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The Provision of Consultancy Services for Crime Competition
Financial Modelling
TO
Ministry of Justice
FROM
KPMG LLP
Ref number 643 RM2592 (MOJ 2983-1)
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CONTRACT FOR THE PROVISION OF CONSULTANCY SERVICES FOR
CRIME COMPETITION FINANCIAL MODELLING FROM KPMG LLP TO
MINISTRY OF JUSTICE
This Contract is made this 30th October 2013 between:
(1) The Secretary of State for Justice ("the Authority") acting though his representative in the Ministry of
Justice (MoJ)
(2) KPMG LLP whose registered office is at 15 Canada Square, Canary Wharf, London, E14 5GL
(Company Reg OC301540)
(3) The Contract shall commence on 30th October 2013 and conclude by 18th November 2013.
WHEREAS:
The Authority requires the Contractor to undertake to deliver the services as per your proposal dated 17th
October 2013 specified in Schedule One (the “Specification”), and the Contractor is able and willing to
provide these services on the terms and conditions set out below.
Signed on behalf of KPMG LLP
Signature………………………………………………………………
Title…………………………………………………………………….
Date…………………………………………………………………….
Signed on behalf of the Ministry of Justice
Signature………………………………………………………………
Title…………………………………………………………………….
Date…………………………………………………………………….
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Terms and Conditions
General Conditions
This contract will operate subject to the Ministry of Justice Terms and Conditions of Contract for Services. If
there is conflict between these terms and conditions and other terms and conditions in this document, this
document will take precedence.
Special Conditions (as included in the ITT document)
Special Terms & Additional Information
MOJ Standard Terms
and Conditions - Amended Oct 13 - with track changes.doc
Sustainable Procurement
You are required to comply with all the applicable environmental laws and regulations in force in relation to
the services/goods required.
All written outputs, including reports, produced in connection with the tender should, where possible, be
produced on recycled paper containing at least 80% post consumer waste and used on both sides where
appropriate.
Non Disclosure
You are required to undertake to be bound by the Authority’s Non Disclosure Agreement in respect of the
company and of those employees deployed on this engagement
Termination for Convenience
The Authority may at its absolute discretion and at any time and for any reason terminate the contracted
services and work at the Authority's convenience by giving the Bidder five (5) business days notice in writing of
its intention to do so. Upon receipt of such notice, the contractor shall, unless the notice directs otherwise,
immediately discontinue the work and placing of orders for materials, facilities and supplies in connection with
the performance of this contract.
Upon such termination, the contractor shall be entitled to payment only for the actual cost of the work
completed in conformity with this contract plus such other costs actually incurred by contractor as are permitted
under the terms of this contract and approved by the Authority. There shall be deducted from such sums as
provided the amount of any payments made to the contractor prior to the date of the termination of this
contract. The contractor shall not be entitled to any claim or claim of lien against the Authority for any additional
compensation or damages in the event of such termination and payment.
Security Clearance
All contractors personnel should be cleared to the Authority security clearance level of SC as a minimum and
must be available to begin work with immediate effect following contract award.
While unlikely, some aspects of the work to be undertaken may require a higher level of clearance, this will be
communicated to the successful Bidder prior to the engagement on such aspects commencing. The Authority
will make best endeavours in providing as much prior notice as is possible in such an event.
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Conflict of Interest
You are to declare any competing interests that any part of your organisation may have. This may be
considered in our determination of our final decision. A competing interest is something which exists when
professional judgement concerning a primary interest (such as the robustness of work undertaken) may be
influenced by a secondary interest (such as financial gain or personal rivalry).
As part of its role to provide services to the Authority (or its agencies), the Company acknowledges that it
(and its employees, agents and subcontractors) may acquire substantial information concerning the
Authority’s procurement projects and programmes of the Authority which could provide the Company with
an advantage and render unfair an otherwise genuine and open competitive procurement exercise for other
goods and/or services.
In the event of a competitive procurement for goods and/or services, subject to its compliance with the
terms of this Agreement, the Company shall (subject also to any requirements set out in the relevant
Authority’s tender documents being satisfied) not be discounted from participating in any procurement
exercise merely by virtue of its provision of other services to the Authority or its agencies PROVIDED
THAT:

the Company can demonstrate that it has fully and properly complied with its obligations as
set out in this Agreement; and

the Company can demonstrate that it has maintained “ethical walls” as referred to in
paragraph below.
