27 June 2008
Local government commissioning has become a much more complex and strategic exercise, involving a variety of different agencies and systems. John Tizard discusses what's needed to do the job properly
At a recent presentation I was challenged by a councillor regarding a reference to commissioning, on the basis that 'there is no proven case for the private sector delivering public services'. However, this individual – like many others – was confusing 'commissioning' with 'procurement'. I have also heard executives from companies contracted to deliver public services claim, erroneously, that: 'If only local authorities had better strategic commissioning capacity, we would win more contracts. Indeed, they would have to contract for all their services.'
The reality is that procurement is simply one means of fulfilling commissioning decisions. It will not always be the most appropriate delivery mechanism. Commissioning, however, is essential – whether services are delivered by an 'in-house' service, another public body or a grant-aided voluntary organisation, or procured through business or third sector providers.
Whatever service delivery model is adopted, commissioning is needed. It encompasses vital components such as identifying needs; allocating resources; developing and managing supply markets; appraising service delivery models; and monitoring and evaluating outcomes (see box, below).
Commissioning should be strategically neutral about who provides what but passionate about securing high-quality services and value for money. It must ensure there are clear outcomes and output targets, with incentives and performance management systems to hold providers to account, regardless of which sector they come from.
It is a political process requiring political leadership so it should not be sidelined as a technical or operational activity. It must be high on the agenda of every council leader and her or his Cabinet and senior officer team.
A successful commissioning body understands what communities both want and require, how these needs might be addressed and which service solutions and delivery models are available. Where the most appropriate is not available, it must be able to encourage suppliers to be innovative about possible solutions. There has to be continuous dialogue with potential suppliers and all partners.
When it comes to service solutions and delivery models, commissioners should consider every option. This means having access to market and supplier data, as well as information on what others are doing, and the confidence to ask the right questions of the right people.
However, there might be occasions when strategic commissioning will legitimately identify one form of service delivery as being right for achieving a specific outcome. This is a proper political and professional judgement – as long as the basis for the decision is transparent and the decision-makers are accountable.
Citizens want responsive local services and to live in safe, clean and vibrant neighbourhoods. But they do not necessarily all want the same services or to live in identical neighbourhoods. Diverse solutions are essential to meet the different needs of diverse communities. There will be differences in different parts of the country and, indeed, within local authority boundaries. Strategic commissioning will also need to address the wider policy goals set by a local authority or local strategic partner, as well as those driven by government or statute.
Over the next few years, changes will have to be made in public services so that citizens' rising expectations can be met within tolerable tax levels at a time of financial restraint. Public agencies will be seeking out the most efficient and effective forms of service delivery and will increasingly procure services from business and third sector organisations, and from each other.
Commissioning bodies will have to take into account the often complex supply systems and chains involved in delivery. Services are increasingly being provided by a network of organisations. Some are owned and run by users, some by community organisations or third sector bodies and others by businesses, employee co-operatives or public sector agencies working alone or in partnership. The interdependency of services means that their design, planning and commissioning must be integrated and co-ordinated to achieve the best outcome both for individual service users and for communities.
If services are delivered by a multitude of providers, commissioning cannot be left back in the town hall when the councillors are involved in a Local Strategic Partnership with their colleagues from the NHS, police and other local organisations. Indeed, local strategic partnering could offer a new opportunity to reinforce the practice of strategic commissioning. Logic would suggest that more and more strategic commissioning and procurement should be undertaken not at council level but by the LSP.
The crucial question is: when is cross-agency strategic commissioning the best option and when is single agency-led commissioning best? The answer requires dialogue between agencies. But this is far from simple. There is a complex web of relationships and partnerships; conflicting performance management systems; as well as different funding sources, resource allocation criteria, accountabilities and decision-making processes, and cultures. LSPs vary greatly in both skills and maturity.
So there has to be local political accountability for strategic commissioning, the use of resources and service performance in any locality. This puts local government in a unique position within the LSP.
If local government and other public bodies are going to procure more services from a range of suppliers there will need to be major changes in supplier behaviour. Significant challenges for private and third sector providers who wish to work with public service markets will arise from the changing needs of public sector clients and their customers.
Large-scale contracts will have to allow for community, neighbourhood and personalised variations in outputs, and co-production opportunities, as well as potentially co-payment by communities and/or individuals. Providers must be ready to adopt retail rather than wholesale models. This will require careful consideration to ensure that the right regulation and contractual terms are introduced to balance customer requirements with commercial sustainability for the provider and risk management.
More and more services could be directly 'purchased' from providers by service users, using public funding. These issues, while tough, cannot be avoided and will be a concern for in-house public sector provision as well as business and third-party providers.
Consequently, there cannot be effective commissioning without an imaginative liaison with potential providers, to understand their requirements and develop an active market. Since failure to participate could be a business risk, business might undertake this pro bono – but third- sector bodies might need support.
The Local Government Association and the CBI has engaged the Centre for Public Service Partnerships to undertake research to identify what local authorities, their partners and suppliers need to do to develop and focus strategic commissioning on securing outcomes that meet the needs and demands of service users and communities.
We will be exploring how modern strategic commissioning can ensure successful fulfilment of Local Area Agreements at a time of limited resources; rising service demands; shifts to personalised services; greater user and neighbourhood choice; and a plurality of providers.
This project will be launched at next week's 2008 LGA conference. We shall invite relevant evidence to ensure that our report and recommendations are based on reality. And we will also seek out new ideas and consider challenging options for the radical development and transformation of strategic commissioning and public service delivery.
A checklist for commissioning
Identify need
Understand and respond to citizen, user and neighbourhood choices and preferences; and involve users and other stakeholders
Determine local outcome goals, based on the above
Allocate resources
Balance quality and outcomes with available resources
Secure delivery of the most appropriate public services to achieve the outcome goals within resource limits
Identify and appraise options for securing services, and the models of service delivery, then decide which option to adopt
Develop and manage supply markets
Design services and service requirements
Monitor and evaluate outcomes
John Tizard is director of the Centre for Public Service Partnerships at the University of Birmingham
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