When the chief executives of top charities like Barnardo’s, Rainer Crime Concern and Tomorrow’s People variously describe their usual experience of commissioning as ‘appalling’, ‘just hopeless’ and ‘a joke’, then it is clear there is a long way to go to achieve the ambition of ‘world class commissioning’.
Many felt the fundamental problem was a lack of understanding of the difference between commissioning and procurement. Too many officials seem to believe their role is just to purchase a service at the lowest price possible. They think they are not allowed to discuss service specifications with potential providers and do not recognise that you can have an iterative, creative commissioning process, involving proper consultation, and then draw a line and embark on a formal procurement exercise.
The emphasis on localism poses particular challenges for national organisations. Whereas it used to be possible to negotiate contracts with government departments or with agencies like the Learning and Skills Councils, in future they will be negotiating with individual local authorities. Richard Williams of Rathbone estimates they will have to develop new relationships with 80 different local authorities over the next two years.
There is also a move towards incorporating services for different client groups into one, generic, contract in the expectation that the prime contractor will sub-contract to specialist providers. For example, RNIB provide a specialist employment advice service for blind and partially sighted people in a DWP contract in Manchester, but they feel a specialist national contract would have been a more effective way of meeting the needs of their client group. Debbie Scott of Tomorrow’s People says the lead contractor will typically top slice 10% of the contract to meet their own transaction costs and the sub-contractor gets paid mainly in arrears, thus creating a cash flow problem.
National networks like Citizens Advice and Home-Start face particular challenges. For example, the Legal Services Commission’s desire to pool their funding with local authorities’ to establish Community Legal Advice Centres and Networks, has already resulted in the loss of funding to Hull CAB, where a commercial partnership of A4E and a solicitors’ firm won the tender. The specification for the service was very narrow and did not include any concept of community benefit. If these developments continue across the sector, the benefits of having a national network of local organisations like CABx and local Home-Start schemes will be quickly lost.
Local infrastructure organisations, like Cambridge House in Southwark and Voluntary Action Sheffield, see part of their role as helping local groups form consortia or partnerships so they can compete effectively. However, Alex Whinnom of Greater Manchester Centre for Voluntary Organisation said he had not been able to find any evidence to date of a national organisation forming an equal partnership with a local organisation from the outset.
For those chief executives who have experience of public sector procurement, the story is too often one of a poorly managed process.
Procurement Problems
· Unreasonable and changing timescales
· Poor service specifications
· Focus on outputs, not outcomes
· One year contracts
· Standardised pricing
· No recognition of costs of difficult clients
· No allowance for inflation
· No allowance for TUPE costs
· No recognition of working capital costs
· No sharing of risk
· Late decisions
Victor Adebowale of Turning Point and former co-chair of the DH Task Force on Commissioning, says that many of the problems stem from poor leadership at the local level. ‘Commissioning is in the last chance saloon’, he says, ‘Unless commissioners get their act together quickly, their function will be contracted out to the private sector- some fear that this might be like putting Dracula in charge of the blood bank’.
Making commissioning work
Although commissioning was high on the list of most chief executives’ challenges, a lot of effort is going in to improving it. Simon Gillespie of the MS Society, is working with the Parkinsons Disease Society and the Motorneurone Disease Association on three commissioning pilots to demonstrate what user involvement in commissioning can achieve. They are developing menus of the services that users actually want and thus beginning to change commissioners’ behaviour.
The Stroke Association have succeeded in influencing the commissioning environment for their services. Having played a leading role in getting the DH to develop a Stroke Strategy, they worked with the DH producing a guide for commissioners, backed up by guidance on the web. Every DH/NHS document now refers to the role of the Stroke Association in service provision.
Some interesting new partnerships are being formed. For example, Serco are teaming up with a number of third sector organisations- with TACT in Stoke on Trent for work with looked after children; with Contact a Family to help local authorities develop arrangements for short breaks and parent participation for families with disabled children; and with Rainer Crime Concern and Turning Point to help rehabilitate offenders as part of prison management contracts.
At the local level, Councils for Voluntary Service like Birmingham Voluntary Service and Voluntary Action Leicester are working with the local authority to develop joint commissioning strategies for the third sector. The ‘Birmingham Model’, which invites third sector organisations to say how they can help achieve particular outcomes within particular price bands is gaining popularity as an alternative to standardised procurement approaches.
Joint work is also taking place in particular service areas; for example, Nick Wilkie of London Youth is aiming to establish a development worker in each London borough to work with local authority officers and local youth clubs to develop quality services for young people.
Developing the relationship
The secret of success in contracting is undoubtedly to develop a good relationship with your commissioners. Thames Reach take prospective commissioners to see other projects they run; they are open about the need to keep learning and improving; and they get a third party to phone up their commissioners on a regular basis to ask them questions about their performance, focusing on the areas where the commissioner feels Thames Reach could do better.
Martin Narey of Barnardo’s, was delighted to be able to agree a 20 year contract with the London Borough of Brent for provision of a Family Centre- a welcome change from the one year contracts offered by so many other authorities.
Su Sayer of United Response believes the key to effective commissioning is having a joint approach in which both parties are willing to discuss problems, share risk and work out innovative solutions together.
Training
Perhaps one of the most hopeful signs that things are going to improve is the emphasis being put on training commissioners and third sector providers alike. The training programme for commissioners, funded by OTS, has now begun and should help address some of the poor practice reported by the third sector.
But third sector chief executives also spoke of the need to train and develop their own middle managers, who are having to prepare tenders, present bids, negotiate and then manage contracts. Mark Lever of the National Autistic Society, feels a culture change is required for many third sector staff, who are having to operate in a much more business-like way. This is often different to the charity world they are used to, where the emphasis was more on securing grants to meet costs, rather than managing costs as tightly as possible to deliver a viable and sustainable service.
Although the reports from the commissioning front line make depressing reading, there is a definite feeling amongst the chief executives I spoke to that things can only get better.
Richard Gutch is an Associate at Prospectus, the third sector recruitment solutions agency.
