"Who'd have thought that we'd be reduced to lawyerspeak and statisticians and management gobbledegook as the formula for working with people.
Its a nightmare, Mr Brown. I cry myself to sleep, and wake up crying, and cry on the way to work, and cry into my coffee, and cry all the way home."
Transforming Rehabilitation Programme – Payment Mechanism Design Overview
1.1 This overview document sets out how MoJ will pay for services that will be delivered
under the Transforming Rehabilitation Programme and the rationale behind the chosen
1.2 The payment mechanism for services provided to the offender allocated to the provider
is comprised of two elements: Fee For Service (FFS) and Payment by Results (PbR).
The FFS is primarily paid for mandated activities that deliver the sentence of the court
and licence conditions and includes Through the Gate (TTG) services and
Rehabilitation Activity Requirements (RAR). PbR is paid for the achievement of
statistically significant reductions in reoffending against the baseline historical level.
1.3 The total available funding in any year, known as the Maximum Annual Payment
(MAP), has been set on a Contract Package Area (CPA) basis for each year of the
contract. Providers are required to bid a FFS for each year of the contract. The
difference between the FFS bid and the MAP will form the basis of the amount available
for PbR, relating to the quarterly cohorts and annual cohort that are established in that
1.4 Key features of FFS are outlined below and further detail can be found in section 3 of
this overview document:
- FFS covers the delivery of sentence requirements and includes TTG and RAR.
- Providers will bid against a predicted annual volume range, weighted for sentence type and, in the case of Unpaid Work, the length of the requirement. This is known as the Weighted Annual Volume (WAV).
- Providers’ FFS bids are expected to include a ‘learning curve discount’ to drive continuous improvement.
- The FFS for the predicted WAV will be an annual amount paid in twelve equal payments made monthly in arrears.
- At the end of each contract year, the FFS paid on the predicted WAV is reconciled to the actual WAV recorded, with a retrospective payment or deduction applied if the actual WAV is shown to have been outside of a set tolerance range around the predicted WAV.
- Service credits will be applied for failure to deliver the mandatory services to a specified time and quality, in line with the performance framework.
1.5 Key features of PbR are outlined below and further detail can be found in section 6 of
this overview document:
- PbR will be paid based on a binary metric (the reoffending rate, i.e. the percentage of offenders in a cohort that reoffend) and a frequency metric (the frequency of reoffending, i.e. the number of reoffences per reoffender).
- The offenders allocated to a provider will be grouped in quarterly cohorts for the binary metric.
- Payments on the binary metric will be made only for achieving statistically significant reductions in reoffending, with deductions applied to the FFS for underperforming (i.e. increasing the rate of reoffending beyond a statistically significant point) and higher payments for further improvements in reducing the rate of reoffending.
- Annual top-up payments will be available on the binary metric for statistically significant improvements against annualised targets.
- The offenders allocated to a provider will be grouped in annual cohorts for the frequency metric.
- There is a “hurdle”, set at the binary reoffending baseline, which must be achieved in order for any payment to be made on the frequency metric.
- Payment on the frequency metric will be made if there is any reduction in reoffending (provided the binary hurdle is also passed) and deductions will be applied for any increase in reoffending.
- There will be significant financial deductions to the FFS and/or a termination right for MoJ for large or repeated increases in reoffending rates.
1.6 Providers may purchase services for offenders within their cohort from other providers.
A rate card, using the prices stated in their bids, will govern the prices for these
1.7 The NPS will purchase delivery of certain services from providers for offenders that the
NPS manages. Payment will be made on a Fee for Use (FFU) basis. Prices for these
services will be governed by a rate card. Prices for any elective services (i.e. those not
already included on the rate card) will be agreed between the NPS and the provider.
The same approach will be taken by commissioning bodies, such as other government
departments, which also wish to purchase services from CRCs.