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Updated 1 October 2012

Credit Union Expansion Project Questions and Answers

No Question Response
1 Why should a successful employee based credit union join the project? The systems that will underpin the project will allow for process efficiencies and further recruitment of members but it is accepted that the project may “not be for all”
Large employee based credit unions have an important role to play in the CUEP for a number of reasons:
They would bring a strong Tier 2 base to any consortia they’re involved with
They have the membership recruitment expertise which could be shared amongst the consortia
Diversity and balance of customer base is essential to long term sustainability of the movement.
2 Is there some independent support available to help with bid writing? DWP is unable to make recommendations of this nature. Your existing networks may be useful sources of information.
3 What would be seen as the advantage to registered social landlords of working with credit unions? Working together, RSLs and credit unions can work towards the Social Justice agenda and help improve the quality of life for their customers.
For example:
Introduction to budgeting accounts to avoid rent arrears and possible homelessness
Steering tenants away from high cost loans
Educating tenants towards saving regimes etc
4 Are there any existing consortiums already out there? DWP is not in a position to gather this information or comment.
5 In terms of the Feasibility Study recommendations, how can Local Authorities support local credit unions going forward? Local Authorities are in a good position to create opportunities for partnership building in the local area and facilitate introductions.
6 Is the FSA aware of the Feasibility Study? Yes the FSA supports the Feasibility Report and has no issues with project ideology. In particular it is recognised that change will happen at an acceptable rate.
7 Where is more information available about banking platforms? Information about leasing banking platforms and associated hurdles will be available in the credit union sector itself. Research via the internet may be useful.
8 Will everyone need to switch to the same software supplier? Any IT change requirements will be determined by the suppliers and their supply chain and not by DWP.
9 What are the benefits of automated decision making? It is not expected that automated decision making will result in 100% of the decisions being made this way, however there are benefits attached to its introduction:
Building up credit scoring information about their customers will benefit the credit unions and customers alike
A significant reduction in staff time in making up front decisions
This could potentially free up resource to focus on bad debt and other areas of the business
10 How does this project fit in with Welfare reform programme? The timing of Welfare Reform implementation and the potential Credit Union Expansion Project may be different. Any technical solutions will not be in place prior to the rollout of UC for new claimants. Whilst there are many areas where enhanced Credit Union services do dovetail and support the Universal Credit rollout agenda, this is NOT why the Credit Union Expansion Project came about. Our business model assumed that automated services would be available from Jan 2014 however, whatever plans you have in respect of Welfare Reform do not need to change if you participate in Credit Union expansion. In fact, the delivery may prove to be more effective.
11 Additional funding is needed now. Is there any prospect of DWP funding before next year? There are no other plans to support credit unions outside of the CUEP.
12 It would seem that smaller credit unions are not appropriate for this project, is this part of the message? As long as the consortium meets the minimum requirements of the project, the outcomes will help any credit union irrespective of size or urban or rural location. The project will also leave behind a legacy for any credit union to benefit from in the future.
13 Could a partnership be made up of CDFIs, CUs and RSLs? The make up of any partnership is for the sector to decide. The described partnership would meet the eligibility criteria: i.e. not for profit financial organisations. We will detail this in the Invitation to Tender.
14 Are the number requirements at organisational level or across the consortium? CDFIs don’t have members and do not offer products? The membership number requirements are across the consortium. Although CDFIs don’t have members they could offer a loans service and act as agents for a consortium by opening bank accounts, etc, or by referring savers to credit unions. DWP will treat the number of borrowers the CDFI has had in the last 12 months as if that were the number of members held.
15 The minimum of 15 credit unions and 120,000 members could act as an entry barrier. What is the rationale behind this? This is based on the findings of the Feasibility Study Report and represents the scale and  capacity required to achieve the ministerial ambition of serving a million more people. The 120,000 members is the critical factor not the number of credit unions involved.
16 At what stage in the tender would the consortium members have to prove they have the numbers on side? Numbers would be determined by letters of support from consortium members and the 30
June 2012 FSA return, to be supplied at the point of submitting a tender.
