15% 15% 15% 15% 10% 5%
Work Programme West Yorkshire -
Referrals and Minimum Performance
Levels
Referrals - West
Yorkshire
ITT 2010 Dec 2011 June 2012
Total 54,601 77,950 66,107
• Contact centre engagement
• Personalised programme of support delivered by
specialist Work Coach
• Specialist Intervention - ‗Best Friend Directory‘
• Skills development - pre and in work skills
requirements
• ‗InterMatch Agency‘ – commercially modelled
employer offer
Delivery Design Principles
By his own admission 18-year old Usmaan
Mahmood lost focus and confidence after
leaving school and not getting
anywhere with his search for a job:
“I was just sitting around home most of the
time, hanging out with friends – drifting
really – and beginning to think a job would
never come my way...”
Joining the Work Programme at Interserve
Working Futures rekindled his enthusiasm
and in just three weeks Usmaan began to
see some light at the end of the tunnel: -
“The support from Interserve and work
coach amazing – really caring about helping
me to find work and always going the extra
mile, I am now working and loving it!”
Delivery Partners and Employers
Interserve Working Futures Delivery
Partners
Mandatory Work
Activity
Work Programme Prime
Contract West Yorkshire
Work Programme
Subcontracts
• Devere Hotels
• Symington's
• TK Max
• Foxes Biscuits
• Primark
• Marks & Spencer
• Bibby Warehouse
• Amazon
• Sainsbury's
• Interserve – West
Yorkshire Police
• Next
• Barclays Bank
• Debenhams
• Securitas
• Argos
Some of the employers we work with
To watch Sian Makepeace at work in the
Cafe Bar of the magnificent new
Hepworth Gallery in Wakefield it‘s obvious
she is very happy in her work – meeting
and serving the many visitors the
Hepworth has welcomed since its opening
last year.
Yet this 44 year old mother of four and
grandmother to 7 month old Logan, had a
troubled background of worry, illness and
relationship breakdown.
“My self confidence had been shot to
pieces” she says “but I’d heard about the
Government’s new Work Programme
initiative and was referred by Jobcentre
Plus.
I was a nervous wreck before the
meeting, when I met with Sara Walker
and John Fell at Interserve. Lovely, lovely
people! Normal, nice human beings, not
patronising in any way and made me feel
so relaxed – giving me the confidence to
hold my head high again....”
John Fell says Interserve Working Futures
have a good relationship with The
Hepworth and he immediately spotted the
fit between the Gallery and Sian.
―The Hepworth’s customer criteria are
very specific and Sian Makepeace was the
ideal candidate. We even arranged a half
day work shadow so Sian could get an
understanding of the company – also
giving the employer an opportunity to
speak with Sian”.
DWP relationship
• IWF Strategic Management Group
•MWA & WP links
• IWF Business Development
• IWF Operations
• IWF Contract led Strategic Management Steering Groups
• IWF Quality & Compliance Dept.
• IWF Senior Operational Management Team
• IWF Board
• IWF Strategic Management Group
• IWF Business Development DWP Policy,
Commissioning & National
Forum
DWP Provider Assurance
Team
DWP Account Management
DWP Performance Management
Partnerships with Government
Jobcentre Plus
The Future
• Welfare to Work – DWP opportunities, Work
Programme 2, Northern Ireland, other national
and International opportunities
• Skills – delivery of Apprenticeship provision and
other skills programme
• Employer Services – Expanding our employer
offer into the Commercial marketplace
Future Growth Strategy
Thank you
Capital Markets Day 2012
Tim Haywood, Group Finance Director
17th October 2012
Key acquisition facts
Acquisition date 4 May 2012
Consideration Up to £18.25m
Revenue c£18m
Profit c£3m
Multiple of Profit 6x
Intangible assets acquired
(customer relationships) £7.7m
Amortised over
6 years /
£1.3m pa
(full year)
• Formerly known as Business
Employment Services Training Ltd
(BEST Ltd)
• Offers a range of welfare-to-work
programmes including, but not
limited to, the Work Programme
• c1/3 of prior year revenue from
New Deal
Interserve Working Futures
The Work Programme
Fee structure for an individual
Attachment fee Job outcome fee Sustainment fees
Paid after initial discussion with
customer service consultant
Reward for getting customer back
into work and keeping them in work
Paid whilst customer is kept in
work
Assists with initial service delivery
costs.
Payments made after 3-6 months of
cumulative work
Monthly payments for 13–26
months
£400 - £600 per attachment in year 1.
Reduces over first 3 years to £nil at
the start of year 4
£1,000 to £3,000 after 3-6 months
employment
£170 - £370 per month for up to
24 months
Sustainment fees
Job O
utc
om
e F
ee
Att
achm
ent
fee
13 - 26 months3 - 6 months
Start on
programme
Job
Start
Start of additional
weeks in work
Attachment fee - Cash
Attachment fees received in cash
over first 3 years
Capitalised and amortised over
estimated time to first performance
income
Performance income recognised as
cash received
£
Time
Attachment fee – Income statement
Attachment fees received in cash
over first 3 years
Capitalised and amortised over
estimated time to first performance
income
Performance income recognised as
cash received
£
Time
Attachment fee – Balance Sheet movement
Attachment fees received in cash
over first 3 years
Capitalised and amortised over
estimated time to first performance
income
Performance income recognised as
cash received
Time
£
Questions
Capital Markets Day
Yvonne Thomas: Managing Director, Justice
17th October 2012
Background and Rationale
• Established August 2011 in response to increasing
competition in public service provision.