In the event that the Company (or a Corporate Recipient) wishes to submit a tender or participate in any
tender for the provision of goods and/or services relating to the requirement or any other procurement
project or programme of the Authority, it shall demonstrate to the Authority and otherwise ensure at all
times that:





such tender is not made with the benefit of the Information;
those persons who receive the Information directly or indirectly pursuant to this Agreement
(the “BAU Team”) are not involved (and have not been involved) in the tender process in
any way and do not directly or indirectly provide the Information to persons involved in the
tender (the “Bid Team”);
any Information is not available to the Bid Team (or other employees of the Company (or a
Corporate Recipient) who are not acting on behalf of the Contracting Authority) on the
Company’s (or the Corporate Recipient’s) computer networks and that the Bid Team and
the BAU Team are, so far as practicable, located in different offices of the Company (or, as
the case may be, the Corporate Recipient) and procedures are implemented including (but
not limited to): (a) a clean desk policy; (b) lockable private storage areas for paper
documents otherwise available to both teams; (c) secure storage and secure access to
electronic documents, electronic files and e mails otherwise available to both teams; and
the Bid Team and the BAU Team have separate reporting and management lines.
The Company and Corporate Recipient have entered into a Non-Disclosure Agreement
In the event that the Company (or a Corporate Recipient) becomes aware that the Bid Team has received
any Information which is not provided by the Authority pursuant to the procurement process and is not
otherwise in the public domain, the Company (or the Corporate Recipient) shall forthwith inform the
Authority of this fact and carry out an urgent review the purpose of which will be to identify the reasons for
the disclosure, the extent of the disclosure and to ensure that such information is not again disclosed.
Thereafter it shall as soon as practicable share with the Authority the results of such review and, in the
event that the Authority believes that the continued participation of the Company (or the Corporate
Recipient) is not otherwise prejudiced, implement any proposals arising from such review or any
reasonable recommendations of the Authority.
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SCHEDULE ONE
(3) The Ministry of Justice requires KPMG LLP whose registered office is at 15 Canada Square, Canary
Wharf, London, E14 5GL (“the Contractor”) to deliver services in accordance with the invitation to
tender issued on 10th October 2013 (see ‘ANNEX A’), Clarification document issued on 15th October
2013 (Annex B) and your tender response dated 17th October 2013 (see ‘ANNEX C’).
Prices & Charges
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ANNEX A
SPECIFICATION
1.
Introduction
The Ministry of Justice (MoJ) works to protect the public and reduce reoffending, and to provide a more
effective, transparent and responsive criminal justice system for victims and the public. It is a ministerial
department, supported by 37 agencies and public bodies.
The Legal Aid Agency is an executive agency of MoJ. It is a delivery organisation which commissions legal aid services from
providers (solicitors, barristers and the not-for-profit sector) and administers both civil and criminal legal aid schemes in England
and Wales..
Criminal legal aid accounts for a significant proportion of the MoJ budget, at around £1bn per annum in 2012/13 delivered by just
over 1600 firms and over 4000 advocates.
2.
Aims
The Government is currently proposing to introduce competition in the criminal legal aid market. The proposals are set out in the
Government consultation response Transforming Legal Aid: Next Steps1.
In order to further develop the proposals, we wish to procure advice, based on financial analysis, from external consultants on the
proposed number of contracts to deliver Duty Provider Work (DPW) in each of our proposed procurement areas (i.e. the proposed
geographic areas within which providers would be contracted to deliver criminal legal aid services).
This work is required to inform our assessment of options for the final model of procurement of criminal legal aid services.
3.
Objectives
We wish to take advice from external sources to:
a)
Obtain more detailed financial analysis and modelling to inform our assessment of options; sustainability and the final
decision on the number of contracts for Duty Provider Work.
b) Ensure our proposed procurement areas allow at least a minimum number of providers to continue to operate in each
area, and that a service is provided to all who need it.
c) Ensure that our final decisions achieve an appropriate balance between the need for consolidation of the market to ensure
financial sustainability and the ability of suppliers to adapt in the time available.
