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									Commissioning – a national third sector perspective


I’d like to say first of all that in my work with the Local Commissioning and Procurement
Unit at NAVCA we have been holding up Croydon's third sector commissioning
framework as a good example. There’s a number of features that make it an exemplar.
The fact that it includes commissioning under contract and grants. Its recognition that
third sector organisations play a number of roles in public service delivery, including as
advocates and advisors as well as providers. I look forward to continuing to signpost
other areas to Croydon for its third sector commissioning framework.


I was told that today’s event is a taking stock of where things are in Croydon vis a vis
the framework, and my role is to contribute a national perspective. It has prompted me
to take stock of how things seem now in third sector commissioning compared with
when I came into post 18 months ago.


It was amidst many concerns about the actual and potential negative impact on third
sector organisations of commissioning. Concerns were focussed on the shift of public
sector funding from grants to contracts, and what is lost through a lack of grant funding.
Added to this was the unequal playing field for third sector organisations wanting to
tender in open competitive situations. This was worst for the smaller to medium sized
local organisations that couldn’t compete with the economies of scale of larger
organisations and didn’t have the experience and skills to complete high quality tender
submissions. There was much talk about the barriers that face third sector organisations
in contracting, for example unnecessarily high thresholds for financial turnover or
insurance requirements. The governments’ policy agenda was about having more third
sector organisations involved in delivering public services.


So - have things changed for third sector organisations in that time? Yes and no, is the
short answer. The shift from grant to contract funding continues and has been recently
evidenced by NCVO. The barriers that contribute to an unequal playing field have been
well documented, and we have seen some real efforts to reduce or remove some of
those barriers. We’ve also seen a growing awareness on the part of voluntary and
community organisations of the need to join and work together to deliver public services
if they wish to compete with larger organisations or private sector companies. Some
have formed consortium to win contracts and have successfully beaten off private


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sector providers or national charities. However, the message is still not getting through
enough.


One concern remains, however, and has even grown. Medium sized voluntary
organisations (£100,000 £1m) are most at risk of losing out in this agenda. Why the
medium sized and not the smallest? Because they are the ones that are most
dependent on government funding, and thus most at risk from the adverse effects of
competitive tendering. The worst case scenario is what one person has called the
‘bifurcation’ of the sector. That’s where we could end up with the small and large third
sector organisations intact but the middle sized ones have all but disappeared. But let’s
not go any further into that doomsday scenario. It is caused by policy interventions and
therefore be changed by policy interventions. It can be prevented, and a good third
sector commissioning framework is a key way of preserving a healthy and diverse local
third sector.


Let’s move on to look at where central government policy is leading us and how that
might translate into the local context. Steve asked me to consider what government
policy and guidance is saying about the third sector, local authorities and
commissioning public services.


There are in fact not one, but several agendas relating to this. Firstly, there’s the
continuing drive to deliver ‘value for money’, greater efficiency and a wider supply of
delivery organisations through procurement and specifically competitive tendering. This
is a dominant agenda. Commissioners are expected to have competencies in market
shaping, market development and even market management, depending on which
guidance they take a lead from. In this policy agenda third sector organisations are part
of the market. The Government has said that full market mechanisms are not
appropriate in public services such as health, social care and education. In practice this
seems to be not always the case, and the use of market approaches to bring about
service improvements and transformation seems set to continue.


Secondly, there are a number of government agendas clustered around democracy,
citizenship, choice personalisation. In commissioning this means that there is a clear
expectation that commissioners engage with stakeholders at the earliest possible stage
in the commissioning process. This applies at strategic and at service level.


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Stakeholders should be involved in identifying needs, deciding on priorities, and shaping
and designing services. In this policy agenda third sector organisations have a role as
facilitators of stakeholder involvement, advocates, representatives, campaigners and
lobbyists. They do, however, need some resourcing to play these roles fully and
effectively, and this needs to be recognised in commissioning processes.


A third policy agenda relates purely to procurement. Policies on procurement expect
that procurement practice achieve a number of financial and social objectives. It’s
expected to achieve savings, value for money, good quality services, equality and
diversity and even sustainability, which has come to mean environmental. However,
whilst we routinely hear how much money has been saved through more efficient
procurement, there is very little, if any, good guidance on how social objectives can be
delivered through procurement. Earlier this year the OTS produced a report on the
social clauses project which a few local authorities had been involved in. It was very
disappointing and has not proved to have any value as a tool for encouraging progress
in this area.


The last agenda I’ll refer to is that of innovation in public services. Government sees
innovation as essential for transforming public services and that innovation resides with
the entrepreneurship that comes with social enterprises.


