Post by John Uliano on Sept 1, 2021 16:10:35 GMT
Scenario #1: Go/No Go Analysis
Questions:
What are the major (obvious and not so obvious) risks of this contract?
The contract being reimbursed at 70% via performance is concerning and a risk to me. While my experience with budget/contract management is not very extensive, I have not experienced a contract being funded at such a level. In fact, from my experience, the contract’s funding is a bit flipped, as most of the contracts I have worked with usually have 30% to 40% performance-based payment, with the remaining amount, 60% to 70%, being fully cost reimbursed. With a majority of the funding being based on outcomes, and in light of the prior vendor failing to meet milestones, I would be worried that we’d struggle to make budget if we too experience the same challenges with recruitment and placement milestones.
The milestones themselves are a little tricky too and have their own risks. For example, “60% are still employed in the same job 6 months later.” I would want clarification, because this would not allow for any type of laddering for the participant, whether with the original employer or new employer. As we try to improve our participants’ economic well-being, this would be a huge sticking point and a risk to our reputation if participant had to remain in the same, exact job and potentially forego other opportunities.
I do not believe that Easter Seals in Texas has experience providing services in the reentry field (at least based on my review of their websites). This is not to say that they would not be able to rely on best practice established with other populations or leverage the cube and rely on supports from other The Fedcap Group companies and practice areas. In my experience, which is solely based on my work in New York City, the reentry community specifically at times can be very insular and be challenging to break in with (while dollars have been moving towards organizations working with those with a history of court involvement, this has not always been the case, so things can get territorial!). With that said, I am unsure if this is entirely true in Texas, although it would be a risk to me. As it relates to reputational risk, if we are trying to establish a presence in the reentry sphere, we would want to make sure we get this right. Of note, Texas does have the largest population of individuals living in jails and prisons, so establishing a footprint could lead to future program opportunities.
The Career Design School (CDS) and Total Facilities Management (TFM) from my knowledge requires its participants to be living with a disability. Again, from my experience and knowledge, both programs do work with individuals with a history of incarceration, so have likely established best practices, but based on the information shared it does not indicate that the individuals being serviced through this contract will necessarily be living with a disability. I think there is minor risk associated in transitioning the program to servicing some individuals living without a disability. Separately, and broadly, it does seem that the Labor Market Review for Texas (link) suggests at present there is strong growth in leisure and hospitality and professional and business service, which I think CDS and TFM support employment-wise, so that could offset some risk.
While maybe not a risk per se, not being provided the value and length of contract makes it challenging to fully evaluate the riskiness of the venture.
What should be done early to ensure that the contract does not fail?
Prior to implementation, I would request a meeting with the funder to determine the challenges that the most recent vendor experienced in providing program services. Additionally, I would also request to meet with the prior to vendor to learn more about their experience. I would specifically want to know what they observed as being the issue with participant recruitment, as this was cited as being a challenge.
Based on my experience in the reentry field, it is important to make partnerships with jail/prison-based service providers, as well as the law enforcement agencies located in the facilities, as they can drive participants to the program, and this should be done sooner than later. I would establish a schedule to have program staff located in the actual facilities conducting orientation and enrollment for the program to incarcerated individuals prior to their release, so that a connection can be made with the returning citizens as soon as possible post-release. There is a decent amount of research suggesting that connecting and establishing relationships soon after an individual’s release positively impacts recidivism rates. Not to mention, it could potentially help address the concerns with recruitment. Immediate partnerships should also be explored with other community-based reentry providers, as well community supervision agencies (e.g., parole and probation) to broaden referral opportunities.
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?