• The Government intends to compete up to 50% of the public
sector prisons. We would estimate that c.50 prisons will be
competed over the next four years.
• The Ministry of Justice has announced its intention to
compete c.£600m per annum in probation services.
Competitions have started for some services.
• Further competitions for justice and related services
announced by the Youth Justice Board, Probation Trusts,
Home Office, DCLG and Local Authorities.
• Complements and extends core Interserve capabilities in
Construction and Support Services (prison construction,
maintenance, operation of secure facilities, Work
Programme delivery, investment expertise).
What is the “Justice Market”?
131 Prisons
35
Probation
Trusts
174 Local Authorities
363 Courts
174 Youth
offending
teams
50 Secure
Units
43 Police
Forces
150+ DIP‘s
Secure Hospitals
Immigration
Removal Centres
Target Market Segments
Prisons Custody
Risk Assessment
Resettlement
Probation Supervision
Risk Assessment
Interventions
Policing
Integrated Offender Management
Custody Suites
Community Diversion
Youth Justice Secure Training Centres
Secure Children‘s Homes
Rehabilitation
Diversion
Problem Families Diversion
Risk Assessment
Interventions
Immigration Immigration Removal Centres
Addressable Market – Annualised Spend
(adjusted to reflect target segments)
£1.5bn
£3.6bn
£4.0bn
Health
Substance Misuse
Youth Justice
Community
Budgets/Problem
Families
£700m
£1.0bn
£1.5bn
The Justice Team
• Senior professionals with backgrounds in: — Ministry of Justice / National Offender Management Service
— Her Majesty‘s Prison Service
— Probation Trusts
— Private sector operators.
• Governor experience of Cat A, B, C & D prisons
including HMPs Leeds, Hatfield, Moorland, Forest
Bank, Ranby and Whitemoor.
• National performance and standards management
of all prisons.
• Probation experience at Leicester & Rutland and
Norfolk & Suffolk Trusts.
• PbR and social investment bond expertise.
The Justice Market – Some Facts
• £12.5bn – annual cost of re-offending to the UK
• £2.7bn – total spending each year on prisons estate
• 14% - market share of prisons managed by independent
providers
• £150m – amount spent on prison escorting and custody
services each year
• 99% - the market for prisoner escorting and custody services
is almost fully open
• £1bn – approximate annual spend on probation services
• 3% - small proportion of probation services currently
delivered by independent providers
• 60% - the proportion of the £1bn probation services budget
likely to be opened up to new providers
The Prison bids
Prison Competition Phase 2
Number of
prisons being
bid
HMP Acklington
& HMP
Castington (HMP
Northumberland)
HMP Durham
HMP Lindholme,
HMP Moorland &
HMP Hatfield
(cluster)
HMP Onley HMP Coldingley HMP Wolds
G4S 7
GEO 4
HMPS* 9
Interserve 3
Mitie 0 WITHDREW AS PRIME WITHDREW AS PRIME WITHDREW AS PRIME
MTC/Amey 5
Serco 6
Sodexo 6
Number of
bidders 5 5 4 5 4 4
*Mitie now subcontracting to HMPS
Approach
• A very experienced bidding and delivery team has been
recruited.
• We are adopting a rigorous but innovative approach to
solving well-understood delivery problems.
• Investing time in understanding the problems – use of
evidence, analysis and new research.
• Developing new, re-useable service ―components‖ which
will be applicable to a range of different opportunities.
• Interserve providing operational insight, process design,
infrastructure and funding to a range of partners as a prime
bidder.
• Good new partnerships and alliances have been established.
• The ―glue‖ in a fragmented system.
Interserve Partners
Technology Research Training &
Transformati
on
Supply
Chain/Partner
Our Rehabilitation Offering - Prisons
―A Prison should be a place where offenders not only
serve their sentence but also engage in productive
activity to lead crime-free lives once they are
released‖ Interserve bid, HMP Durham, April 2012
• Prisoner self-service – a first in prisons.
• Every Interserve prison will guarantee 30 hours per week of work, training
and education which prisoners will be required to engage in – double that
in most prisons.
• A new delivery model for Offender Management brings together three
separate prison functions into one under the management of our Probation
Trust partner, Durham Tees Valley Probation Trust – a radical, but fully
compliant approach.
• New integrated systems and processes to underpin new ways of working
from admission to post release rehabilitation – the most complete end-to-
end infrastructure design in the market.
• End result – better service, better outcomes, much lower costs.
Progress
• November 2011 new justice team submits pre-qualification for Prison
Competitions Phase 2 (PCP2).
• January 2012 Interserve qualifies as a framework provider for prison
competitions for the following four years.
• November 2011 Interserve submits PQQ for Community Innovation
Payments by Results bid.
• April 2012 Interserve qualify for Community Innovation PbR.
• April 2012 National partnership with Durham Tees Valley Probation
secured.
• June 2012 Interserve shortlisted for Community Innovation PbR.
• April 2012 Interserve submits three full operating bids for Durham, Onley
and Wolds prisons.
• July 2012 Interserve begins engagement in Wales Probation PbR.
• August 2012 Interserve starts participating in market engagement events
for Secure Training Centres.
Interserve Justice -
Delivering Better Social
Outcomes
Questions
