Black box or empty box?

In an attempt to move away from central prescription of service design, the Work Programme adopted a ‘black box’ approach. However, a misunderstanding of this concept erodes service quality and looks likely to exacerbate an outcome gap between disadvantaged groups. Immediate transparent and nuanced performance reporting may ameliorate this, along with negotiation of minimum quality standards.

The first New Deal employment programmes, introduced in 1998, came to be viewed as highly prescriptive. Their design was centrally determined and locally delivered to a fairly rigid template.

The imposition of central direction is common across our public services, whether commissioned or procured and irrespective of the sector. Prison regimes are tightly controlled, in public and private prisons. We have a national curriculum in our schools. These fixed processes allow for evidence and learning to be gathered centrally and passed on as best practice; enable clear quality control, with inspection against common frameworks, and ensures a ‘fair’ service with equal access in all locations for all service users to the same opportunities.

When early New Deal performance plateaued, its centralised prescription was seen as a barrier to improved effectiveness and efficiency. Individual differences were ignored. Jobseekers were characterised by the type of benefit they were on, or by age, and this meant the service did not listen to and could not respond to personal need.

In 2000, The Employment Zones (EZs) were outsourced to the private sector in 15 particularly challenging areas of high long-term unemployment and replaced the New Deal in those areas. The providers did not have to deliver a prescribed programme. The service was not described in the ‘invitation to tender’ by the procurer – it was a ‘black box’.

The EZs could be procured in this way because their payment mechanism was outcome-based. These were the first big contracts with payment by results. Providers were paid if, and only if, the jobseeker got a job and stayed there. So with money attached to the outcome, it wasn’t necessary to break down the service into a series of prescribed steps, or inputs, with payment attached to each. In fact, if you pass on the risk of service success/failure to the contractor, they are going to need to have greater control over the pulleys and levers determining their performance. And as the procurer, surely you are only really interested in the outcomes anyway?

Evaluations of the EZs, seeking to explain their relative success in comparison with New Deal, point to their increased flexibility. A similar model evolved in just about every provider with empowered frontline advisors each working with caseloads of jobseekers: a) focused on delivering sustained employment outcomes, and b) given discretion over how to get there, with, in most cases, pots of discretionary money to access. The advisors paid for bespoke training, handed out mobile phones, bought interview clothes, paid for MOTs, covered debts, funded the first few supermarket bills once someone started work, and paid ‘bonuses’ to jobseekers sustaining their employment. In the process, they roughly doubled the number of long-term unemployed people finding and keeping work.

A new mantra was, meanwhile, gaining in volume and credence: everything must be…….. localised. This mantra survived the election of 2010 and has got even louder, with power to be cut from the centre and decisions devolved to the citizen. Local people to be given the right to design, bid for and deliver their own services. The people delivering services to be given a greater personal ownership of their service through local mutualisation. Schools freed from conformity to be shaped by their local parents. Doctors to commission services in response to their local patients’ needs.

The strands of influence come together in the Work Programme and it is managed as a black box procurement. Would-be contractors are invited to bid for the contracts with the invitation to tender setting out clear performance targets (in terms of numbers of people getting jobs and staying there), with a detailed payment mechanism linking virtually all the money to long-term employment outcomes.

It is black box because it is outcome-based and risk is transferred. An assumption also appears to have crept in that black box with no central prescription will equal localization and responsiveness.

The invitation to tender for the Work Programme does not prescribe any characteristics of service delivery at all. The bidders are asked to set out their own minimum service standards but there are no parameters within which to do this and the resulting standards vary enormously in level and nature. Some contractors have committed to meet jobseekers at set intervals and to provide them with set services, and have shared this information with the jobseekers. Other contractors wrote brief high level, indefinite mission statements.

Nine months into delivery, and concern is now being expressed about the quality of service being received by some jobseekers, with some providers and/or in some locations. There are reports of caseloads (the number of jobseekers allocated to each advisor) three or four times the size of the caseloads on EZs or New Deal. There are complaints about lack of resources, such as computers and other jobsearch materials. And the subcontractors who were cited in some of the tenders as providers of specialist services in support of the prime contractor, are receiving limited referrals, in some cases of inappropriate jobseekers.