17 Could a consortium form a social investment company under this project? The project will contract with suppliers to develop and implement financial products and services to expand their membership. Funding will be released on evidence of delivery. It is not expected that the funding would be able to be used for the purpose described
18 Is 100% automatic loan decision making referring to credit scoring or credit referencing? The ambition is that all loan applications will be subject to credit scoring to enable a level of automatic loan decisions to be made. It will be for bidders to decide how this can best be achieved.
19 How are Tier 2 and Tier 3 consumers identified? Tier 2 consumers generally have household incomes of between £15 k and £30k, some with a record of failed banking transactions. Tier 3 consumers are those with a household income below £15k, the majority of whom are benefit claimants.
20 2 years accounts are required, how would this work with a new special purpose vehicle? We would look at the last 2 years accounts of all of the organisations who are part of the special purpose vehicle.
21 Are the 1 million more members financially excluded members or a blend of customers? The Feasibility Study Report recognises that it is important for there to be a blend of customers in order to achieve growth and financial sustainability. The blend is not prescriptive. It will be for bidders to identify the most effective blend that achieves self sufficiency whilst continuing to meet the needs of Tier 3 customers; the Feasibility Study Report recommends a 50/50 blend.
22 Are there any guidelines for a maximum level of funding towards administration costs in a bid? There are no guidelines. We recognise that frontline services and administration will need to be forecast but it is for bidders to determine and apportion costs as part of their bid.
23 The contract is due to start in January 2013 and end in March 2015 is this long enough to achieve project objectives? There could be a concern that CUs will grow too fast. The project assumption is that there will be no funding beyond March 2015. We understand the point made and the risks involved. The Feasibility Study Report illustrates that within this timeline the ministerial ambition is achievable. Successful suppliers will need to robustly manage activities to ensure that the project objectives are delivered within this period.
24 Is there enough time for partnerships to secure agreements? We understand that it will be difficult to secure agreements before 28 September (the proposal return date) and only expect a letter of support to be included with proposals. Formal partnership agreements do not need to be in place until any contracts are awarded in January 2013.
25 Is there a high risk to working capital? We understand that some products will require investment by suppliers. The project funding structure will allow for staged product funding to provide a reasonable balance of risk and reward for suppliers and DWP. This will include milestone payments for product development, delivery and proof of effectiveness - in addition to payments for expansion.
26 What happens if the minimum requirements cannot be met in terms of numbers, is their a plan B? If there is market failure, there is no plan B and the project would be cancelled.  We do not anticipate market failure.
27 25% contributions from credit unions is a requirement. Is it permissible to deploy Growth Fund reserve? Would that be “in the spirit of the Growth Fund”? At the end of March 2011, Growth Fund resource became part of individual credit union finances to continue to be used “in the spirit of the Growth Fund”. It is now for credit unions to make decisions on use on this basis. So if a CU were to consider further investment in an infrastructure project that was designed to serve more consumers on lower incomes then that might be a reasonable decision to make.
28 What is it anticipated the interest rate cap will be increased to in April 2014? The assumption is that the interest rate cap will be increased in accordance with the ministerial ambition. However, this will be a matter for Parliament to determine, so we are unable to answer the question. The Feasibility Study Report, based on advice from the banking sector, suggests that an appropriate rate would be 3%. It will be for credit unions to decide what rate is appropriate to charge within any new level agreed. You may wish to construct a range of financial projections taking this information into account.
29 Is guidance on cross funding going to be provided as mentioned in the Feasibility Study? The proposed DWP project is not dependant on cross funding or investment. Once a successful CU led project has been delivered that may be the time for the CU or CUs involved to explore cross funding further.
30 Can a single legal entity be defined? A legal entity is described as an individual or organisation which is legally permitted to
enter into a contract, and be sued if it fails to meet its contractual obligations and can be held
liable for damages. In the case of CUEP examples may be:
one existing organisation, proposing to manage 15 or more CUs - in this example the one existing organisation is already a single legal entity
two or more organisations, jointly propose to manage 15 or more CUs - in this example they will have to set up a single legal entity, for example a special purpose vehicle.
