The government oversold the prospects of voluntary sector organisations winning lead contracts under the Transforming Rehabilitation programme, charities have told the National Audit Office.
The programme involved the outsourcing of responsibility for probation services for all low and medium-risk offenders to 21 community rehabilitation companies. A report on the programme from the government’s spending watchdog says that although the Ministry of Justice put extensive effort into attracting voluntary sector bidders for the main contracts, they largely lost out to private sector organisations.
The report, published today, says that only one of the 21 top-level community rehabilitation companies set up to run these regional probation services was won by a contractor from outside the private sector.
"Reflecting ministers’ objectives to open the market, the ministry put extensive effort into attracting a diverse range of potential bidders, whether as prime contractors to lead consortia or within supply chains," it says.
"Voluntary sector bodies considered that government had ‘oversold’ the prospects for them to win as prime contractors, and that the time and resources they had used to participate in the competition were not well spent."
It says the voluntary sector bidders for CRCs lost out largely because of their limited resources and a lower appetite for risk than their private counterparts.
"They recognised that Transforming Rehabilitation represented a step up in size even for large voluntary organisations, but considered that their track record and ideas made them credible bidders," says the report.
It says voluntary sector organisations felt the factors that worked against them in winning prime contracts included their difficulty in bidding for more than two CRCs because of a lack of scale and an initial lack of detail from the MoJ about its requirements for financial guarantees from bidders, "which led to protracted but largely unsuccessful efforts to find solutions right up until bidding".
The NAO report says the MoJ emphasised that the government had provided particular support for voluntary sector bidders "and had shown flexibility, for example by halving the normal level of parent company guarantees it required of CRC providers".
But it says that, given the particular challenges, investment and risk involved in taking over and restructuring CRCs, "it was not surprising that the MoJ needed a high level of assurance that winners had sufficient financial and commercial standing to sustain such a demanding proposition".
The report says that voluntary bodies still have a major role as suppliers to CRCs, "although recent surveys of the sector indicate increased uncertainty and instability in funding of their work with offenders".
A spokeswoman for the Ministry of Justice said: "The voluntary sector plays a key role in our probation reforms, with 19 of the 21 CRCs being run with their assistance.
"We are committed to giving new providers the flexibility to innovate, and new providers are already bringing a wide range of skills and experience from the public, private and voluntary sectors that will be essential in tackling reoffending.
"Thanks to these reforms, offenders in prison for less than 12 months are now receiving support from the probation service for the very first time."