Successful strategic commissioning by public sector bodies is a complex process, more akin to making music than a purely technical exercise. Ministers should take note
I was delighted to note that Norman Lamb, the social care minister, made some telling points about public sector commissioning recently, when he was speaking at an ACEVO conference.
Amongst other things, he complained that all too often commissioning becomes a race to the lowest price, irrespective of either quality or who is going to provide the services. This is probably even more the case under the severe financial conditions under which most of the public sector including the NHS and local government finds itself having to survive.
He also observed that commissioning much too infrequently leads to third sector organisations delivering services.
And his third interesting point was to refer to commissioning as a ‘science’.
Norman Lamb’s comments made me realise that over the last few years, as the public sector has talked more and more about strategic commissioning, the majority of practitioners and commentators have lost sight of what strategic commissioning actually is, can and should be.
First, it is vital to avoid the mistake of conflating commissioning and procurement. Procurement, by which I mean the purchasing of and contracting for services, is just one of many means by which a public body can secure the implementation of commissioning decisions and their desired outcomes.
In that light, I suspect the point Lamb was seeking to make is that procurement all too often leads to a race to the lowest price and is overly price- driven - the much too frequent result of which is poor outcomes. In that, he is absolutely correct.
Of course, it can be argued that good strategic commissioning should be neutral as to who the provider of the service is and only concerned with outcomes and value for money. However, ‘exemplar’ public sector commissioning (and indeed procurement) also seeks to achieve: maximising social value (and indeed, the Social Value Act specifically requires local authorities to do precisely this); connectivity with and contributions to wider public policy goals; and the most effective use of resources.
With the latter in mind, it should not therefore be beyond the wit of an effective commissioner to ensure a fair deal for the third sector. Of course, this commissioner has to make sure that her/his procurement colleagues understand what is expected. Unfortunately they usually don’t.
Sadly, procurement processes and requirements all too often simply exclude most of the voluntary and community and wider third sectors as they do many SME businesses. This is where the problem usually lies.
This is particularly the case when contracts are let on ‘payment by results’ systems, with the provider requiring a capital base or massive balance sheet and/or cash-flow to survive for a long period with no revenue – something that few charities or SME’s can do (which is just one of the reasons why the entire system is fundamentally flawed); or where the size and scale of the operation can only be undertaken by large corporates; or where massive bonds are required that only organisations with large robust balance sheets can raise.
Lamb should take his complaints further, and challenge public bodies that insist on excluding the third sector on this basis; and he should insist that the Social Value Act is enforced and extended right across the public sector.
On Norman Lamb’s third point, where he describes commissioning as a science, I’m sorry but I believe he is just plain wrong. It has to be seen as an art, a mindset, a set of behaviours and cultures – and not processes. Using the term ‘science’ implies that there is always an objective, single and clear solution. This is simply not the case when dealing with complex services for people with complex needs.
Strategic commissioning is ultimately about choices between services and service solutions; resource allocation; and in the case of social and health care settings, it is about eligibility criteria and deciding whether or not to impose charges and if so at what level.
These are political matters and cannot be addressed simply through some scientific and technical procedure – or tick-boxes. And as Lamb knows better than I, political choice and political action are rarely, if ever, scientific!
If I appear to be critical of Norman Lamb, this is not my intention for I have a great deal of underlying sympathy for his argument and for his apparent frustration. As a minister, he is in a very good position to address the concerns and shortcomings that he has described - and to push hard for a shift in behaviours, especially in the NHS.
He might start by ordering the tearing up of many of the massive and complicated process-driven manuals that describe and often proscribe over-engineered commissioning processes. In their place, he needs to support and fund programmes designed to enable politicians, managers and commissioning staff to approach the subject as if it were an art – a beautiful piece of music rather than engineering exercise.
So what are the movements that should form this music? They should be based on some key behaviours. This means being guided by values, principles and a public service ethos; focusing on user and citizen at all times; being less concerned for institutions and more on outcomes; ensuring user and wider community involvement at all stages and times; challenging – not accepting - current orthodoxy; exploring and encouraging innovation and experimentation; pursuing social value as well as conventional value for money, thus integrating commissioning with wider social, economic and sustainability agendas and goals; and finally, collaboration rather than competition.
In turn this requires a strategic commissioning process to be based on having clarity of policy goals, preferences and priorities; identification of community and user need and aspirations; identification of the outcomes required to meet these needs and aspirations; determining the social value and wider public policy outcomes that are being sought; prioritising these outcomes and the available resources, and matching the two together; ensuring that all options for securing these outcomes are considered, and understanding what approaches might be available.
These might include the use of service provision, behaviour change, co-production, self or partially self-funding, direct payments, collaboration with or transfer to other public agencies, partnerships or contracting with the third and business sectors, regulation - or a combination of two or more of the above.
It is also important to know what alternative suppliers (including ‘in-house’ service units) are available or could be persuaded to play, and how and on what terms; and to access evidence on what works and what does not, and on what terms. And commissioners need to potentially encourage or incentivise suppliers to be available and/or in the case of the local voluntary sector or SMEs possibly support capacity building.
The next stage is to set targets and specifications for potential suppliers and apply these to all providers. Plus it is important to take a view as to the most appropriate form of provision to meet targets, encourage innovation and achieve the desired outcomes. And, if necessary, procure from the business or voluntary sector, having first decided that procurement is the right approach.
There should be a continuous review of these stages and they will naturally run concurrently at times.
It is vital that strategic commissioning maximises user and wider stakeholder (including citizens, staff, unions, voluntary groups and advocacy organisations) involvement at every stage. Service users and other stakeholders should also be involved in every decision, including in any procurement process. Many public bodies but unfortunately not all, ensure such involvement as a matter of routine. Commissioners should be continuously speaking to both actual and potential providers from inside and outside their organisation and established contacts. And they should be scanning the world beyond their place to ensure that they are aware of best practice, innovation and potential new players and ideas.
In reality, good strategic commissioning is a behavioural approach that every good public organisation, manager, leader and politician should always be striving for. Recent hi-jacking and distorting of the idea has perhaps made some think it’s a matter for the technical specialist whilst others lazily think that it is simply about a buying solution. It is neither.
The introduction of Section 75 procurement and competition requirements in the NHS are unhelpful and further create the impression that commissioning should always lead to some form of competitive procurement. Plain wrong!
Ultimately many decisions will be politically driven, and Norman Lamb will understand this better than anyone. I welcome his intervention and very much hope that he will work with colleagues in the NHS and beyond to develop an art-based approach to commissioning. If he succeeds, then even in a period of austerity, we could yet see better outcomes for the public.
See PF's interview with Norman Lamb in the April issue of Public Finance magazine