Since the recruitment challenge is immediately identified, I would want to see on a daily basis our attempts at engagement and number of participants enrolled. In terms of reporting, I would want tracked the number of outreach-type activities conducted (e.g., visits to the jail/prison, table events inside/outside the jail/prison/in the courts, phone calls made post-release to individuals identified as having an interest in the program) and compare that to enrollment to see what our conversion rate is so that we can determine what activities work best for recruitment. Additionally, I would implement something similar with our referring partners. Which provider is referring the most participants and of those, who fully enroll? The monitoring of recruitment is obviously key and I would continue more intensive monitoring until it was deemed it was no longer an issue. Similarly, with the contract being heavily funded via performance, I would want consistent reports regarding job placements and retention. Thankfully, I am assuming this program will have FedcapCARES, which does have robust tools for measuring these milestones specifically.
Along the lines of managing milestones and program revenue, I think the director would want to be all over the budget and making sure the program can meet its expenses. We would want to be on top of account receivables with the funder, as we would need that funding back to the program as soon as possible to ensure solvency. A risk here could be if the program funder is slow with their payments to their vendors, which would result in financial strain.
How can you negotiate this contract to mitigate as much risk as possible?
I would want the reimbursement to be more balanced. Not sure how flexible the funder would be but the 70/30 split does not seem feasible in my opinion. Since we are not sure how long the contract lasts, I would see if the funder would be open to having the funding to be more so cost-reimbursed at contract start and then scaling the funding over the contract’s length to more performance-based (e.g., 40/60 year 1, 50/50 year 2, 60/40 year 3, etc.)
Jai/prison-based contracts are usually issued by a municipality. Some of the staff in those facilities are usually employed by the municipality as well, in addition to other community-based organizations being funded by municipality. To shore up the recruitment challenge, I would request that the municipality mandate their staff and funded programs to refer participants to our program. There would have to be a criteria for referral, but this could help ensure a steady flow of participants.
I would also want access to the facilities to do our own recruitment of participant pre-release. No one can deliver our message as best as we can, so getting into the jails and prisons would be important to mitigating risk.
As an aside, based on my responses and the unknown of whether we could renegotiate this contract, it would be a NO/GO from me.
Scenario #2: Fraud, Control and Compliance
Questions:
Was a fraud committed? Are there any compliance issues?
What were the risks involved with this contract?
How could you have mitigated them?
I do not feel that we have committed fraud in this case. I do believe that some poor decisions were made and poor judgment was exhibited. Attending the expensive dinner and receiving the gift are of concern, although what is not stated is whether the staff member shared these activities with their direct supervisor, which if not, would have been a way to mitigate the risk. I do believe in some instances, attending dinners is permissible, as is receiving small gifts. With that said, another way in which to sometimes mitigate receiving a gift is to share it with the team/department/etc. (although I do realize that in this case it does indicate it was personalized).
I would want to question how the city contact had the staff member’s home address. That is a little fishy, although there are ways that this could come up in conversation. It does potentially reek of boundary issues on the staff member’s part, but not necessarily fraud.
Risks with this contract center on the poor management by the city contact, as well as the delays in the city agency paying their accounts receivables, although unsure if that is specifically due to the way in which the contact person is processing the invoices/billing. Additionally, the Fedcap staff member may not have been the best fit here, as it sounds like someone a bit more vigorous was needed to pressure the city regarding payment.
What specific controls should we have implemented?
Specifically, some controls should be implemented regarding the timeliness around account receivables (A/R). The staff member, as well as the A/R staff on the finance team, need to have a detailed plan in place so that when A/R is overdue by X number of days, there are steps to take with the external funders, as well the internal finance and program operations teams, to escalate the issue so that payment and revenue is not lost. Controls should also be reiterated around fraternization/boundaries with funders and business partners, as it seems that these were a little blurry in this case.
Are there any lessons learned?
I feel that there is a lesson here around expedience and urgency. Despite our staff members challenges, it seems like we just allowed the contact and city as a whole to potentially not honor their obligations in this case, although this can be attributed to our agency not having a plan to address the risk of a poor communication and delayed payments from the funder. This would be something that could be tightened through the establishment of controls/SOPs as to what Fedcap staff should do in future situations like these.
