Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh w/c 29 September 2008

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Objectives To provide an overview of the Accountant in Bankruptcy To present a high level overview of how contracted out insolvency services will operate in the future contract To outline the PQQ approach and timeline To provide a brief overview of the eSourcing system To provide access to specialist help and advice To deliver the same consistent message at each regional event..

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Agenda Overview of the Accountant in Bankruptcy Importance of the project High level Vision and overview of the contract operation PQQ and Tender Approach eSourcing Scotland Overview Questions Close AIB Session Lunch Steve Ashcroft session

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Welcome

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Accountant in Bankruptcy: Overview Executive Agency of the Scottish Government (since April 2002) Operates independently, but responsible to Scottish Ministers for standards CE is THE Accountant in Bankruptcy – independent statutory officer Supervise the process of bankruptcy and act as trustee when appointed to do so

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Accountant in Bankruptcy: Overview Also responsible for: Personal Insolvency, Corporate Insolvency & Diligence Policy in Scotland The award of bankruptcy in debtor applications Debt Arrangement Scheme (DAS) Maintain the public Register of Insolvencies Supervision of protected Trust Deeds Registering Corporate Insolvencies

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Accountant in Bankruptcy: Overview Administer cases both through internal administration teams and Agency contract Relocated from Edinburgh to Ayrshire Operational & Corporate functions based single site at Kilwinning in North Ayrshire Approx 140 staff across all functions Operating cost of circa £12m per annum

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Contracted Insolvency Services Projecting £5m expenditure for 2007/08 Approximately 2/3 of our core workload Significant operational risk to our business continuity Significant reputational risk to the service quality

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Contracted Insolvency Services A key objective in out Business Strategy – published October 2006 Preparation work began 2007/08 Commitment in our 2008/09 Business Plan Vision released June 2008

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Government Context Care about bankruptcy and Creditor/Debtor’s experience Committed to Procurement to achieving best value – McClelland agenda Ministers care about a successful Insolvency Services Contract

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Vision and High Level Overview of the Contract Operation

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008  We’re serious about making a contract fit for our collective modern purpose  We’re committed to contracting in a way that is interesting and rewarding for you  We want you to bid for our work  We’re confident our contract can work for you – whatever size of organisation you are  We want you to consider how this contract opportunity can fit with your organisation plans

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Background of our Approach Develop Strategy Define Needs Tender and Contract Develop & Innovate Manage Performance Consult Customers Continuous improvementStep Change Customer focus

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 April Consult Customers Public Sector McClelland Reform Agenda Best Value requirements Creditor and Debtor organisations Perceptions on performance Ideal outcomes Define Needs Review available Management Information Consider best practice Review current internal processes associated with managing Agent contract Consider key strategic options Agree AiB vision and business strategy April Continuous improvementStep Change Customer focus

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Political Contract is dated Does AiB have sufficient Regulatory powers to ensure consistency in case administration? Awareness that the SME agenda is growing politically Procurement Reform requirement for efficiencies Full affect of Bankruptcy Reform not yet known Social Increase in insolvencies projected What socio-economic mix will this be and therefore what complexity for future cases? What affect will LILA have, in particular on Debtor petitions? What affect on complaints to Regulator of cases externally managed? Technological MIDAS investment has not yet been utilised fully in respect of external caseload Costs associated with double handling and continued use of spreadsheets internally Economic Creditor organisations have a choice. Their strategies are not yet fully understood but the impact could have significant and long term affect on AiB Large number of existing Agents with variable performance and satisfaction, though limited availability of usable MI on key metrics Opportunities exist for internal efficiencies with improvements in contract terms, performance of agents and reconsideration of some practices Internal costs and potential for efficiencies in Case Operations are not yet fully known A large pool of potential suppliers exists No benefit of suppliers’ expertise is currently realised AiB Case Strategy Summary analysis of Current State

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 High Level Vision and Design Principles A 3 year agreement with option to extend for a further year: Debtor Cases in-house Creditor Cases out The establishment of an effective Customer Strategy Establishment of effective Contract and supplier relationship management Implementation: On going monitoring and review of the strategy Transparent mechanism for comparing cost and performance internal vs external Technology-enabled A mechanism for continuous improvement

