Post by Gregg Caplitz on Sept 1, 2021 11:04:40 GMT
Scenario #1: Go/No Go Analysis
Easterseals TX is contemplating going after a new contract for vocational training of individuals leaving jail or prison. Building on our current Career Design School, the RFP requires that the company develop an innovative Culinary and Facilities Management Program and place people in jobs with at least 6-month retention. The contract will be awarded in January and would need to be launched in March.
This is a performance-based contract where a significant portion of the revenue (70%) comes from meeting performance milestones. The milestones include the following:
• 300 people trained annually
• 50% of those trained are placed in jobs
• 60% are still employed in the same job 6 months later
The past provider was challenged in recruiting program participants and did not meet job placement or job retention milestones.
As the Company Executive, you are about to enter into a Go/ No Go discussion with your team. You will be leading the discussion, and you need to be fully prepared for the discussion. The questions below need to be considered. Based on the information provided how would you respond to these questions? What other questions should you consider to ensure you’ve addressed all areas of risk?
Questions:
• What are the major (obvious and not so obvious) risks of this contract?
1. Potential Failure to Secure Relationships with CORI (Criminal record) friendly employers
2. Securing Experienced Culinary Trainers to provide training
3. Cooperation with Department of Correction Employees in providing training and recruitment
4. Recruiting the number of participants necessary to meet program guideline
5. Financial Risk due to performance-based nature of contract
6. Reputational risk if participant suffer significant rates of recidivism
• What should be done early to ensure that the contract does not fail?
1. Secure commitments from CORI Friendly Employers
2. Establish partnership with State Restaurant Association and National Restaurant Education Federation
3. Seek Partnership with Local State Workforce Development Offices to Assist in Job placement
4. Confer with other FedCap companies engaged in providing similar services.
5. Seek positive P/R through local news coverage
6. Monitor recruitment numbers
7. Monitor job placement
8. Monitor job retention
9. Arrange for career counseling services either internally or through a partner
• What are some of the tripwires that the program director needs to be able to monitor should the company move forward? How will that measurement occur?
1. Monitor recruitment numbers. Closely follow recruitment and program admission to ensure we are tracking to complete goal of 300 recruits.
2. Monitor job placement. Closely follow job placement reports to ensure that 150 are placed during contract term
3. Monitor job retention. Closely follow job retention. Require copies of checks which could be rewarded with small stipends for receipt to ensure that 60% of placed participants remain employed 6 months later.
• How can you negotiate this contract to mitigate as much risk as possible?
1. Negotiate terms of 6-month job retention. Does it require they be in same job or simply still employed?
2. Attempt to negotiate partial payments for benchmark performance. Per head fee for placement and retentions as opposed to benchmark performance.
3. Seek to ensure cooperation of DOC employees in recruiting and placing inmates.
Scenario #2: Fraud, Control and Compliance
You have been assigned to manage a new Fedcap Group contract with a City agency that begins in December. Your counterpart at the City insists that you initially meet at a very expensive restaurant for dinner and drinks. A few weeks later, you receive a small, personalized holiday gift that is sent to your home.
As the contract begins, you get the sense that the City Agency is not very well organized. Our billing vendor keeps sending invoices that are rejected because they do not have the proper billing codes. Our accounts receivable starts to grow. As the months go by, you have difficulty arranging a meeting to resolve issues. You soon learn that the City Agency contracts with another Not For Profit to provide similar services. A few months later you hear that your counterpart from the City has left his job with no explanation given. As time goes on, our billings decrease dramatically and our contract after one year is not renewed, we eventually have to write down a substantial amount of unpaid receivables.
Questions:
• Was a fraud committed? Are there any compliance issues?
1. The expensive restaurant is certainly a red flag. Who paid for the dinner? Was the personalized gift reported? Who paid for the dinner? Fraud may have been committed and there is certainly a potential that harassment took place
2. Was their a request for favors from the City representative?
• What were the risks involved with this contract?
1.Lack of research to determine that other vendors provided similar services
2. Unclear contact requirements and billing standards
3. Continued provision of services absent provision for payment/
4. No clear chain of reporting
• How could you have mitigated them?
1.Negotiated prompt payment terms.
2. Clearly documented and reported to Compliance the restaurant and personalized gift.
3.Negotiated contract benchmarks and performance measures to ensure payment.
3. Ceased to provide services absent acceptable payment terms.
• What specific controls should we have implemented?
1.Measurement of a/r outstanding.
2. Anti-harassment reports should have been filed.
3. Reports filed with City Legal department about employee’s behavior after his mysterious departure.
• Are there any lessons learned?
