03 August 2007
Voluntary sector involvement in public service delivery is blighted by poor commissioning and perceived conflicts with European Union competition rules, the Audit Commission has found.
'It's up to the voluntary sector to help councils select the best organisations to deliver local services,' said commission chair Michael O'Higgins. 'What the sector needs is clarity, not charity, and that means improving bidding processes and demonstrating its worth in clear and measurable ways.'
The commission's July 31 report, Hearts and minds: commissioning from the voluntary sector, found that many councils and their officials were confused about how commissioning from the third sector sat within EU procurement rules.
For example, councils were concerned that efforts to 'build capacity' among local voluntary sector organisations might conflict with the need to maintain a level playing field between potential competitors.
Similarly, they worried that involving potential providers too soon in the commissioning and planning process undermined the desired 'commissioner/provider' split. There was a need for non-technical advice on these matters, the commission noted.
While there was 'genuine competition' within and between voluntary and private sector providers of adult social care services, the commission found there was little for specialist or niche services, such as community transport. These were often monopolised by one small or middle-sized voluntary body, possibly due to the lack of profitability for commercial organisations.
Where real market competition was lacking, councils and voluntary organisations should develop a 'pragmatic approach' to price negotiations, the commission said.
'When grant funding voluntary organisations to deliver services, commissioners and bidders should ensure that the amount paid in grant makes the provision sustainable,' the commission said. 'In the absence of competition, councils need to work with the voluntary sector to develop a pragmatic approach to full-cost recovery, within budgetary constraints.'
Seb Elsworth, head of policy at the Association of Chief Executives of Voluntary Organisations, responded: 'The need for pragmatism in some situations does not undermine
the need for third sector organisations to employ full-cost recovery in their planning processes. Before embarking on a funding exercise for any project, it is imperative that the organisation is aware of the full cost.'
But the commission noted that many third-sector organisations lacked the capacity to do such analyses or to engage in local authority commissioning or consultation processes.
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