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Develop Procurement Strategy Current provider intelligence Collect market information EU Legislation and Legal Advice Scottish Procurement Directorate Best practice principles Business case for Internal Efficiencies Options Appraisal for Procurement Business Case Strategic Board sign off Implementation Plan June July Continuous improvementStep Change Customer focus

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 The new contract strategy has had to balance the needs of many Stakeholders Debtors: Want our providers to be responsive; For costs to be controlled; and For an effective mechanism for handling complaints Creditors: Want our providers to realise assets in a timely manner; and For costs to be controlled Providers: Want to exercise professional judgement in carrying out their duties in case administration; For existing beaurocratic approval processes to be streamlined; For clear guidance on what is expected and how they will be measured AiB & Public Purse: Want providers to carry out case administration requirements in a timely manner; For costs to be controlled; For processes to be streamlined to bring about significant internal efficiencies; For management information to enable objective measurement of performance; and For providers to contribute to the work related to policy and in ongoing programmes to improve processes …and our approach meets all these needs

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 So - How will it work? What you’ll get is: Steady caseload for the next 3 – 4 years Lots of which will be fairly standard An opportunity to work closely with us to develop the service we provide Trustee freedoms you can’t have You’ll need to work acting on behalf of the Accountant which means: Working within our boundaries Reporting against key metrics

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Some things about administering bankruptcies never change… You need to assess the case – tracing and interviewing people You need to realise assets and seek contributions You need to submit accounts to us You need to pay dividends You need some other professional services to make all the above happen and You need to return a Sederunt Book in order to be discharged at the end of the case …but we have made the process simpler to operate

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 In the new contract…. You will be able to work more according to your own professional judgement (within pre-defined boundaries). In the past, a request for “additional hours” was said to takes 2 hours to complete and submit

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Payment for Court Appearance PROVIDER AiB AIB SYSTEMS Provider considers extra hours required Is it on the list? Y Prepare Request Accept Y/N Provider Paid Update SAGE to pay Log on Case Auto update to Case Y Attend Court, Note hours Claim fee with Web Accounts process N N Reason For reject Y/N

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 In the new contract: Where you can self-certify (within pre-defined boundaries) you will be able to directly call off contracts for Outlays – another significant administrative and cash flow benefit

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 AGENT / COB CONT. MGR / B1 (COB) AIB SYSTEMS Case manager determines a requirement SUPPLIERS Regular Outlays Request (Phase 1) Regular Commodity? Follow Ad hoc process N Y Can you self certify? N Y Instruct AIB supplier with Case Ref as reference Prepare Request Approve Y Advise Case Manager Prepare Monthly Invoice Supplier Paid Check (exceptions) Bulk load to case Update SAGE to pay Receive Invoice Electronically Log on Case Y N 78% expenditure 89% invoices 85% suppliers

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 In the new contract: You will log on to a secure Web Application to submit Accounts and Schemes of Division -Integration with MIDAS and -Semi-automatic calculation of fees and recovery A significant reduction in time and cost for both parties

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 PROVIDERS AIB MANUAL AIB SYSTEMS Audit of Accounts (incl. SOD) Midas generates Accounting periods Preparation Of accounts Through process SAGE for payment Agent Paid Std Letter Of Determination Monthly report showing accts due in period Submit data & attachments To web app Overnight Integrate to MIDAS & workflow Accept? Std Letter of rejection Audit Accounts & contributions N Y System Confirmation 1 st Phase: Accounts and 6 month MI 2 nd Phase: Trustee Accounts

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 How you will get work Region 2005/062006/072007/08 Highlands and Western Isles Grampian and Northern Isles Central Fife and Tayside Lothian and Borders South Strathclyde Ayrshire, Dumfries and Galloway North Strathclyde, Glasgow and Strathkelvin You can be awarded a contract for one, some or all lots This contract is designed to work whatever size you are

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 National Lot Consider it as our insurance policy against unpredicted increases in demand It will run alongside the regional lots through the life of the contract Cases will only be allocated through the national lot in the event that regional demand increases above that currently predicted