If in doubt potential bidders should seek legal advice as to whether or not their organisation is legally permitted to enter into a contract.
31 Should there not be a due diligence exercise for those forming the consortium? DWP will conduct due diligence on the consortium. Lead bidders will also be expected to ensure the suitability of proposed partners, sub contractors or suppliers prior to submitting a bid.
32 Will any extension of time be allowed? It is recognised that the time available may provide a challenge.  Alternative options and any amendments to the timeline will be discussed and posted on the CUEP website.  However we do not anticipate any change to the timeline
33 Will the bid fail if sufficiently high numbers are not achieved to allow for fall out? We anticipate that lead bidders would want to ensure the suitability of its membership prior to submitting a bid.
34 Can Northern Ireland credit unions apply? Because Northern Ireland Social Security Agency (NISSA) receives its funding allocation directly from Government, Northern Ireland credit unions are not eligible to apply to this opportunity. Northern Ireland credit unions could however benefit from buying into the CUEP products and services that would be left as a legacy by the project.
35 CDFIs have customers but also shareholders. Do they both count as members in any consortium? CDFI loan customers are counted by DWP as if they were CU members. Is the number of CDFI shareholders relevant in the context of this answer?
36 Does the argument for decision making cover loans to corporate members as well as individual members? Yes it applies to 100% of the decisions made.
37 Can Credit Unions be part of a bid with more than one consortium? DWP cannot prevent Credit Unions from joining more than one bid, however, successful bidding organisations that are aware their CU partners are named in other bids must be able to demonstrate they can still meet the minimum scale (15 CUs/120k members) should some of their partners opt for another successful bid.
38 There are not 40 credit unions in Wales. Would DWP expect a combined bid with English credit unions? CUEP is open to organisations in England, Scotland and Wales. No geographical restrictions apply.
39 Are there any plans to have a central resource where a potential lead can try to attract CUs? DWP will not be engaging in credit union sector business in this way. The sector, or elements within the sector, may wish to organise their own business information hub.
40 How will the flow of money work? The Invitation to Tender will outline the funding strategy. Bidders will need to consider this when developing funding structures within their partnership. The funding strategy is that no less than 60% of payments will be based on delivery of growth and efficiency and no more than 40% on product delivery.
41 Growth Fund 1, 1.5, and GF2 were very successful – why change a winning format? Evaluation of the Growth Fund showed that it was very successful. However Growth Fund did not address the wider issue of much of the sector being reliant on some grant funding from public sector organisations. CUEP not only aspires to address the issue of credit union self sufficiency but also to modernise processes, drive efficiencies and continue to provide the services that consumers want.
42 A portfolio ratio calculator or PRC has been mentioned. What exactly is the formula for this? The Portfolio Ratio Calculator is still in the development and testing stage. If it proves to be fit for purpose, details will be shared with potential suppliers.
43 Is it anticipated that there will be a restriction on the eligibility to apply for the funding based on the interest rates charged? Some CDFIs currently charge up to 60% APR. Would this disqualify them from participating in the project? The eligibility criteria are not based on the rates of APR charged. Details of eligibility will be found in the Invitation to Tender. Ultimately, however, Ministers will wish to assure themselves that what they approve is acceptable in a policy context.
44 From all the figures issued (£73m and £38m etc) how much is going to be used for loans and how much will be used in modernising operations? £38 million was determined to be the maximum sum required to fund expansion and modernisation by the feasibility study. This sum is in addition to the £13 million invested in CUs and CDFIs during 2011/12. The £38 million will be used to fund expansion and modernisation. The money is not going to be paid as an investment in loan capital or as revenue payments for, say, loans made - as was the case with the former Growth Fund.  Funding will be linked to Key Performance Indicators in contracts that demonstrate achievement against modernisation and expansion targets.
45 Does DWP expect that credit unions should be ready to fill the gaps in banking services for those on low incomes in time for the roll out of UC? CUEP and Universal Credit are two entirely separate projects. As a project CUEP is designed to support modernisation within the credit union sector and expand services to 1 million more members.  However, Government recognises that there is a shared consumer market and that credit unions may have a part to play in the rollout of Universal Credit, supporting those on benefit through the transitional change. However, credit unions are not seen as the only solution.
