Issue details

Proposed decision:

Cabinet to:

1.            Agree the procurement of an e-voucher distribution service provider via the Crown Commercial Framework RM6255 (Voucher Schemes)  to meet the needs of the County Council

2.            Delegate authority to the Corporate Director of Finance to take necessary actions, including but not limited to, entering into relevant contracts or other legal agreements, as required to implement this decision.

Background and Proposal:

The County Council provides a range of support to the residents of Kent who are on low             incomes or in financial crisis.  This includes financial support to help individuals and             families buy essentials, such as white goods, groceries, energy, clothes or basic furniture.  On other occasions it is to support a Government initiative, for example distributing supermarket vouchers during school holidays to families whose children ordinarily receive a benefits related free school meal.  Through the pandemic period the need for such support has been significantly higher that pre-pandemic, and demand for support continues to be high.

To date, the separate services in the County Council have made their own arrangements           for procuring and distributing vouchers to individuals and families, despite the basic requirements being very similar. 

It is proposed that the County Council procures a single service provider of e-vouchers, using the Crown Commercial Framework RM6255 (Voucher Schemes) as the procurement route.  This framework lists 11 suppliers of e-vouchers.  The agreed specification has been compared to the company prospectuses on the framework portal to establish which companies potentially offer a suitable solution and a procurement exercise will be completed in line with the requirements of the framework.

This decision is solely to procure a service provider to enable the County Council to issue e-vouchers to individuals and families.  It does not relate to, nor seek funding for, the costs of the vouchers issued by the individual services or any policy decisions in respect of whether these services should provide such support and the criteria for that. Such decisions either have been made by the relevant decision maker utilising the relevant budget or will be presented to the relevant decision maker for deliberation as the need arises.

The timetable for procurement is being driven to ensure that should a decision be made to issue FSM during summer 2022 the Council has a provider in place to implement this.  This currently assumes the procurement process is completed with contracts signed by 22 June 2022.  Until the procurement process is complete it is not known what mechanism the provider would use to deliver this requirement or the role of schools in this.  As summer term ends 27 July 2022 time is needed to communicate any changes, enable the provider to “onboard” schools, and allow schools to take any action necessary.

The collective view of the services that provide vouchers to families is that an e-voucher solution would improve and streamline their processes.  They have agreed a single Council-wide specification, which it is expected could be delivered by a provider.  The procurement of a service provider places no obligation on the Council to buy a specific volume of vouchers but provides a solution to do so should the Council decide it needs to do so.  The costs of procuring and implementing the solution is within existing budgets.

Financial Implications:

In procurement terms, the expected value of the contract includes both any fees/costs made to the provider for delivering the service, together with the face value of the vouchers provided.   The contract values may vary significantly, for example depending on whether FSM vouchers are or are not provided in holiday periods.  Critically, there will be no obligation or requirement to put expenditure through the contract, but it provides the mechanism to do so should the Council need to.

The estimated contract value needs to represent the estimated maximum value that might reasonably be foreseen.  This appears significant because the face value of vouchers is included when calculating the estimate vale and accordingly requires a key decision. That said, it is anticipated the cost of providing the service (i.e. the payment retained by the service provider) will, at most, be a very small percentage of this sum.  To illustrate this the current arrangements are below:

The cost to deliver/administer vouchers to residents currently is contained within the budgets of the services that do so.  In many cases much of this is staff time.  An e-voucher system will reduce the time some staff spend purchasing and distributing vouchers to residents and will reduce transaction costs.  Having a single system with staff in different services able to use it also supports business continuity across the Council. 

The procurement of a single service provider is not expected to create a budget pressure for the County Council.  It is anticipated any costs associated will be met within existing service budgets.  Until the procurement process has been completed and the charging framework of the preferred provider is known it is not possible to set out precisely how this will operate between services.  However, it is most likely to be that each service has a budget code with the provider to which the costs of their vouchers is charged, which will cover face value and any unit charge for issuing these.  The most significant unknown cost is mobilisation and onboarding.

It is expected that the service provider will be able to agree different payment terms for different aspects of the service provided.  For example, if FSM vouchers are provided to families in summer 2022 the cost would be circa £4.8m and any provider is likely to need funds up front or in rapid payment terms, whereas the more general distribution of vouchers is likely to be payment in arrears.  The final payment arrangements will be negotiated during the procurement process, and any changes for individual services worked through with them and Corporate Finance.