Post by Patrick Torsney on Aug 15, 2007 11:23:12 GMT
Not-for-Profit Unifed Contract Transition Process
1.1 This document sets out how, under the Unified Contract, the Legal Services Commission intends to manage the transition from the payment for hours worked to fixed and graduated fees in the Not for Profit Sector post 30th September 2007. The essence of the arrangements is a concession allowing for a buffer of payments for Contract Work subject to the Commissions strict rights in relation to contract management as detailed in the Unified Contract.
1.2 The General Civil Contract was based on inputs i.e. hours worked and did not incentivise suppliers to be efficient. Performance management of the contracts ensured that suppliers delivered their contracted hours, but the Legal Services Commission often had to take an interventionist approach such as imposing upper casework limits to try to drive efficiency.
1.3 In the past 12-months many agencies have delivered increasing value for money and contributed to the increase in the number of clients assisted by legal aid. The Legal Services Commission is moving towards the purchase of end-to-end services, incorporating a mix of cases that present themselves. The aim of the transitional process is to ensure that agencies continue to deliver and to improve upon that service, so that with the roll out of best value tendering they will be able to compete with other service providers for contracts.
1.4 Account Managers are in place to support providers through the transition, and we strongly encourage organisations to speak to their Account Manager should there be any questions or queries.
2. OUTLINE OF THE MAIN CHANGES
2.1 What has already changed?
2.1.1 The Unified Contract Standard Terms were implemented on 1st April 2007.
2.1.2 New outcome codes were introduced to support Key Performance Indicators.
2.1.3 Payments became monthly in advance rather than quarterly.
2.2 What stays the same until 30th September 2007?
2.2.1 The General Civil Contract (NFP) contract specification will continue to govern the performance of casework for cases started before 1st October 2007.
2.2.2 The funding formula for agencies remains unchanged.
2.2.3 NFP providers will still be reconciled against hours worked.
2.2.4 Performance will be required at 95% or above, subject to the provisions contained in Annex C of the current NfP Specification (concerning the 15% allowance for good reason).
2.2.5 Income will remain at 2006/7 levels subject to satisfactory performance.
2.2.6 Level 1 work will still be allowed.
2.2.7 Both tolerance and level 1 will remain capped at a maximum of 10% of contract.
2.2.8 Existing Upper Casework Limits will remain in force for Debt and Welfare Benefits.
2.3 What changes before 30th September?
2.3.1 Arrangements for outreach work post 1st October 2007 must be agreed in advance by separate agreement with Account Managers, preferably before the end of August 2007.
2.3.2 Additional Upper Casework Limits will be introduced in the categories of Housing and Employment when an agency’s average claim is greater than seven hours. The Limit will be set at the level of the regional average claim in that category. This will control the length of cases that started before 1st October 2007 even if they do not complete until after that date. Regional offices will notify agencies individually if a Limit is to be applied to their work. Any Upper Casework Limit set does not include any work carried out before the Limit is imposed.
2.3.3 Quarterly review of performance against contracted hours was done in July 2007. Contract hours and payments were amended
2.3.4 Agencies were encouraged during external training events to monitor case lengths in advance of the introduction of New Matter Starts (NMS) on 1st October 2007.
2.3.4 Regions will hold internal & external training events that will focus on the transitional process and reconciliation.
2.3.6 Organisations will be asked to provide a list of work in progress at the end of September 2007. This will include date case opened, client name, client reference number, the hours worked and any disbursements incurred and paid to the end of September 2007. An excel form is available by email from Account Managers for this purpose.
2.3.7 A final reconciliation will take place once September’s hours are submitted on 10th October 2007. Agencies that have failed to deliver 95% of their contractual hours (or 85% if the allowance for good reason applies) for the period 1st April to 30th September 2007 will be liable to recoupment from future payments in respect of their underperformance for that six-month period.
2.4 What about cases that start before 1st October 2007 but continue after that date?
2.4.1 Cases that start before 1st October 2007 and continue beyond that date will still be governed by the NfP Specification that was in force at the time that the case commenced.
2.4.2 Any Upper Case Limits imposed before 1st October 2007 will continue to apply to work done after 1st October on cases that started before that date.
2.5 What will change post October 1st 2007?
2.5.1 The Unified Contract Civil specification will be implemented on 1st October 2007 and will apply to all cases started on or after that date.
2.5.2 Short pieces of specialist level advice that may previously have been done as Level 1 work can still be done, but the financial eligibility test must be carried out, and will be claimed for through the fixed fee system.
2.5.3 Annex C to the Unified Contract Specification in force from 1st April 2007 has no relevance after 30 September 2007.
2.5.4 Agencies’ performance will be monitored against the Key Performance Indicators (KPIs) set out in the Unified Contract Standard Terms. A failure to achieve any of the specified standards for KPIs numbers 1-5 inclusive as shown in such annex or any additional KPI introduced under that annex, on or before 31st March 2008, shall not of itself be a breach of contract. This is however without prejudice to our rights under the Unified Contract if the failure to meet a particular KPI separately involves a breach of another obligation under the contract.
The change from hours to cases
2.5.5 In September, agencies will be issued with new Office schedules including numbers of NMS to cover an 18-month period to 31st March 2009.
2.5.6 The Office schedule for the 18- month period to March 2009 will contain 19-months worth of NMS to support work in progress. Historic level 1 work will be proportioned to contracted NMS for provision of specialist advice.
