Get ready for that local

authority contract:

NORDCAT Services
case study
December 2007

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Introduction:
NORCAT provide an example of a third
sector organisation evolving and changing
to get ready for contracting. NORDCAT’s
relationship with their customer Dorset
County Council has changed over time
from that of hosted organisation to
contracted supplier.

The case study shows what can be

achieved with collaborative working from
The services NORDCAT has specialised
both the supplier and the customer to
in have differentiated from the commercial
enable an organisation to scale up to
bus operators by focusing on “going off the
deliver.
beaten track” and helping people in
isolated areas access services and
Background:
facilities further afield who otherwise often
would have no other means of
NORDCAT (North Dorset Community
transportation. NORDCAT also ensure
Accessible Transport) is a charity and
their buses are easily accessible with low
company limited by guarantee established
floors.
in 2001. They provide a door-to-door
minibus service in the North Dorset area
The major private sector bus companies
primarily for the elderly, disabled and
have tended to stick to the more profitable
socially excluded.
major corridor routes, leaving many
beyond its reach and unable to access
In 2001 Dorset County Council
basic services around the area.
successfully bid for funding from the Rural
Bus Challenge from the government’s
As NORDCAT’s services grew, it became
Department for Transport and were
apparent that a separate trading arm
awarded £462,000 over three years to
should be established to take advantage
establish an accessible transport scheme
of new contracts, and focus on the more
in North Dorset.
commercial areas of business such as
contracts. NORDCAT Services, the
trading arm, was established in September
“Communication is the 2005. NORDCAT Services is a wholly
best answer. Info won’t owned trading arm of the charity which gift
come to you, you’ve got to aids profits back to the charity, and took
go and find it.” on its first contracts in February 2006.

NORDCAT as a whole now has a turnover

This was used to invest in three new
minibuses and established a dial-a-ride
service in late 2001. This service was
hosted by the Council.
In 2001 NORDCAT was incorporated as a
separate legal entity, distinct from the
Council, with charitable status. This ran
the dial-a-ride service, and had also taken
on the transport for a local agricultural
college.
of £1.1 million and operates a fleet of 15
minibuses and 9 buses with some
timetabled services and demand
responsive.
The Contract:
The existing demand-responsive public
service that NORDCAT provided was
placed out to tender, under a competitive
process open to all. NORDCAT Services
successfully tendered for this and signed a
three year contract in 2007 with Dorset
County Council of around £200,000 for a

2
dial-a-ride service in Dorset operating
between Dorchester and Yeovil.
Unlike a traditional commercial service
that is timetabled along exact stopping
points, NORDCAT’s service is demand
responsive and makes detours through
villages to pick up pre-booked customers.
There is a fixed starting and end-point, but
the bus diverts according to demand on
the day.
People can ring NORDCAT and ‘book’,
this then determines the bus’ route. The
buses have a maximum advertised time to
reach the destination, so while it makes
detours, this is not ultimately at the
expense of finally reaching the destination.
The communication wit the end-users
works both ways with NORDCAT able to
warn people if the bus is likely to be late.
This demand responsive service has led to
many drivers getting to know their
customers and vice versa.
Dorset County Council has been very
supportive throughout the process of
applying, negotiating and delivering the
contract. A key contact within the council
is supportive of community run transport
services and has ensured that commercial
companies have not ‘cherry picked’ the
profitable routes.
Writing the tender, and pulling together all
the information took time and Community
Transport Manager, Helen Reed, focused
on putting the tender documents together.
“A good local authority
that wants to work with the
sector makes a hell of a
difference”
However it remained complex trying to
price a service for which the ultimate
demand could only ever be estimated.
While regular point to point services have
to estimate demand from numbers of
customers, their annual mileage should be
fairly static. Each NORDCAT journey can
vary daily from 25 to 35 miles depending
upon the demand on the day. This has a
significant impact on the variable costs,
notably the mileage costs, but also
administration costs such as working out
the fuel rebate based on litres used.
3
Dorset County Council was flexible on this
and happy to accept NORDCAT’s
proposals based on expected demand.
Previously some transport contracts have
been let for up to five years with no
flexibility, meaning that if demand does not
meet expectations, or evolves due to
external factors, it can be hard to adjust
the services. Therefore although it is a
three year contract the demand for
NORDCAT’s services is reviewed
annually, with a degree of flexibility in the
contract.
Joe Rose from NORDCAT pointed out the
“sheer time” to calculate the variable and
fixed costs was extensive and NORDCAT
also had the “usual problem of getting all
the information together and working
through the mathematical process”. The
service was priced to make a profit, as
commercial competition would have done
also, only NORDCAT feel they can be
more efficient and undercut major bus
companies by not having to satisfy
individual shareholders with a large return.
They feel price was a “prime” factor in
winning the contract.
Ongoing contract management requires
NORDCAT to monitor the take up of their
services, and keep records of all the
mileage. They also try to involve their
customers in the service and run surveys
and provide newsletters to keep them
informed of developments. Joe Rose
spoke of how they also try and show their
appreciation to their drivers “We also do
silly things like an annual Christmas party
where customers can vote for their
favourite driver and recognise members of
staff. It’s a good way for customers to
express their gratitude and staff to feel
appreciated”.
As NORDCAT had had a strong existing
relationship with Dorset County Council,
they were able to maintain this connection
when they became independent and the
council have remained supportive.
The Board and Leadership
NORDCAT the charity has thirteen
trustees and NORDCAT Services has
three directors. The trustees are taken
from users groups such as Age Concern,
other age and disability related
organisations, plus people with business
experience including one former director of
a major company and one local authority
accountant.
The board of the charity were supportive in
setting up the new subsidiary company
and on the whole have been supportive of
a general transition towards contracting
from grants. “There were a few
reservations, and interesting discussions
including the ‘tail wagging the dog if they
[the trustees] were not careful’ but they
[the trustees] have found the right balance
and are generally supportive. They play a
vital role in sometimes curbing enthusiasm
and playing ‘devils advocate’ when
contract opportunities may be do not fit as
well as first imagined” said Joe Rose.
He also points out that to enable good
quality third sector suppliers a supportive
local authority is important, “A good local
authority that wants to work with the sector
makes a hell of a difference”.
However that is not necessarily enough on
its own and NORDCAT have shown the
benefits of being proactive and effectively
communications “Communication we’ve
always found is the best answer. Info
won’t come to you, you’ve got to go and
find it.”

Key Recommendations:

Joe thinks the future of contracting with

the public sector “is quite healthy and [the
public sector should] consider moving
away from fully commercial options
towards social enterprise with a social
benefit as well as financial, not measuring
purely on commercial terms”.

KEY BENCHMARKS:

-Provide an innovate service

-Communication with customers

-Fit-for-purpose legal structure

-Time to put into tender process

-Working out true cost of delivering service