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Example Allocation Model RankProvidersCapacityProportion of Allocation 1ABC10010% 2DEF50050% 3UVW20020% 4XYZ20020% Region x with annual capacity 1,000 ABCCase 1 DEFCases 2, 4, 6, 8 & 10 UVWCases 3 & 7 XYZCases 5 & 9 Allocation every 10 cases We can’t guarantee volumes We can’t control flow You can’t pick and choose

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 How you will be paid Flat Fee – A flat fee will be paid for all cases administered, regardless of complexity or origin of the application. This will be in 2 instalments Uplift – Based on assets realised through the course of the case. Hourly Rate – For trading cases For work we agree is additional In the future, the uplift will reward you for much of your additional time

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September ,545 externally-managed cases closed between 1/4/07 and 31/3/08: 40% cases ingathered funds 207 of which were in excess of £3,000 22% cases realised heritable assets, 426 of which were in excess of £5,000 19% cases realised contributions, 80 of which were in excess of £3,000 Past Performance Approx 54% of Creditor petitions in the past have realised no assets Significant further detail will be provided at tender stage to allow all bidders to commercially assess the opportunity

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 How you will be measured Financial Performance To provide an unambiguous measure of provider performance in realising assets. Likely to include: Value of contributions; Assets realised; actual costs Customer Service To provide an unambiguous measure of provider performance related to customer (largely external) satisfaction. Likely to include: Time to first contact with debtor; measures related to complaints Process Performance To provide an unambiguous measure of performance in the administration process. Likely to include: Timeliness and accuracy of accounts, timeliness and accuracy of Sederunt Books Developing Partnerships Approach to innovation; active involvement in AiB initiatives to improve processes and policy. More difficult to establish objectively

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008

Pre Qualification Process

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Tender and Contract Development of Pre-Qualification Criteria Development of Evaluation criteria Clear specification of requirements Reporting and performance expectations Term of contract Payment schedules and timing Rewarding the best performers Balanced Scorecard approach Implementation – Internal and External. A long process Sept Continuous improvementStep Change Customer focus Manage Performance; Develop and Innovation Customer-specific metrics Focus on value – the end result Benchmarking and development of best practice With our providers and across UK and Europe Insolvency Services Regular two-way communications Challenging status quo Secondments

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Pre Qualification Allows us to define and assess the features and qualities we’re looking for in our future partners Allows you to decide if you wish to bid We’re using the eSourcing Scotland technology to facilitate this process

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Indicative Timing Contract Notice PQQ Launch PQQ Due 13 Sept 24 Sept 31 Oct Evalua- tion Tender Launch Contract Award Implemen tation w/c 3 Nov 14 Nov March / April 09 April 09 Two ways to receive PQQ: OJEU Public Contracts Scotland website

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Pre Qualification – How to Access Log on Browse contracts

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Financial Services Category

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Contracted out Insolvency Services

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Record your interest & follow instructions

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 What we’re looking for Financial Status and Insurance 10% Technical Ability and Quality 80% Business Probity 10% The Pre Qualification contains a mixture of mandatory questions, and others that will obtain marks

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 What we’re looking for Financial Status and Insurance 10% BankingMinimum requirement Accounts100% InsuranceMinimum requirement

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 What we’re looking for Business Probity 10% Question 1Minimum requirement All othersEqual proportion

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 What we’re looking for Technical Ability and Quality 80% Technology Minimum requirement PoliciesMinimum requirement Experience22% Capacity20% Competence22% Principal Business13% Customer Service8% Account Management5% Management Info3% Secure Data Storage5% Electronic information2%

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 What to do with Questions No such thing as a daft question Ask anything through the system eSourcing Scotland representatives will demonstrate

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Summary We’ve approached PQQ criteria very carefully We have a well balanced and fair approach to evaluation We hope you find the process clear and the system easy to use Don’t let the technology be a barrier to bidding – we’ll help you get on…

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 eSourcing Scotland

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Questions

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Questions Scope Not existing contract PQQ Vision for future operation eSourcing tool Remember – fees and their structures will be part of the tender

Contract for Insolvency Services Inverness Aberdeen Glasgow Edinburgh | w/c 29 September 2008 Agenda Overview of the Accountant in Bankruptcy Importance of the project High level Vision and overview of the contract operation PQQ and Tender Approach eSourcing Scotland Overview Questions Close AIB Session Lunch Steve Ashcroft session