What’s your definition of sustainability? Does it include bad debt?
Yes, we look at financial sustainability in the fullest commercial sense. So true, full financial sustainability relates to the organisation’s financial situation once all earned income, expenditure, and all liabilities have been fully accounted for.
Is it the partnership that needs to be sustainable or each individual credit union within the partnership?
We are looking at financial sustainabilityacross entire partnerships. Bids will need to demonstrate how and when sustainability will be achieved for each of the credit unions included in the partnership, in addition to the collective business of the partnership itself.
What level of autonomy will credit unions retain?
Some level of standard approach to the product and service offer is necessary to achieve project objectives. However, it remains that the degree of standardisation is for the lead bidder to agree with individual credit unions. All credit unions will continue to operate as financial co-operatives governed by their own board.
The level of commitment seems huge in the short timescale. Is there enough time to pull together effective bids?
The Feasibility Study Report was published in May and detailed consultations with credit unions took place in the summer of 2011.The content and recommendations made in the report provided a clear message. DWP anticipated that the Feasibility Study Report should stimulate discussion within the sector about the development of partnerships and ideas. The formal procurement process is subject to time restrictions and starts when the Invitation to Tender (ItT) is advertised. The ItT provides detail about tender documentation requirements and the timescales are the maximum allowable.
What happens if the number of credit unions in the partnership reduces below 15 as a result of mergers or credit unions wanting to leave?
The requirement is for a minimum of 15 credit unions with a collective membership of 120,000 at the time of bidding. Any changes post contract award will need to be assessed against the terms of the contract. DWP would have to treat each individual case on its own merits. We would seek to work with a Supplier to resolve issues where ever possible.
How can you dictate automated decision making when the loan decision ultimately remains with the credit union?
DWP is specifying that automated decision making should be introduced because of the considerable cost savings and delinquency improvements that such systems can bring. Credit union operating costs remain high and delinquency could be improved at different levels for most credit unions. It is not intended that all loan decisions be made automatically. The requirement is that an identified system uses data sets specific to credit union customers to allow automatic yes and no answers to be identified quickly for the reasons stated above. The move will increasingly reduce the need for manual intervention as experience and expertise builds up in individual credit unions.
Where does the Post Office fit in to CUEP?
There are advantages to credit unions working with the Post Office but it is not a requirement that the Post Office features in any bid.
Will credit unions be protected from the main contractor benefiting disproportionately from the contract?
The financial relationship between credit unions and main contractors will be a matter for them to negotiate and manage.An agreed funding structure between the main contractor and the partnership is required as part of the bid.
How do you expect smaller credit unions to afford a current account?
The purpose of the Feasibility Study and this project was to show how by working collaboratively a wide range of credit unions can have access to the range of financial products and services that potential members require. Very few credit unions could deliver bank accounts in isolation from others in the sector. The Feasibility Study identified that modern banking products are achievable within the costs of a collaborative project because these systems and services are available to lease and collaboration can increase joint buying power. How this translates down to individual credit unions depends on what any partnership agrees.
Will credit unions be required to have a current account by the time we enter the contract?
No, the bid will only need to demonstrate how and when it will meet this requirement across the consortium.
By current account do you mean the Credit Union Current Account?
No, we do not mean the CUCA. The CUCA is just one of many current accounts available.The minimum requirements for the current account are described in sufficient detail in the Commercial Specification of the project. It is for the sector to interpret the requirement and put the appropriate products and services in place.
How many consortiums are you looking at?
We have no preconception of the answer to this question, which will be determined by the number of bids received and the results of evaluation
Will all the £38 million be available to the consortia?
The only money not available for this purpose is DWP project costs.
Is there a maximum number of credit unions in a consortium?
No, there is a minimum number of 15 but not a maximum number.
Will there be funding to rationalise mergers?
DWP is not offering to pay to support mergers. However, where mergers and other collaborations are considered relevant it will be for partnerships / bidding organisations to include details and proposed costs in bids to meet project objectives.
