Contracting: why local authorities should value more than price

13 May 16

Local authorities should do more to secure the value smaller charities can add to services

The current commissioning process pits charities against each other in competition to access the ever-dwindling pot of public sector funding. Yet the voluntary and community sector is not a homogeneous group and should not be treated as such. The value smaller charities have to offer may not be best highlighted through the formality of the current tendering process. 

Small and medium-sized charities are in danger of being left behind. A move towards larger, more generic and aggregated contracts can squeeze out smaller charities in favour of larger organisations who have the resources, capacity and expertise to write successful bids. The biggest consequence of this is the negative impact on people and communities who no longer have a wide range of services available to them.

Yet smaller organisations bring advantages. They are more likely to be deeply embedded within their communities, providing vital or specialist services, and regularly engaging with service users on a personal basis. They are often more trusted by service users than the local authority which means that they can be important gatekeepers to information and very useful allies in the co-design and co-production of services for the people they work with.

Local authorities have a crucial role to play in facilitating a greater role for smaller charities. This is not about preferencing one type of organisation over another, but it is about recognising the value that organisations of all different sizes and specialisms can bring to people’s lives and actively working to remove barriers to council funds. This means commissioning for the best services available, rather than simply the cheapest.

There are a myriad of ways that local authorities can lead the way here.

Firstly, commissioners should voluntarily increase the weighting they attach to social value beyond a ‘duty to consider’ to become an intrinsic part of the way in which bids are assessed. Doing so will allow commissioners to take into account the much broader range of services available and the added social, economic and environmental value that contracting with the voluntary and community sector can bring. This might include offering local employment and volunteering opportunities, specialist services, early intervention and prevention programmes and a long-term approach to people’s needs.

Secondly, councils should consider retaining grants for lower value, specialist contracts. Commissioning for smaller values will be less costly and bureaucratic than the larger aggregated contracts. However, commissioning is not always the most appropriate means of providing communities with their vital services. Grant-funding can allow for more agility and flexibility of response from smaller-sized organisations which have great services to provide, but cannot participate in the commissioning process on an equal footing with larger VCS organisations. What is deemed appropriate for grant-funding will of course vary from council to council.

The main objective here is to put the person at the centre of the commissioning process. In order to address people’s needs holistically, councils and the voluntary sector should work together, utilising their different expertise and specialisms, to provide the best support possible to these people and their interconnected needs. From the smallest, most niche organisations providing very tailored services to the larger organisations spanning several local authority boundaries with great strategic oversight, all charities have vital, yet different, roles to play in improving the lives of the individual; and all should have fair access to council funds to do so.

In times of stark budget cuts, it is understandable that value for money comes top of the priority list. But for the people at the heart of the commissioning process, benefiting from the range of services councils are commissioning for, their problems do not neatly align with political cycles and need much more holistic, long-term approaches which cut across ‘austerity measures’ and the short-termism of current commissioning practices. The lowest bidder may provide a competitive price, but they will not necessarily provide the best quality or specialist services, have the greatest insights into their local communities or provide the best value in the long term.

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