Third sector commissioning

October 2008

The way that local public sector bodies secure services for their local population is often referred to as “commissioning”. It is the process by which local councils, primary care trusts and other public bodies, decide how to buy the services they need for local people.

Public bodies (as the purchasers) focus on getting the best service at the best price for service users, and encourage competition between providers - whether they are public, private or voluntary sector.

Commissioning is quite complex and involves a number of stages, from conducting needs assessments in order to find out what services are needed, prioritising and developing options, to commissioning the services, monitoring, evaluation and review.

Policy Context

In October 2003, the government published the National Procurement Strategy, setting out how central and local government, working together with partners from the public, private and voluntary sectors intend to set about improving local procurement. Councils were encouraged to explore a partnership approach to service delivery.

In December 2006, the Cabinet Office published their Action plan for third sector involvement in public services. It set out the steps the government had already taken to support the sector in the public services arena, and the steps that will be taken in the future. It identified measures to improve commissioning from the third sector.

The government committed itself to eight commissioning principles that it believed would improve the experiences of the third sector.

1. engage with the third sector as advocates;
2. consultation well in advance of commissioning new services;
3. put outcomes for users at the heart of planning;
4. map the fullest practicable range of providers;
5. consider investing in the capacity of the provider base;
6. ensure contracting processes are transparent and fair;
7. seek long-term contracts and risk sharing wherever appropriate;
8. seek feedback to review the effectiveness of commissioning processes.

Examples of commissioning programmes

A number of current commissioning programmes and initiatives present opportunities and challenges for the local voluntary sector:

Commissioning framework for health and well-being – putting a strong emphasis on closer working between health and local government. Promoting health, well-being and independence.

Every child matters – have a strategy and action plan for working with the third sector, to make the most of the potential offered by the third sector.

World class commissioning – to drive up the commissioning capability of local NHS commissioners.

Social care and personalisation – giving people control of their own personal budgets.

Areas of debate

The greater emphasis placed on local councils and primary care trusts to commission services from a range of providers, and the role of councils as ‘place shapers’, has brought about fundamental changes in the way third sector organisations secure statutory funding.

Commissioning has already replaced grant-giving in many areas, and third sector organisations are having to develop new relationships, skills and expertise to enter the bidding process to secure funding. There is a danger that small and specialist organisations will be squeezed out of the market, as they may not have the capacity, resources, or the expertise, to compete.

Inconsistencies in the commissioning and procurement practices of some statutory bodies can also be a problem. The Audit Commission has found that current procurement practices do not encourage voluntary organisations to enter the market.

The feasibility of including full-cost recovery when bidding for services is of concern to voluntary organisations and commissioners alike. The full cost of any project needs to reflect an element of each type of overhead cost incurred in the delivery of a service. The principle of full-cost recovery is included in local government procurement practices, but can present challenges for all involved.

The third sector has always had a number of roles. Campaigning for change at local and national levels has been an important part of their work, along side the provision of services, and is a legitimate part of their activity. This dual function can place strains on relationships between the statutory and third sector, particularly at local level, and between organisations and commissioners. The sectors’ independence is an area of on-going debate.

Whilst commissioning and contracts can provide funding security for a voluntary organisation, there has been concern that it also puts constraints on the organisation, causes ‘mission drift’ and stifles innovation, as organisations seek to meet the objectives set by commissioners.

Issues for consideration locally

Many of the above debates resound locally, and are issues that are now engaging the sector. It is important to note that the impact of a greater emphasis on commissioning services, and the procedures surrounding the process, is not only changing the relationship between the statutory and voluntary sectors, but also the shape of the voluntary and community sector itself.

The challenge for the sector locally is to make the necessary changes, and to pursue new approaches like consortia development, so that it can compete in a changing market, whilst maintaining its values, diversity and independence.

This article is a summary of 'A Comprehensive Briefing on Third Sector Commissioning' October 2008