Is charging an increased interest rate only a recommendation?
Should Parliament agree an increased rate of interest, it will be for credit unions to decide how to take this forward within the guidelines of the Feasibility Study. It is anticipated that loan rates would be priced in accordance with risk and cost levels, and it will be important to show in business and financial plans that proposals will achieve financial sustainability for individual credit unions and the bidding organisation.
Are you aiming to get full geographic coverage?
The project aimis to achieve the maximum coverage that is realistically possible. We are aware that it will not be possible to achieve universal coverage from the outset of a project, however, we are not looking for regionally or geographically restricted bids because the challenge is for the credit union sector to collaborate to achieve its maximum potential.
Are you hoping that the least sustainable credit unions will be involved?
We would expect to attract a diverse range of solvent organisations at different stages of development.
What is meant by “all credit unions within a bid must use the services of a professional financial director or accountant”?
We expect all credit union boards to fully understand the financial position, operating costs, levels of bad debt, delinquency and make decision to reduce expenditure and increase income to lead to sustainability. How credit union boards access professional financial advice to support their understanding and decision making is for them to agree with a lead partner.
Will there be any funding for staffing aside from the payments by results you describe?
There will be no funding in advance. What the payment structure within a partnership will look like is for the partnership to negotiate, agree and propose to DWP.
What if our bids aren’t good enough, will you come back to us and tell us how to improve them?
No, this is a competitive exercise for a commercial contract. We are not able to tell bidding organisations how to improve bids as this would place others at a disadvantage.
What if too many consortia, wanting too much money apply?
All bids will be subject to evaluation regardless of the number received or the amount of money proposed. We will award contracts to the value of the resource available. The evaluation process will decide which bidders (if any) will be awarded a contract.
What would the financial consequences of leaving the consortium be?
That is for lead bidders and their partners to determine. If in doubt potential bidders and their partners should seek legal advice.
Have the various regulators (FSA, Bank of England, DPA etc.) been involved in these discussions and have they expressed a view on both the legality and advisability of credit unions and CDFIs forming a SPV?
The FSA are aware of the Feasibility Study and the DWP Credit Union Expansion Project. If you require a view from the FSA then we advise that you approach them directly. Whatever SPV, consortium or other partnership may be formed, DWP will not provide legal advice regarding their formation and/or the spread of risk/liability. That is for lead bidders and their partners to agree. If in doubt potential bidders and their partners should seek legal advice.
Could a potential pool of customers be counted (eg RSL tenants) towards reaching customer numbers?
Individual tenants that meet the following criteria for credit union members or CDFI customers will be counted towards the eligibility criteria. Block numbers of RSL tenants will not be counted towards the minimum eligibility criteria.

Existing Member:

  • a personal member of a credit union with a membership number who owns a minimum £1 share in that credit union
  • a personal loan customer of a personal lending CDFI who has taken a loan out at that CDFI in the last 12 months

New Member:

  • a personal member of a credit union with a membership number who owns a minimum £1 share in that credit union
  • a customer of a personal lending CDFI who takes out a personal loan at that CDFI, or for whom that CDFI is transacting other personal financial business 
Could a retail outlet counts as “one CU” towards reaching the number of CUs needed to form a consortium?
There is no provision for organisations with multiple retail outlets. A credit union is counted as one credit union regardless of how many outlets it has.
If a consortium is devised but falls short of either the number of CUs of total “members”, will the application be summarily thrown out without consideration?
We expect proposals to be made in good faith. We also expect bidding organisations to ensure, as far as they are able, that the declared members of a partnership and their membership numbers are accurate at the point a bid is submitted. However, if bids falls short at the point of submission they will not be eligible for evaluation. If bids fall short during evaluation the circumstances will be considered but the minimum criteria will still apply.
How can we get access to the Invitation to Tender?
The ItT is not yet available. It is expected to made available on the Bravo website week commencing 3.9.12.
Would we be able to send representatives to the supplier briefing?
The supplier briefing is for lead bidders and their chosen representatives only. Places are limited and you will need to be nominated by a lead bidder in order to be able to attend. Please see the CUEP website for details.