Advice is sought from a provider with experience or knowledge of large scale procurement exercises and skilled
multi disciplinary resource.
The output of the financial modeling work should be a paper published by the consultants setting out their
conclusions for the optimal sized contract in value terms (including recommendations as to how the value of
own client work should be taken into account), and any associated recommendations for addressing issues with
regard to specific procurement areas. The MoJ will then use this to inform the number of Duty Provider Work
1
https://consult.justice.gov.uk/digital-communications/transforming-legal-aid-nextsteps/supporting_documents/transforminglegalaidnextstepsweb1.pdf
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Contracts on offer under the proposed modified model.
4.
Background to the Requirement
Following a number of previous consultations on the subject, in April 2013 the Government launched the consultation on further
reform of the legal aid system, including introducing competition in the criminal legal aid market. The competition model
proposed was designed to achieve best value for money by offering providers increased opportunities to scale up to achieve
economies of scale and provide a more efficient service, giving them the confidence to invest in the restructuring required in the
knowledge they would be in receipt of larger and more certain returns.
Having carefully considered the responses to the consultation, the Government announced in September 2013, in the consultation
response Transforming Legal Aid: Next Steps that it would undertake a second phase of consultation on refined proposals for
introducing competitive tendering. The modifications to the competitive tendering proposals include the removal of price as an
award criterion, instead setting fees administratively for criminal legal aid work. A summary of the responses to the April
consultation are set out in Annex B and the modified model is described in detail in Chapter 3 of the consultation response.
The current consultation on the proposals opened 5 September 2013 and aims to collect views on the modified model, including
the proposed procurement areas, remuneration mechanisms and the interim fee reduction.
Governance
The Legal Aid Transformation Programme Board provides strategic oversight of the activities within
this programme, so as to ensure that the Government’s policy is implemented and that benefits are
realised. Programme Board membership is drawn from both the MoJ and the LAA, in line with the
collegiate approach to working. The Programme Board chair is Catherine Lee, MoJ Director
General of Law and Access to Justice.
The consultants appointed under this contract would be managed by Analytical Services and would formally report to the
Programme Board. Therefore, other teams across MoJ and LAA may provide information or meet with the consultants where
necessary.
5.
Scope
The Government is jointly commissioning a piece of research with the Law Society to help inform the analysis of sustainability
and the final decision on the number of contracts for Duty Provider Work under the modified model described in Chapter 3 of the
latest legal aid consultation.
The piece of work is divided into two stages. The Law Society has commissioned Otterburn Legal Consulting to conduct the first
stage of this research. A quantitative survey has been sent out to criminal legal aid providers, which aims to collect certain
financial data, as well as assessing their management ability to deal with growth 2. Otterburn will also be interviewing a small
sample of providers to collect more in-depth qualitative data about their views.
The scope of this procurement forms the second stage of the research which would involve taking the quantitative and qualitative
data collected by Otterburn and use it to advise MoJ’s Analytical Services and Policy teams on the optimal size and number of
contracts in each procurement area as specified in the consultation response in order for the market and service to be sustainable.
There may also be a requirement for additional qualitative interviews to be conducted to inform the modelling work, which could
be within the scope of this procurement. Potential bidders should demonstrate the ability to conduct qualitative research (recruit
2
http://www.lawsociety.org.uk/news/stories/contracts-for-duty-work-help-us-build-the-evidence/
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respondents, carry out qualitative interviews, analysis) and should provide costs for conducting qualitative interviews as an
additional option (for 5, 10 and 20 interviews) to inform their modelling work.
It is important to highlight that sustainable delivery is one key factor we propose to apply to help determine the final model of
procurement. For information, the other key factors are:




We must ensure a sufficient supply to deal with potential conflicts of interest;
We must ensure a sufficient case volume to allow fixed fees to work;
We must ensure the market is sufficiently agile to meet the financial and volume demands; and
We must ensure the market is competitive in future tendering rounds (sustainable procurement).
These four factors are described in more detail in Transforming Legal Aid: Next Steps paragraph 3.31.