Do these agendas dovetail and complement each other or do they run parallel or even
work against each other? In NAVCA we think that the market and procurement agenda
is often pre-eminent and driving too much at the expense of the others. Do rigid
contracting processes encourage innovation – or stifle it? How is value for money
assessed and does it really mean the cheapest? Another way of looking at it is to ask
whether a commissioning framework enables third sector organisations to effectively
fulfil all the roles they aspire to – whether as providers in a marketplace or advocates
and representatives.


As I’ve just outlined, although government policy on third sector commissioning is not
fully coherent and lacks leadership in some areas, there are several key themes
relevant to the sector in current commissioning thinking at national level. The four main
themes I’m going to touch on here are;




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Personalisation of public services
Outcomes
Impact
innovation


I’ll begin with personalised services. What this means is that citizens won’t have to fit
into the traditional boxes of services. Instead, services will fit around the individual.
Government expectations are clear – all services are expected to move in this direction,
led by the transformation of adult social care. This means a huge change in how
services are commissioned. What we have now is a situation where commissioners
purchase services through block contracts. The vision of personalised services is that
citizens will decide what they need individually and will then have control of budgets to
individually or collectively commission the services they choose. In this world third
sector organisations will need to figure out new models for delivering services and
engage with service users as commissioners. This will take time and requires
organisational development and capacity building. Third sector organisations will not
simply become ready overnight for these changes and it needs to be recognised that
this is quite a journey.


The second theme is outcomes based commissioning. There is generally an aspiration
and even a move in the direction of commissioning for outcomes instead of outputs. So
instead of ‘we want x amount of this type of activity for this group of people’ we have
instead ‘what changes do we want to see as result of the commissioning process’? Or
even better ‘what changes do the users of this service want to see as result of the
commissioning process’?


Commissioning for outcomes frees up service providers to be more imaginative and
creative in what services they deliver and how they deliver them instead of being tied to
the old or existing patterns and models of service delivery. We are still in the early
stages of this journey. One of the things it needs to work is excellent involvement and
engagement from the people who use the service so that the right kind of service is
commissioned. that the communities in question define the change they wish to happen.
It means that service specifications and monitoring arrangements look very different to
the way they do just now.




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Going a step further with outcomes, some areas are trying to maximise the value they
get from public services by commissioning services that are not just based on outcomes
for specific groups of service users, but the wider community. They link services to
wider community benefits as set out in the Community Strategy. The best known
example of this probably is the commissioning for public benefit that Camden Council
have done for a mental health day service. They asked bidders how they would deliver
better outcomes for that population of service users. They also asked bidders how they
would contribute to Camden’s Community strategy. So they asked questions such as
‘how will your service increase resources in the Camden economy, especially deprived
areas’ . ‘How will your service reduce worklessness and economic inactivity.’ ‘How will
your service increase access to public benefits … for Camden citizens in deprived
areas.”


This approach to commissioning plays to the strengths of third sector organisations who
can demonstrate what we call the ‘added value’ that third sector organisations are
uniquely well placed to bring to the delivery of services. Maybe it ticks the box of ‘doing
more for less’ (or maybe that should be doing more for the same) – mantra that we’ll
hear more and more in the next few years. It does also require a major change in
culture and thinking and a leap in faith on the part of commissioners and third sector
organisations.


This is linked very much with another major government theme – that of prevention and
innovation. As we face challenging times ahead, we are told that the old ways of
delivering services are changing dramatically and a brave new world lies ahead. No
single body has the answers for how to deliver better services – commissioners
certainly don’t – and organisations that can come up with innovative approaches are
needed. So here’s another challenge. How do commissioners work within a framework
that has enough structure to provide consistency, coherence and demonstrate
transparency and fairness, and also enough flexibility to encourage innovation and
responsiveness to locally identified needs?


As I’ve said, another major theme of government policy on commissioning public
services is that of value for money. Easy to say, tricky to measure and evaluate. There
are methodologies developing which help to measure some of the harder to measure
elements of what third sector organisations provide. Social return on Investment is one


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of these methods, and the OTS have published a very useful guide on SROI. It’s also
important that we in the sector rise to the challenge of evidencing the impact that our
organisations have. It won’t just be enough to say that we do good, important and
valuable things for our communities, and it won’t be enough to depend on our marketing.
We’ll be expected to prove our worth and evidence our impact in more concrete,
realistic and measurable terms.




Hopefully I’ve said enough to fulfil the brief of getting you thinking and flagging up the
big themes in this agenda. What I’ve said can perhaps be summarised very simply. The
overriding criterion against which all commissioning should be measured is: ‘is this
going to change things for the better for the people who need this service and for local
communities? Is it going to enable local third sector organisations to really fulfil their
potential to change things for the better for local communities?




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