Is an individual eligible to bid?
It is not for DWP to advise whether an individual would be appropriate to lead a bid. The key issue would be whether or not the bidding organisation is eligible within the meaning the eligible bidders criteria that we have published. Bids must be led by CUs, representatives from the CU sector, or other not for profit financial organisations who offer financial products and services to tier 2 and tier 3 consumers. These organisations can also be members of a partnership, consortium or co-operative bidding to DWP.
Must all participants in a consortium deliver all products and services. For example, basic bank account, current account, budget account etc? Or can some participants provide some products and services whilst others provide the others, such that as a consortium unit all products and services are being delivered somewhere?
The minimum number of 15 CUs (increasing to a minimum of 40 CUs) must all, individually deliver all the minimum products and services
Is the list of shared support services – namely, credit control, accountancy, marketing and HR services exhaustive? What else can be covered?
The commercial specification of the project details the minimum requirement for shared support services. DWP is not specifying what additional services a bidding organisation may opt to deliver, but all systems, products and services proposed for support by the CUEP must deliver personal financial services for personal members or customers.
78 What documentation will be needed to demonstrate that the additional minimum 25 CUs are in place for phase 2? Bidders will need to provide a detailed staged plan showing the names of organisations who have agreed to join the partnership consortium.
79 What do you mean by transactional accounts? This is any account from which money can be received or paid out to an individual or organisation outside of the credit union.
80 What do you mean by an active member? An active member is a member who has taken out one or more products within the last 12 months.  This could be loan, regular or lump sum personal savings, insurance policy, ISA etc. Where a product has not been taken in last 12 months but a transactional account is in operation, active members will have transacted from their account within the last calendar month, this includes payments in or out.
81 Is there a preferred number of bids? No. However, we are limited by a fixed budget.
82 Can we earn the interest on the escrow account? To be confirmed.
83 Why are you so confident that there won’t be market failure? The Feasibility Study demonstrates that the project is capable of success. Indications are that the credit union sector wants to embrace the changes required for modernisation and expansion. DWP wants to support the sector in making that happen
84 Is it anticipated that losing bids will be taken into the fold by winning bids? This is not a question for DWP to answer. It is for the sector to consider and discuss contractual and financial implications with DWP before making a formal decision.
85 It was originally £38 million. Why is it now only £35.6 million? The difference represents DWP project costs.
86 Will there be a social impact analysis requirement? No, the social need has already been established in the Feasibility Study.
87 Can New Enterprise Allowance (NEA) customers be counted towards the membership number requirement? No, NEA does not constitute personal lending so these customers may not be counted.  In addition NEA is delivered through a DWP contract so counting NEA customers as new members for CUEP purposes would constitute double counting and therefore double funding.
88 Will Merlin Standard apply? No
89 What’s the difference between a basic account and a budget account? The definitions of the minimum requirements of each type account are detailed in the draft specification available on our website. In the light of discussions today, we will revisit these in the final specification to ensure greater clarity.
90 Will a bid fail if it doesn’t include accessibility via the Post Office? No, a bid would not fail on this basis alone.
91 Will there be an opportunity to redevelop the financial model mid contract? No
92 Why have you specified that bank charges to the consumer will be no more than 99p per week? Ministers dictated this in the Feasibility Study Report. The amount is exclusive of Transaction charges incurred by the individual e.g. for withdrawals or balance enquiries at an ATM.
93 Is there an expected level of new customer lending activity? A proposal must demonstrate that lending activity (measured by outstanding loan book value) to new customers will account for a minimum of 15% of total outstanding loan book  by end of March 2014, 20% by end of September 2014 and 25% by end of March 2015.
94 Can you make the payment model concise and slick with short payment timescales to encourage lenders to support organisations who are unable to commit to the amount of investment required? The proposal for the funding of Set up costs / Product Delivery (maximum of 40% of total contract value) is based on demonstration of achievement of development, implementation and delivery milestones. Milestones will be defined by each individual bidder and be linked to their implementation plans. However 25% of total payment linked to any specific product will be retained and released when DWP have reviewed the supporting documentation and have evidence of milestone achievement and product take up. Once validation has occurred, payments can be released.  DWP’s service level agreement stipulates that invoices will be paid within 10 days of receipt of the invoice.