The scope of this stage of the research would therefore take the form of:
i.
ii.
iii.
an advisory function to provide information and evidence which will inform the assessment of options
and recommendations on the number of contracts to be offered
modeling analysis of potential market behaviour and the implications of the advised number of contracts
model
assurance that the size and geography of the proposed procurement areas are appropriate
As far as possible, the contracts to deliver Duty Provider Work should also be large enough in volume and value to be sustainable
in their own right after the cumulative reduction in fees by 17.5%. However, most criminal legal aid providers will deliver both
Own Client Work and Duty Provider Work. Therefore, this must be taken into consideration.
We propose the research is modelled according to our currently proposed procurement areas. However, if in modelling a
procurement area it becomes clear that the size or geography of the area is inappropriate, this should be flagged accordingly.
Procurement areas should:


allow a minimum number of providers to continue to operate in each area; and
allow a service to be provided to all who need it.
6. Requirement
Using both the data collected from the survey run by Otterburn, and the consultants own knowledge of the Legal Aid sector, the
consultant will:
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
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Produce a series of illustrative financial models to show the correct size of contracts required for a provider to be viable
under the proposed fee reductions for different types of procurement area.
Include iterations of this to show different provider structures / practices in terms of how a provider might respond
Analyse whether changing the proposed procurement areas alters the size of contract required for a provider to be
sustainable.
Propose the relevant start up costs, and long term operating costs of providers with a contract to deliver DPW.
Analyse the ability of the existing supplier base to adapt into the provider structures/practices (and as applicable for new
entrants) required to operate the recommended model effectively
Model a range of scenarios based on changing the variables set out above.
Attend weekly updates, where the researchers will report back on the more in depth qualitative interviews that will be
underway.
7. Performance of the Services and deliverables
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Plan and Milestones (including dates for completion)
(i)
The Plan as at the Effective Date is set out below:
Milestone
Deliverables
Duration
(bulleted list showing all
Deliverables (and
associated tasks)
required for each
Milestone)
(Working
Days)
A paper published by 17
the consultants setting working
out their conclusions days
for the optimal sized
contract in value terms
(including
recommendations as to
how the value of own
client work should be
taken into account),
and any associated
recommendations for
addressing issues with
regard
to
specific
procurement areas.
Milestone
Date
Customer Responsibilities (if applicable)
15 November
(ii)
If so required by the Customer, the Supplier shall produce a further version of the Plan (based on the
above plan) in such further detail as the Customer may reasonably require. The Supplier shall
ensure that each version of the Implementation Plan is subject to approval. The Supplier shall
ensure that the Implementation Plan is maintained and updated on a regular basis as may be
necessary to reflect the then current state of the implementation of the Services.
(iii)
The Customer shall have the right to require the Supplier to include any reasonable changes or
provisions in each version of the Implementation Plan.
(iv)
The Supplier shall perform its obligations so as to achieve each Milestone by the Milestone Date.
(v)
Changes to the Milestones shall only be made in accordance with the variation procedure and
provided that the Supplier shall not attempt to postpone any of the Milestones using the variation
procedure or otherwise (except in the event of a Customer default which affects the Supplier's ability
to achieve a Milestone by the relevant Milestone Date).
8. Performance Monitoring
Throughout the period Analytical Services will regularly review the work being undertaken to ensure it is progressing in line with
the contract specification.
9. Security
Subject to 102 Petty France security restrictions.
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ANNEX B
The Provision of Consultancy Services for Crime
Competition Financial Modelling
Clarification Document
Ref Number: 643 RM2592 (MOJ 2983-1)
Date: 14th October 2013
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Summary of Teleconference
Q1. What is the distinction between the own and duty solicitor
A1. Duty Provider Work refers to criminal legal aid services to those clients who choose to
receive advice and assistance from whichever duty solicitor firm is on call at that time, whereas
Own Client Work refers to criminal legal aid services to those clients who select their own
provider at the point of request.
Q2. Can there be two solicitors on call at any one time?
A2. The client choice is between the duty solicitor firm on call or any solicitor firm of their own
choosing which they provide the name of. Only one duty provider is on call at any one time, but
the provider may have more than one solicitor on call at that time, though this is not necessarily
required by MoJ.