1. Yes, initial behavior should have been a red flag.
2. Was the contract duly authorized.
3. Performance benchmarks and payment terms should be clearly negotiated.
4. Payment versus provision of service terms should be clearly delineated in contract
Easterseals TX is contemplating going after a new contract for vocational training of individuals leaving jail or prison. Building on our current Career Design School, the RFP requires that the company develop an innovative Culinary and Facilities Management Program and place people in jobs with at least 6-month retention. The contract will be awarded in January and would need to be launched in March.
This is a performance-based contract where a significant portion of the revenue (70%) comes from meeting performance milestones. The milestones include the following:
• 300 people trained annually
• 50% of those trained are placed in jobs
• 60% are still employed in the same job 6 months later
The past provider was challenged in recruiting program participants and did not meet job placement or job retention milestones.
As the Company Executive, you are about to enter into a Go/ No Go discussion with your team. You will be leading the discussion, and you need to be fully prepared for the discussion. The questions below need to be considered. Based on the information provided how would you respond to these questions? What other questions should you consider to ensure you’ve addressed all areas of risk?
Questions:
• What are the major (obvious and not so obvious) risks of this contract?
1. Potential Failure to Secure Relationships with CORI (Criminal record) friendly employers
2. Securing Experienced Culinary Trainers to provide training
3. Cooperation with Department of Correction Employees in providing training and recruitment
4. Recruiting the number of participants necessary to meet program guideline
5. Financial Risk due to performance-based nature of contract
6. Reputational risk if participant suffer significant rates of recidivism
• What should be done early to ensure that the contract does not fail?
1. Secure commitments from CORI Friendly Employers
2. Establish partnership with State Restaurant Association and National Restaurant Education Federation
3. Seek Partnership with Local State Workforce Development Offices to Assist in Job placement
4. Confer with other FedCap companies engaged in providing similar services.
5. Seek positive P/R through local news coverage
6. Monitor recruitment numbers
7. Monitor job placement
8. Monitor job retention
9. Arrange for career counseling services either internally or through a partner
• What are some of the tripwires that the program director needs to be able to monitor should the company move forward? How will that measurement occur?
1. Monitor recruitment numbers. Closely follow recruitment and program admission to ensure we are tracking to complete goal of 300 recruits.
2. Monitor job placement. Closely follow job placement reports to ensure that 150 are placed during contract term
3. Monitor job retention. Closely follow job retention. Require copies of checks which could be rewarded with small stipends for receipt to ensure that 60% of placed participants remain employed 6 months later.
• How can you negotiate this contract to mitigate as much risk as possible?
1. Negotiate terms of 6-month job retention. Does it require they be in same job or simply still employed?
2. Attempt to negotiate partial payments for benchmark performance. Per head fee for placement and retentions as opposed to benchmark performance.
3. Seek to ensure cooperation of DOC employees in recruiting and placing inmates.
Scenario #2: Fraud, Control and Compliance
You have been assigned to manage a new Fedcap Group contract with a City agency that begins in December. Your counterpart at the City insists that you initially meet at a very expensive restaurant for dinner and drinks. A few weeks later, you receive a small, personalized holiday gift that is sent to your home.
As the contract begins, you get the sense that the City Agency is not very well organized. Our billing vendor keeps sending invoices that are rejected because they do not have the proper billing codes. Our accounts receivable starts to grow. As the months go by, you have difficulty arranging a meeting to resolve issues. You soon learn that the City Agency contracts with another Not For Profit to provide similar services. A few months later you hear that your counterpart from the City has left his job with no explanation given. As time goes on, our billings decrease dramatically and our contract after one year is not renewed, we eventually have to write down a substantial amount of unpaid receivables.
Questions:
• Was a fraud committed? Are there any compliance issues?
1. The expensive restaurant is certainly a red flag. Who paid for the dinner? Was the personalized gift reported? Who paid for the dinner? Fraud may have been committed and there is certainly a potential that harassment took place
2. Was their a request for favors from the City representative?
• What were the risks involved with this contract?
1.Lack of research to determine that other vendors provided similar services
2. Unclear contact requirements and billing standards
3. Continued provision of services absent provision for payment/
4. No clear chain of reporting
• How could you have mitigated them?
1.Negotiated prompt payment terms.
2. Clearly documented and reported to Compliance the restaurant and personalized gift.
3.Negotiated contract benchmarks and performance measures to ensure payment.
3. Ceased to provide services absent acceptable payment terms.
• What specific controls should we have implemented?
1.Measurement of a/r outstanding.
2. Anti-harassment reports should have been filed.
3. Reports filed with City Legal department about employee’s behavior after his mysterious departure.
• Are there any lessons learned?
1. Yes, initial behavior should have been a red flag.
2. Was the contract duly authorized.
3. Performance benchmarks and payment terms should be clearly negotiated.
4. Payment versus provision of service terms should be clearly delineated in contract