95 What is the length of the funding gap you anticipate needs to be covered ? The length of the funding gap will be dependent on each bidder's individual implementation plan and the speed with which you can begin to receive milestone payments for product delivery and payments for the growth measures.
96 Can you confirm what you consider to be IT and how the £9million cap works? For the purposes of this procurement IT is defined as any activity and associated resource required to develop, integrate, implement and deliver an automated platform and products or services directly supported by the automated platform. The cap is the total amount for the project not per bid.
97 The budget really would not Support any TV work – are you proposing now to do this from another pot of money or have you reviewed that this is necessary? A total of £1.5 million is the only pot of money available for marketing across the project. It is for bidders to suggest how this can best be utilised to meet project objectives.
98 Can expenditure incurred on the project prior to contract award count towards the 25% credit union contribution? DWP is content to accept bids from organisations that already have similar expansion and modernisation activities underway. We expect such organisations to clearly identify in their proposal and plans where their current commitments finish and where new arrangements begin. DWP will not count any previous financial commitments as a supplier’s contribution to their 25% share of IT and Marketing costs. Neither should organisations commit expenditure on the assumption that they will win a contract.
99 How are RSLs intended to fit into the delivery of the invested credit union service and will there be opportunity for them to work with the credit unions the DWP will be investing in? The Feasibility Study recognises the value of a range of different partners to the project, including RSLs. See also question 3 on this question and answer log. It is up to bidding consortia to decide who they want to work with to best achieve the project’s objectives. You may wish to contact the credit union sector direct.
Can you give any clarity regarding the mechanism for release of funds at the early part of the contract, and particularly what costs regarding the set up of the SPV and structure are covered?
DWP will not pay any costs associated with setting up an SPV or other form of delivery partnership. Detail regarding how and when payments will be made will be described in the formal ITT and at the post ITT briefing
The retention of funding seems high. How will this work?
Retention will be applied to product costs. Product costs should not amount to more than 40% of your overall costs, the retention will be applied to a proportion of the product costs which will be confirmed in the formal ITT.
Where the consortium is establishing an SPV, will payment be routed through that or are you seeking to contract with a credit union as lead bidder?
DWP will contract with and make payments to one legal entity per bid, whether that is one existing Credit Union, or one organisation established as an SPV or other form of partnership
Will information be shared with all suppliers? Without wishing to limit any areas of development in the personal finance arena, would there be consideration of areas we consider highly sensitive?
DWP will not share information regarding any bid with any other bidders. If two or more contracts are awarded contractors will be expected to share best practice, as per part 1, paragraph 7.8 of the specification.
What do you mean by the term solvent?
Each credit union joining the project must be solvent and must be compliant with any minimum capital requirements imposed by the FSA (or any successor agency or regulator), evidence from certificated accounts will be required during the due diligence phase of evaluation, and as part of ongoing audit and monitoring after contract award. Bids must not include any credit union which is, or might reasonably expect to be, non-compliant with any regulations or other requirements set out by the FSA (or any successor agency or regulator). This includes any credit unions that are in dialogue with, or under warning from the FSA (or any successor agency or regulator) for any matter, whether solvency, practice or capital related which might affect their regulatory permission to take deposits, make loans or provide any other services.
May we assume that as long as we take all precautions we can, and deal firmly with all issues that arise as we uncover them, that the contracting SPV will not be held responsible for individual credit unions discrepancies?
This is a reasonable assumption providing the credit union achieved compliancy at the bidding stage.
Should we factor in a rise in interest rates in advance of this being laid before parliament?
At 3.2 of the specification we state that plans will indicate how the interest rates charged will support achievement of financial sustainability. The impact of the proposed legislative change to interest rates, referred to at 8.3 of the specification, will be considered in your planning.
We recently heard the date for submission of proposals might be put back to the end of October. Could you please confirm any revised timelines please?
This will be confirmed when the  formal ITT is issued.
Can you clarify that Credit Unions and CDFIs may be party to more than one bid?