Q3. What response has been received to the survey so far? Has there been a good amount
of data/Coverage?
A3. The survey has so far received a low response; the number of response received is less than
100, and the final number of responses is likely to remain below 100. Given the likely low
response to the survey, we wish to ensure we obtain maximum information from the qualitative
interviews to inform the modelling work. The survey covers questions around the financial
circumstances of the firms, including detailed information about their costs and income, as well as
requirements for legal aid contracts to be viable for them. The ability to use the data from the
survey will be dependent on the final response; coverage and representativeness of the results.
Q4. What was the initial survey size? How many surveys were sent out?
A4. An invitation to take part in the survey was sent to all current criminal legal aid providers,
through LAA e-bulletin and through the Law Society communications.
Q5. Was the survey in the form of a template or in free form?
A5. The majority of the survey was in the form of a template, which collected detailed financial
and business information about the firms in a structured way. The survey also included four open
ended questions at the end to obtain information about provider views on: size of the
procurement areas; main challenges in achieving the size of a firm required to achieve a viable
contract; main challenges if the firm only had own client work; and support or measures that could
support the firm to operate under the proposals.
Q6. Although you have asked for a capped price, will there be a requirement for a second
price for qualitative interviews?
A6. Yes. The main requirement is for the financial modelling work, and a capped price should be
quoted for this. There may be a requirement for the contractor to undertake some additional
qualitative interviews, for example to focus on a specific area or group of interest, and these
should be quoted as an additional option.
Q7. Why is this contract governed by the MOJ’s terms and conditions?
A7. The value for this contract area does not exceed the £100k requirement for this event to be
undertaken under the Consultancy One Framework. Therefore MOJ Terms and Conditions will
govern this contract, as already stated in Appendix A of the ITT documents.
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Q8. Do they require successful contractors to be vetted by the MOJ?
A8. We do not expect the contractors to be vetted by the MoJ, due to the tight timescales of the
work. However, as many existing companies and contractors have already been vetted, it would
be helpful to know the level of clearance potential bidders hold as this may influence the way in
which the work can be conducted.
Q9. Will data be protectively marked?
A9. No, the data will not be protectively marked under the government protective marking system.
The data is collected and will be held by Otterburn Legal Consulting rather than the MoJ, and
Otterburn Legal Consulting will provide analysis required for the modelling directly to the
contractor. The data will however need to be treated with sensitivity and in confidence, given the
reassurances given to the survey respondents.
Q10. How long is it until survey responses close?
A10. The fieldwork closes on 18th October.
Q11. Will the successful bidder get the raw data even if it’s anonymized?
A11. It is expected that the successful bidder will not get access to the raw data even if it is
anonymised. There has been considerable suspicion and resistance from potential respondents;
in order to encourage participation it was deemed necessary to provide reassurance that
individual responses (even anonymised) would only be seen by Otterburn Legal consulting.
Q12. Is this report to be published?
A12.Yes, the expectation is that the report will be published.
Q13. Does the MOJ have an idea about how big the contract size is?
A13. The initial work undertaken by Otterburn during the April consultation looked at 3
hypothetical firms and assessed their viability under the contract sizes we were proposing. This
work suggested that contracts in the region of £1 million might enable firms to be viable to sustain
a 17.5% reduction in fees. However, this is based on a very small sample, hence wanting to
undertake something more comprehensive this time around.
Responses to written questions
Q1. Can you please provide an example of the questionnaire issued by Otterburn Legal
Consulting to Criminal Legal Aid providers?
A1. A copy of the survey and accompanying instructions and information is available via the Law
Society website:
http://www.lawseociety.org.uk/news/stories/contracts-for-duty-work-help-us-build-the-evidence/
Q2. Can you please detail what volume of information will be available to us during the
completion of this project?
A2. The information that will be available will include:
 Quantitative data from the survey (see copy of the questionnaire for the exact
questions, likely number of responses will be below 100).
 Qualitative information based on approximately 25 in depth interviews (that will
explore: the financial and economic circumstances of the firms in more detail; their
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views on the proposed procurement areas and required size of contracts to be viable;
perceived readiness to adapt and respond to proposals; and how the firms are
planning to respond to the proposals).
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ANNEX C
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