2.5.7 An example of a calculation of 12-months worth of NMS is set out in Annex 1 to this document.
2.5.8 Tolerance NMS will be allocated to agencies in proportion to historic usage rather than blanket allocation. The lowest fixed fee of debt, £121, will be used to calculate the number of tolerance NMS allocated. If agencies consider that their tolerance allocation is insufficient to cover the work they do they should discuss the matter with their account manager.
2.5.9 Agencies will have scheduled maximum NMS. This is the maximum number of cases that agencies are authorised to start and that the LSC will pay for.
2.5.10 The NMS allocation will be guaranteed until 30th March 2008, and will not be lowered if the agency is performing below 85% usage between 1st October 2007 and 30th March 2008.
2.5.11 Agencies will need to monitor their usage of NMS, as failure to start sufficient cases will lead to inability to bill down the line, and to a reduction in income.
2.5.12 There is potential for successful agencies to increase funding through the grant of additional NMS subject to local needs and priorities. Increases are not guaranteed, and organisations must not start more cases than allocated.
Payments, claims and credits
2.5.13 Subject to satisfactory performance under their current contract until 30th September 2007, agencies will continue to receive the same standard monthly payment from October 2007.
2.5.14 The standard monthly payment will include a payment on account of disbursements, based on agencies’ previous expenditure on disbursements.
2.5.15 The standard monthly payment will be subject to the reconciliation process set out below.
2.5.16 Agencies will receive a credit for each case reported on the CMRF (NB the case may not actually have completed…it could be a Stage claim).
For cases opened prior to 1st October 2007 and closed after 1 October 2007
2.5.18 When cases opened before the 1st October 2007 are closed, agencies will only claim a credit in respect of the additional hours and disbursements incurred post 1st October 2007 as all previous work has been funded under current arrangements. These additional hours should be claimed at the agency’s individual hourly rate (as specified in their current contract schedule).
2.5.19 When reporting such cases agencies will be required to state (a) all the time spent on the case (both before and after 1st October 2007) in the “time” column, and (b) the cost of the time spent on or after 1st October 2007 in the “profit costs” column. The information on the total time spent is for internal LSC use only and does not affect the amount of ‘credit’ for these cases which is as stated in paragraph 2.5.18.
2.5.20 Providers are encouraged to complete the residual work form attached as Annex 2 for each case to aid internal monitoring.
For cases opened on or after 1st October 2007
2.5.21 Agencies will be credited with the relevant Standard or Graduated fee, unless the case falls within the provisions for exceptional cases (see below).
2.5.22 The credit will also include any disbursements incurred. In appropriate cases, as specified in the Funding Code, disbursements will include travel costs.
2.5.23 Where the cost of the time spent on a Controlled Work case opened after 1st October 2007, calculated at hourly rates, is at least three times the fixed fee, agencies will be able to apply for the case to be treated as “exceptional” by completing form EC-CLAIM 1. Providers are required to submit the exceptional case file to Nottingham for assessment:
Legal Services Commission Nottingham Regional Office Fothergill House 16 King Street Nottingham NG1 2AS DX 10035 Nottingham 1
Once the claim is made the agency will initially be credited with the Standard fee appropriate to that category of law. Cost assessment of all exceptional cases will be done at Nottingham, except Immigration claims which will be assessed by the National Immigration and Asylum Team in Exchange Tower:
National Immigration and Asylum Team Legal Services Commission London Regional Office 12th Floor, Exchange Tower 2 Harbour Exchange Square London E14 9GE DX 100170 Docklands 2
Following assessment agencies will be credited with any balance assessed as due. Organisations are however encouraged not to budget exceptional cases into their finances until the results of any assessment are known.
Reconciliation of claims against payments
2.5.25 As a general rule, account balances will be reviewed monthly with action taken as and when required, usually no more than once per quarter.
2.5.26 The first quarter review of claims against payments under the new arrangements will take place in January 2008.
2.5.27 The reconciliation for 2007/8 will be undertaken in April 2008.
2.5.28 The reconciliation will allow agencies the benefit of a credit buffer of up to a maximum of 3-months average claims in the period to March 2008.
2.5.29 This will be reconciled down to a maximum of 2-months average claims by 31st March 2009 (the end of the 18-month schedule period).
2.5.30 By the end of the current contract on 31st March 2010 the maximum buffer will be reduced to one-month average claims.
2.5.31 During the initial 18-month period, as a general rule we will use a rolling 12-month basis to calculate average claims. Where the 12-month period includes months before October 2007 we will seek to treat those monthly payments as if they were the total claims in those months. There are circumstances, however, where it will not be appropriate to use a rolling 12-month basis and in these circumstances we will act reasonably in not selecting too short or too long a period.
2.5.32 Given that the buffers reduce over time, it will be in the interests of agencies to improve their performance on reconciliation gradually over time, rather than seeking or hoping to improve performance towards the end of the relevant buffer period.
2.5.33 Where the Account Manager projects that the maximum buffer is likely to be breached, on the basis of the agency’s performance to date, the Account Manager will discuss whether to adjust future monthly payments with the agency. Account Managers will make an early, gradual reduction in monthly payments, rather than waiting to the end of the period to make a substantial reduction later in the contract year if and when the buffer is breached.