This question has already been answered at number 37 of this log.
What do you mean on slide number 30 by 'discretionary rejection', which bidders are asked to respond to as part of the ITT? That suggests you can/will reject a bid based upon someone's discretion or possibly on their opinion.
Within the Invitation to tender there will be a section covering areas for discretionary rejection which all bidders have to complete, this is in accordance with regulation 23 of the Public Contract Regulations 2006. Under this section bidders need to place a yes or no against questions such as 'has your organisation committed an act of grave misconduct in the course of your business or profession'.  DWP is entitled, at its discretion, to exclude bidders from consideration if they answer ‘yes’ to any of those questions.  In the event that bidders do answer ‘yes’ they are asked to describe the relevant incident and any remedial action subsequently taken. The information provided will be taken into account by the CUEP evaluation and governance team in considering whether or not the bidder will be able to proceed any further in respect of this procurement exercise.
What can prospective bidders do to influence, in a constructive way, the funding process to ensure that there is a level playing field and that the sector's success is made a priority over the process itself?
The DWP has standard policies and procedures for its procurement activities to ensure consistency, transparency and equitable treatment for all bidders in a commercial process. The department is also charged with protecting taxpayer's money and certain safeguards are used to manage the risks of investment failing to deliver vfm or not delivering on policy intent. This project is being taken forward on the basis of the recommendations in the Feasibility Study: these clearly state that to ensure the investment of the sector in the project that the department will retain monies pending successful delivery of key milestones. If you feel that you have the skills to help the project succeed, but are restricted by your financial position, we would encourage engagement and collaboration with other interested parties to form a larger entity capable of achieving the investment required to benefit from this opportunity and contribute to the sector's success.
Would it be possible for the DWP to provide a list of Growth Fund CUs, or other interested parties, e.g. CDFIs, to enable the DWP criteria to be met for the CUEP bid?
It is not relevant that a credit union or CDFI was formerly a Growth Fund contractor. Details of bidder eligibility will be confirmed in the Invitation to Tender, this is likely to say that eligible bids must be led by CUs, representatives from the CU sector (which may  include personal lending Community Development Financial Institutions (CDFIs)), or other not for profit financial organisations who offer financial products and services to Tier 3 and other personal consumers.,
I would like to ask whether the date for determining member numbers within CUs for the CUEP bid will be changed to the September FSA return or alternatively from CUs’ Curtains/other software printouts, as the June 2012 FSA return will be out of date, by the time of the tender submission deadline of the 26th October?
At the time of the bid the most recent membership numbers should be provided. We will obtain more up to date membership numbers as a baseline from which to measure growth later.
Please would you clarify exactly what the 99p maximum charge is intended to cover?
The ‘99p’ is for the weekly equivalent administrative charge made by the CU to the member for the account. Additional charges incurred by the CU and passed on to the consumer for failed payments or other transaction charges are not included in the 99p threshold.
In the CUEP specification point 7.8, you state that where identified by the DWP, knowledge of good working practices and innovation demonstrated by organisations will be made available to other contractors. Is this information available now to prospective bidders?
Para 7.8 relates to the exchange of good practices during the Credit Union Expansion Project once contracts are awarded. Regular regional good practice forums were held for CUs with Growth Fund contracts during the life of that project.
Please would you expand on what a basic account is exactly, as this is not a savings account or a budget account or a current account.
A basic account provides simple transactional services. It provides an account with cashpoint access, enables DDs and S/Os. It is not linked to VISA (or other) credit platforms, so cannot be used to pay for goods or services via a debit facility or cheque. It does not carry any credit facility as a result (aside from a possible buffer zone to ensure access can be gained to the last few pounds of money in an account via a cash point).  The offer of a cheque book facility to customers is entirely optional and will be of no benefit to a bid.
116 Is it possible to attribute the name and CU/CDFI/Organisation of the people who raise the questions on the CUEP Q&A? No, the questions submitted are dealt with in confidence
117 Could you please give us some idea of when the CUEP tender docs will be available We expect that the Invitation to Tender will be published on our website  w/c 10 September