Over the past 18 months, 50 Degrees has supported a significant number of local Connect to Work procurements, with approximately 80% resulting in successful bids. That gives us a useful perspective on the commercial reality of local commissioning. Zach Law, Commercial Lead, shares the lessons from supporting Connect to Work procurements - and what providers can carry into the next phase of employment support commissioning.
Connect to Work has a common national purpose: helping people with health conditions, disabilities and other barriers to get into and stay in work through personalised, evidence-led support. But a common programme does not create a common commercial model.
Across the procurements we have seen, commissioners have made different decisions about funding, payment, performance, VAT, contractual risk, evidence and local delivery design. The service might start from the same policy intent, but the commercial proposition can look very different depending on where a provider is bidding.
The headline value is not the whole story
The first lesson is to understand the funding architecture, not just the total contract value.
Local arrangements have varied in how closely payment profiles align with the annual budgets set out in the documentation. Where a provider can draw down the full budget in line with planned delivery costs, this is less of an issue. Where income is dependent on performance, or on evidence being achieved and accepted, it needs to be modelled carefully.
Providers needed to get clarity early on in the process:
- When funding is paid and what must be evidenced before it is released
- Which costs are eligible, capped or potentially subject to clawback;
- How budget movement, change control and reconciliation will work; and
- Where the provider, its partners or the accountable body carry cash exposure.
During mobilisation, people, premises, systems and partnerships need to be in place before the programme has built momentum. The annual budget, payment profile and cash requirement are different things—and all three need to work.
Good feedback can improve the procurement
Early commercial feedback does not just help providers decide whether a procurement is viable. It can improve the commissioner's approach too.
In one case, our analysis showed that the proposed payment mechanism would make it impossible to fully deploy the budget available for local residents. Too much funding was dependent on performance triggers that were impossible be achieved, therefore leaving around 30% of the TCV stated in the spec unattainable. Following the detailed feedback though the CQ process, the commissioner eventually withdrew the procurement, and restarted at a later date with an updated specification and payment mechanism aligned to delivery and budget utilisation.
We have also seen the same principle apply to VAT. By challenging initial VAT assumptions through the CQ process, multiple commissioners revisited their positions and accepted the appropriate VAT treatment, which mitigated VAT issues for VAT-registered suppliers ahead of contract award / delivery.
It was encouraging to see commissioners listen to detailed, evidence-based feedback and be prepared to revisit assumptions where they did not support the programme’s objectives. That openness created more deliverable procurements, better use of funding for local residents and a stronger basis for successful delivery.
The commercial model needs to work for the supply chain
For partnership bids, commercial clarity cannot stop with the lead provider. Supply-chain partners need a clear view of the opportunity they are being asked to support: the volume assumptions, delivery activity, funding profile, payment terms, evidence requirements, mobilisation costs, risks etc.
This matters particularly for smaller local and specialist providers. They can bring essential local knowledge, trusted relationships and delivery capability, but may not have the in-house commercial resource to model a complex opportunity or fully assess the implications of a payment mechanism.
A good budget model turns a high-level requirement into practical delivery assumptions: expected referral flow, staffing, activity, cost and payment timing. Shared early, it lets partners make informed decisions, price their contribution realistically and understand the conditions that need to hold true for the service to work.
That improves the whole bid. It creates more transparent delivery relationships, gives the lead provider a more robust cost base and reduces the risk of expecting partners to carry financial exposure they did not understand at the outset. The model should not simply produce a price for the lead bidder; it should help the whole delivery system build a sustainable offer.
A nationally aligned programme can have very different commercial realities when it is commissioned locally.
What providers should take from this
Connect to Work shows that local commissioning can produce more relevant, locally grounded employment support. It also shows the commercial complexity that follows when funding, payment, performance and delivery expectations vary from place to place.
The practical takeaway is to treat each procurement as its own commercial entity. Start with the familiar drivers of caseload, resource, cost, performance etc, then assess the local detail properly: payment mechanism, contract terms, VAT position, cash requirement, delivery model and risk allocation.
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