Social Impact Bond

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Initiator(s):

VDAB

Theme:

Social innovation

Domain:

Work

Active state:

In execution

Contact:

VDAB
Patrick Maes
+32 475 61 68 86

PIO
An Schrijvers
+32 2 553 39 72

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Challenge

VDAB wants to introduce the mechanism of a Social-Impact-Bond or SIB in Flanders and use it for an employment project stimulating ‘lost youths’ in Antwerp to search for and find a job.

With a SIB, a government organisation concludes a contract with an external contractor or social service supplier and a private investor or financier to tackle a complex social problem. In the event of success (actually solving the problem) the government organisation pays the investment back to the financier with a return (or bonus) resulting from the savings that solving the problem has yielded to the government organisation.

In order to explore and test the value of the SIB construction for use in the labour market, the VDAB uses the Antwerp NEET youth as a pilot project. NEET stands for Not-in-Education-Employment-or-Training. These are young people who have sort of ‘disappeared from the radar’, and who are extremely difficult to stimulate to employment.

The VDAB attaches three objectives to this project:

Examine whether a SIB as an instrument for public-private partnership makes sense for use in the labour market;
Guiding the Antwerp NEET youths to employment;
In case of success, develop a platform so that Flemish public authorities can use SIBs more easily in the future, not only in the labour market but also in other policy areas.

Preparation

Preliminary trajectory within the VDAB

As early as December 2014, the VDAB started a preliminary study on Social Impact Bonds. In the course of 2015, this led to the application and start-up of an ESF project ‘Social Impact Bond', which was submitted under the Call for ‘Innovation through Adaptation'. The project, carried out in collaboration with HIVA (Research Institute for Labour and Society), explores the value of the Social Impact Bond for the Flemish labour market. In mid-2017, HIVA published the results in its report ‘Financial innovation for social excellence. Preliminary study of a first Social Impact Bond for NEET youngsters in Antwerp'.

Due to the HIVA report, an additional market consultation, supported by PIO, was considered to be unnecessary.

In the course of June 2017, the VDAB called for an 'Application for Participation', to which a number of duos (of social investor and service supplier) signed up.

Tender document

In the autumn of 2017, the tender document was prepared and submitted to the Government of Flanders for approval. This was necessary because the draft decision of the Government of Flanders regulating the co-financing of research and development in the context of public procurement had not yet been finally approved. This (draft) decision delegates the decision power on co-financing to the Hermes Decision Committee, and defines the scope and conditions of co-financing. Final approval after advice from the Council of State is expected in early or mid February 2018.

Approval of co-financing from the PIO by the Government of Flanders

On 22 December 2017, the Government of Flanders took note of the implementation of the Innovative Public Procurement Programme and gave its approval to secure an amount of 3,969 million euro in the 2017 budget of the Hermes Fund for co-financing projects from the first call. 1 million euro was secured to co-finance the SIB project of the VDAB. Consult here the decisions of the Government of Flanders for more details.

Procurement

Call for tenders SIB

Procedure: competitive procedure with negotiation

In mid-2017, the VDAB had already distributed a 'Request for Participation' publicly, to which two duos (of financier and service provider) subscribed.

On 8 January 2018, the VDAB invited the interested duos via e-procurement to submit their bids to the tender document by 1 March 2018 at the latest.

Negotiations took place during March, April and May 2018, after which the duos drew up an adapted offer (their best-and-final-offer or BAFO).

In October 2018, the contract was awarded to the duo BeCode - Impact Capital. With this, VDAB and PIP have concluded the first SIB in Flanders. Read the press release .

Call for tenders independent evaluator

Together with our partners VDAB, BeCode and Impact Capital we have appointed an independent evaluator for our 'SIB project for the employment of Antwerp NEET youth'.

Procedure:

Lot 'measurement of results': competitive procedure with negotiation (within the Public Procurement Act)
Lot 'impact measurement': own negotiated procedure (outside the Public Procurement Act)

On 16 April 2019 the contract was published on e-procurement. Deadline for submitting applications for participation via form was 29 April 2019.

The first lot 'measurement of results' was awarded to HIVA.

Execution

In October 2018, the contract was awarded to the duo BeCode - Impact Capital. With this, VDAB and PIO concluded the first SIB in Flanders.

On 13 December 2018, the first group of Antwerp NEETs started their BeCode training.

On 23 January 2019, we organised a press conference.

Results

SIB

Script - SIB conceptual model

Besides the roll-out of the SIB in a guidance trajectory for Antwerp NEETs, the assignment also included the drafting of a kind of scenario for future SIBs in close mutual cooperation. The script compiles the experiences and lessons learned from this concrete SIB and compares them with the experiences and opinions of other SIBs in Belgium and abroad. The script will be delivered by the end of 2021.