When challenged on this, the Minister for Employment and his Department say that it is “black box procurement”. The contractors are paid on the basis of results. It is up to them how they achieve this. If they fail to deliver outcomes, they will just lose their contract.

Despite the apparent similarities, the procurement of the EZs was different to the Work Programme in four highly significant ways.

1. EZ contracts were competed on the basis of quality and not price. The price to be paid to contractors was fixed – it was the same for all providers. Tenders were scored on the quality of the solution proposed. The box was black when it went out in the invitation to tender, but when it came back in the tenders, it was no longer opaque and it was evaluated.

2. Providers were subsequently assessed on the delivery of their promises. If they changed approach at any time, they had to explain why. Of course, they were expected to continuously improve – in fact, that was a required feature of their box/proposal – but this improvement would be scrutinised.

3. It wasn’t really a black box at all. It had a number of important grey gridlines drawn in it already. All EZ delivery had to meet certain minimum quality standards. For example, the time it took to engage with someone at the start of the programme was limited and this was monitored. Every single jobseeker had to be seen at least fortnightly. Every one of them had to draw up and agree to an action plan. Any money spent on them had to be carefully recorded.

4. EZ performance was also tracked according to important diversity measures, and this was transparently, publicly reported. One of the most exciting features of the EZs, in fact, was how they bucked the New Deal trend and delivered equitable outcomes across ethnic groups. Black people on the New Deal were far less likely to find a job than their white counterparts.

Although WP tenders were evaluated for their quality, the scoring of the tenders that was subsequently made public demonstrates that this aspect of their evaluation failed to discriminate between widely variant proposals. Without detailed examination of their service offer, the boxes effectively remained dark – the contents of the box mattered little in the end.

I have discussed elsewhere the impact of competing the Work Programme on price over quality. With price as the driving force, and with the offer of large discounts rewarded with multiple contract wins, the Work Programme is forced to cream and park.

It is likely that the successful Work Programme contractors will get very clever at ‘diagnostics’. In order to survive, in fact, they must get very smart at quickly separating the wheat from the chaff. Place will be a key determinant and Jane has written about ‘parking by place.’

I am sure they will not set out to discriminate on the basis of age, disability or ethnicity. But it is an undeniable fact that the markers of disadvantage gather around certain individuals in certain communities – with lower levels of motivation, poorer basic skills, limited social networks, less likely to have done well at school, more likely to have been in care, more likely to offend, less likely to have a healthy diet, and so on. With no safeguards in place, either in the procurement process or in subsequent service oversight, the black box of the Work Programme could be a very dark place indeed for many jobseekers.

There is unfortunately nothing that can be done to unpick the Work Programme’s procurement. However, a common framework of minimum standards could be retrospectively agreed with the contractors and transparent performance reporting (with detailed diversity data) is an imperative.

2 Responses to “Black box or empty box?”
  1. Peter says:

    “I have discussed elsewhere the impact of competing the Work Programme on price over quality. ”

    Independent analysis says this just didn’t happen.

    NAO report of January this year clearly states that:

    “2.8 A comparison of the bid scores for successful and unsuccessful bids in each contract package areas shows that neither quality nor price predominantly determined the outcome”

    Click to access 1701.pdf

    • Peter,

      Many thanks for this comment and for the reference to the NAO.

      I have to say that the analysis of the scores that we saw indicated the opposite. On the whole, there was little between organisations in terms of their quality marks, and the differentiator was their price. In one area, we saw one organisation with a comparatively very low quality mark secure the contract precisely because of the discount that was offered. Our impression/analysis was generally shared by everyone else in the industry that I spoke to. I’m afraid I do not have a breakdown of the scores to show you and I don’t think they were ever put into the public domain.

      Though I realise it is hard or me to argue against the NAO without hard data to back me up.

      However, I would suggest that 2.9 in the NAO report does back up my interpretation. If the successful bidders were those who offered large discounts, does it not follow that this was the reason they won? Unless we are to assume that all those offering discounts also happened to offer the highest quality?

      Indeed, I think that all 2.8 is saying is that in terms of weighting the quality and price were, in theory, the same. In practice, the differentiator, was discounting.


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