Questions:
What are the major (obvious and not so obvious) risks of this contract?
The contract being reimbursed at 70% via performance is concerning and a risk to me. While my experience with budget/contract management is not very extensive, I have not experienced a contract being funded at such a level. In fact, from my experience, the contract’s funding is a bit flipped, as most of the contracts I have worked with usually have 30% to 40% performance-based payment, with the remaining amount, 60% to 70%, being fully cost reimbursed. With a majority of the funding being based on outcomes, and in light of the prior vendor failing to meet milestones, I would be worried that we’d struggle to make budget if we too experience the same challenges with recruitment and placement milestones.
The milestones themselves are a little tricky too and have their own risks. For example, “60% are still employed in the same job 6 months later.” I would want clarification, because this would not allow for any type of laddering for the participant, whether with the original employer or new employer. As we try to improve our participants’ economic well-being, this would be a huge sticking point and a risk to our reputation if participant had to remain in the same, exact job and potentially forego other opportunities.
I do not believe that Easter Seals in Texas has experience providing services in the reentry field (at least based on my review of their websites). This is not to say that they would not be able to rely on best practice established with other populations or leverage the cube and rely on supports from other The Fedcap Group companies and practice areas. In my experience, which is solely based on my work in New York City, the reentry community specifically at times can be very insular and be challenging to break in with (while dollars have been moving towards organizations working with those with a history of court involvement, this has not always been the case, so things can get territorial!). With that said, I am unsure if this is entirely true in Texas, although it would be a risk to me. As it relates to reputational risk, if we are trying to establish a presence in the reentry sphere, we would want to make sure we get this right. Of note, Texas does have the largest population of individuals living in jails and prisons, so establishing a footprint could lead to future program opportunities.
The Career Design School (CDS) and Total Facilities Management (TFM) from my knowledge requires its participants to be living with a disability. Again, from my experience and knowledge, both programs do work with individuals with a history of incarceration, so have likely established best practices, but based on the information shared it does not indicate that the individuals being serviced through this contract will necessarily be living with a disability. I think there is minor risk associated in transitioning the program to servicing some individuals living without a disability. Separately, and broadly, it does seem that the Labor Market Review for Texas (link) suggests at present there is strong growth in leisure and hospitality and professional and business service, which I think CDS and TFM support employment-wise, so that could offset some risk.
While maybe not a risk per se, not being provided the value and length of contract makes it challenging to fully evaluate the riskiness of the venture.
What should be done early to ensure that the contract does not fail?
Prior to implementation, I would request a meeting with the funder to determine the challenges that the most recent vendor experienced in providing program services. Additionally, I would also request to meet with the prior to vendor to learn more about their experience. I would specifically want to know what they observed as being the issue with participant recruitment, as this was cited as being a challenge.
Based on my experience in the reentry field, it is important to make partnerships with jail/prison-based service providers, as well as the law enforcement agencies located in the facilities, as they can drive participants to the program, and this should be done sooner than later. I would establish a schedule to have program staff located in the actual facilities conducting orientation and enrollment for the program to incarcerated individuals prior to their release, so that a connection can be made with the returning citizens as soon as possible post-release. There is a decent amount of research suggesting that connecting and establishing relationships soon after an individual’s release positively impacts recidivism rates. Not to mention, it could potentially help address the concerns with recruitment. Immediate partnerships should also be explored with other community-based reentry providers, as well community supervision agencies (e.g., parole and probation) to broaden referral opportunities.
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?
