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NCVO and Serco release code of practice for prime/sub relationship

NCVO and Serco have launched a code of practice aiming to improve the relationships between prime and subcontractors delivering public services.

It comes after months of negative reports from charities subcontracted on public contracts such as the Work Programme, which has seen prime contractors accused of using charities as ‘bid candy’ or exposing them to excessive financial risk.

Sir Stuart Etherington, chief executive of NCVO, said: “There has been a major growth in subcontracting, but NCVO’s members have had very mixed experiences of it. This joint guidance is part of our attempts to raise standards in subcontracting.

“We are certainly not saying subcontracting is always the right way to deliver public services. But where services are delivered in this way, we want to make sure that they are delivered well and that subcontractors are treated fairly. We have deliberately made the principles in this guidance applicable to prime-sub relationships within any sector.”

The code of practice provides advice on a range of issues in the relationships between prime and subcontractors, including setting reasonable expectations, having strong mechanisms for open dialogue between contractors and developing financially sustainable models.

The code also recommends that less commercially experienced partners are supported by primes to understand their contractual obligations and the cash flow impact of relevant funding mechanisms prior to signing a contract.

A number of charities involved in the Work Programme have been forced to close or have exited after having cashflow problems. Secretary of State for Justice Chris Grayling has argued that charities have found their participation in the Programme frustrating as they have signed up to contracts which are not commercially viable.

The Code also encourages primes to make sure that subcontractors are not exposed to financial risks which are disproportionate to the rewards available for good performance, and it says primes should support smaller organisations in their supply chain by helping them secure access to third party capital.

Jeremy Stafford, chief executive of Serco UK & Europe, said: “This code sets the bar high for how companies such as Serco should work alongside their partners in the voluntary sector – and rightly so. We are proud of our many relationships with organisations in this sector. Their skills complement ours and by pulling together we can bring innovation and fresh thinking to the delivery of public services.”

Serco has pledged to follow the Code and encourage others to follow.

Serco works with over 100 charities on public service contracts, including National Citizen Service and contracts to run prisons.


This article was taken from Civil Society – http://www.civilsociety.co.uk/finance/news/content/14877/