in collaboration with

Ministry of Justice Delivers Over £400M of Savings in Ground Breaking Prisons Competition

Capgemini acts as financial and commercial advisors in prisons procurement programme

The Situation With bids invited from the public, In its continuous resolve to reform private and third sector providers, the the justice system so as to ensure Ministry of Justice’ (MoJ) competition that it is more clearly seen as a policy would result in a current public service - working for the local operational public sector prison community, the UK government being transferred to private sector introduced competitive tendering management for the first time in for the country’s prison services. and Wales. Such a competition would help the government deliver multiple This multi-billion pound competition objectives: increase in capacity, programme was run by the Major value-for-money, service/performance Contracts team in the Ministry of improvement, productivity and Justice who, in January 2010, after a innovation. In 2009, the then Justice competitive tender process, appointed Secretary, Jack Straw, announced Capgemini to act as its independent plans to open up competition for financial and commercial advisor. the management of five prisons. Birmingham and Wellingborough were chosen after being identified as poor performing, publically run prisons, Buckley Hall and Doncaster had previously competed contracts that were due for renewal while Featherstone 2 was a new prison.

I was first impressed by Capgemini’s ability to quickly “become a part of the team. Over the course of the project their assertive assessment of complex issues was one of the critical comments that allowed us to realise the substantial savings that resulted from the competition.” Ben Hughes Head of Procurement Major Contracts, MoJ “Contributing to the successful the price and non-price elements of delivery of this high-profile the overall competition evaluation. procurement programme represents an important milestone for Capgemini The Result in our ongoing support of the In March 2011, the Justice Secretary Government’s efficiency and reform announced the agenda,” said Simon Derbyshire, result of the competition in a Capgemini Vice President, Justice & statement to Parliament. Birmingham Security UK. was privatised; Doncaster and Featherstone 2 were also awarded to The Solution private sector firms, with Doncaster Capgemini’s consultants worked as let under an innovative Payment by part of an integrated procurement Results pilot scheme. Buckley Hall team to support and advise the MoJ in was kept in the public sector and four main areas: Wellingborough was withdrawn n Design of the contractual from the competition. payment mechanism: To drive financial efficiencies The financial benefits delivered by through the life of the contract the competition were significant. by fixing appropriate elements of Over the current Spending Review the cost base at competition stage, period, the new contracts will deliver providing sufficient flexibility to savings of over £21 million for the cope with future scope and service three existing prisons and, over the changes, balancing the allocation 15-year life of the contracts, £216m. of risk between the contractor The new Featherstone 2 prison will and the MoJ as well as providing be delivered at more than £200m less a mechanism for contractors to than the originally approved pass on cost changes and savings business case cost. throughout the contract term – all through a mechanism that is simple In addition to the impressive financial to manage and administer savings generated by the competition, n Design of standard and pre- Capgemini delivered the necessary defined financial models: contractual mechanisms to allow To allow the Capgemini team to the efficient and effective contract analyse costs and prices so as to management of the 15 year contracts provide detailed bidder-by-bidder by the MoJ. These include: comparisons and insights n A clear, robust and detailed set of n Design of the financial evaluation financial models at each prison that methodology: underpin the overall price offered To put in place a robust financial by each successful bidder to give the evaluation methodology that met MoJ the necessary transparency and Government accounting rules understanding of the contractor’s and private sector accounting baseline costs so as to monitor and standards. This would allow final control future prices financial submissions to be fairly n A payment mechanism designed to and accurately compared through allow the overall price to change in the use of a net-present-value based response to future service changes financial metric without having to be overly reliant n Delivery of the final financial on the formal contractual evaluation and due diligence: change processes. To carry out a comprehensive review of bidders’ financial “Cumulative savings over the lifetime submissions covering all of the contracts for the three existing financial models and supporting prisons are very impressive at £216 assumptions, culminating in a final million,” said Kenneth Clarke, Lord financial assessment to support both Chancellor and Secretary of State for Justice.

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How the MoJ and Capgemini “Successful delivery was built not Worked Together only on our financial and technical The team from Capgemini worked expertise, but on our ability to work alongside members from the MoJ collaboratively with all stakeholders representing - Major Contracts, prison as part of an integrated MoJ service operational experts, finance, procurement team,” said James Lally, policy and operations analysts, legal, Capgemini Managing Consultant. pensions and HR advisors. As well as public and private sector bid teams If you would like to find out more to deliver all financial elements of the about this project, please contact: high-value and complex [email protected] procurement programme.

Capgemini displayed collaborative working especially during the two key parts of the programme: n When designing the financial models and financial response requirements, the Capgemini Consulting team worked closely with prison service operational experts to ensure that the financial models covered the full scope of the services being contracted and allowed bidders to present the full financial costs and benefits of their proposed operational solutions n When designing the final financial response requirements and evaluation methodology, the Capgemini Consulting team worked alongside MoJ financial and policy analysts to ensure that the bidders’ submitted prices would meet value- for-money and affordability targets.

3 Public Sector the way we do it

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Capgemini UK Approved by Public Sector Ben Hughes, Operational Research Head of Procurement, Procurement Major Contracts, MoJ

Simon Derbyshire, Capgemini Vice President, Justice & Security UK

In collaboration with million people use its services in 900 locations across the , including 650 courts and tribunals and 139 prisons in England and Wales. The Ministry of Justice is one of the largest government departments, with around 95,000 For more information, please visit: people (including probation services) and a www.justice.gov.uk budget of £9.2 billion. Every year around nine PS_071211_IN ©2011 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini. Rightshore® is a trademark belonging to Capgemini.