Since the recruitment challenge is immediately identified, I would want to see on a daily basis our attempts at engagement and number of participants enrolled. In terms of reporting, I would want tracked the number of outreach-type activities conducted (e.g., visits to the jail/prison, table events inside/outside the jail/prison/in the courts, phone calls made post-release to individuals identified as having an interest in the program) and compare that to enrollment to see what our conversion rate is so that we can determine what activities work best for recruitment. Additionally, I would implement something similar with our referring partners. Which provider is referring the most participants and of those, who fully enroll? The monitoring of recruitment is obviously key and I would continue more intensive monitoring until it was deemed it was no longer an issue. Similarly, with the contract being heavily funded via performance, I would want consistent reports regarding job placements and retention. Thankfully, I am assuming this program will have FedcapCARES, which does have robust tools for measuring these milestones specifically.
Along the lines of managing milestones and program revenue, I think the director would want to be all over the budget and making sure the program can meet its expenses. We would want to be on top of account receivables with the funder, as we would need that funding back to the program as soon as possible to ensure solvency. A risk here could be if the program funder is slow with their payments to their vendors, which would result in financial strain.
How can you negotiate this contract to mitigate as much risk as possible?
I would want the reimbursement to be more balanced. Not sure how flexible the funder would be but the 70/30 split does not seem feasible in my opinion. Since we are not sure how long the contract lasts, I would see if the funder would be open to having the funding to be more so cost-reimbursed at contract start and then scaling the funding over the contract’s length to more performance-based (e.g., 40/60 year 1, 50/50 year 2, 60/40 year 3, etc.)
Jai/prison-based contracts are usually issued by a municipality. Some of the staff in those facilities are usually employed by the municipality as well, in addition to other community-based organizations being funded by municipality. To shore up the recruitment challenge, I would request that the municipality mandate their staff and funded programs to refer participants to our program. There would have to be a criteria for referral, but this could help ensure a steady flow of participants.
I would also want access to the facilities to do our own recruitment of participant pre-release. No one can deliver our message as best as we can, so getting into the jails and prisons would be important to mitigating risk.
As an aside, based on my responses and the unknown of whether we could renegotiate this contract, it would be a NO/GO from me.
Scenario #2: Fraud, Control and Compliance
Questions:
Was a fraud committed? Are there any compliance issues?
What were the risks involved with this contract?
How could you have mitigated them?
I do not feel that we have committed fraud in this case. I do believe that some poor decisions were made and poor judgment was exhibited. Attending the expensive dinner and receiving the gift are of concern, although what is not stated is whether the staff member shared these activities with their direct supervisor, which if not, would have been a way to mitigate the risk. I do believe in some instances, attending dinners is permissible, as is receiving small gifts. With that said, another way in which to sometimes mitigate receiving a gift is to share it with the team/department/etc. (although I do realize that in this case it does indicate it was personalized).
I would want to question how the city contact had the staff member’s home address. That is a little fishy, although there are ways that this could come up in conversation. It does potentially reek of boundary issues on the staff member’s part, but not necessarily fraud.
Risks with this contract center on the poor management by the city contact, as well as the delays in the city agency paying their accounts receivables, although unsure if that is specifically due to the way in which the contact person is processing the invoices/billing. Additionally, the Fedcap staff member may not have been the best fit here, as it sounds like someone a bit more vigorous was needed to pressure the city regarding payment.
What specific controls should we have implemented?
Specifically, some controls should be implemented regarding the timeliness around account receivables (A/R). The staff member, as well as the A/R staff on the finance team, need to have a detailed plan in place so that when A/R is overdue by X number of days, there are steps to take with the external funders, as well the internal finance and program operations teams, to escalate the issue so that payment and revenue is not lost. Controls should also be reiterated around fraternization/boundaries with funders and business partners, as it seems that these were a little blurry in this case.
Are there any lessons learned?
I feel that there is a lesson here around expedience and urgency. Despite our staff members challenges, it seems like we just allowed the contact and city as a whole to potentially not honor their obligations in this case, although this can be attributed to our agency not having a plan to address the risk of a poor communication and delayed payments from the funder. This would be something that could be tightened through the establishment of controls/SOPs as to what Fedcap staff should do in future situations like these.