from policy to practice - how is the environment enabling you to deliver or commission public...

8/10/2019 From Policy to Practice - How is the Environment Enabling You to Deliver or Commission Public Services

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National Council for Voluntary Organisations

Public Service Delivery Network

From Policy toPracticeHow is the environmentenabling you to deliver or

commission public services?


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From Policy to Practice:How is the environment enabling youto deliver or commission public services?

1 Introduction3 Setting the scene11 The Big Debate17 Bidding for Contracts21 Consortium Delivery26 Intelligent Commissioning31 From full cost to full value36 National Programme for Third Sector Commissioning

40 Summary - key themes for the future

Contents


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The Public Service Delivery Network (PSDN) was set up byNCVO in 2005 and is run by the Sustainable Funding Project inpartnership with Futurebuilders England. The purpose of theNetwork is to bring together the voluntary and community andpublic sectors to develop and share learning around the deliveryof public services. The Network, which is free for those workingin and with the voluntary and community sector, has doubled insize to 700+ over the last year.

This document is a report of the Public Service DeliveryNetworks second annual conference. This report and otherresources of the network, including joining instructions, casestudies and information about seminars throughout the year areavailable at www.ncvo-vol.org.uk/psdnetwork.

This report was written and edited by Sally Cooke, based on aplenary transcript and workshop notes.

Introduction

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The theme of the 2007 Public ServiceDelivery Network Annual Conferencewas From Policy to Practice. Since theTreasurys original cross-cutting reviewlooking at the sectors role in publicservice delivery in 2002 there has beena great deal of activity in this field,both in terms of policy developmentand practice. One thing that is clearfrom the presentations and discussions

summarised here is the wealth ofexperience that delegates bought to theevent and the evident maturing of thedebate over recent years.

There is no doubt that public servicedelivery and the world of contracting andcommissioning remain challenging forthose on both sides of the relationship.However, driven by an understanding ofmutual advantage and a desire to achievebetter outcomes for service users, manyare improving practice, sharing learning

and contributing to constructive on-going debate in this area.

This document attempts to capture thefull content of the conference includingthe contribution of both speakers anddelegates. It is designed as an aidememoir for those who attended on theday and as a rich summary for thoseunable to attend. Each conferencesession is reported in a separate section,building on the speakers notes anddiscussion on the day. Each section can

be read as a stand alone as well as partof the full document. You might findparts of this report useful to share withyour colleagues. The final section pullstogether a number of key themes thatemerged from the day and which thePublic Service Delivery Network partnersand others might want to address in thefuture.

We very much hope you will enjoy thisreport and learn something from theinteresting presentations and discussionsheld at what was a very lively and vibrantday of dialogue and networking.

If you would like any more informationabout this report or the conferenceplease contact:Charmaine Sainsbury,Sustainable Funding [email protected] or020 7520 2555.

Introduction

One thing that is clear from thepresentations and discussions

summarised here is the wealth ofexperience that delegates bought.2


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The opening plenary session ofthe conference set the scenefor the public services debateand provided context for theworkshops that followed. Thethree speakers were:

Stuart Etherington, ChiefExecutive of NCVO, settingthe scene for the public servicedelivery agenda in 2007.

Campbell Robb, DirectorGeneral of the Office of theThird Sector (OTS), takingstock of developments withinGovernment one year on fromthe OTS Action Plan.

Martin Kinsella, ChiefExecutive of P3: The SocialInclusion Charity, sharinghis views and experience inthe field of service delivery.Martin is a Social EnterpriseAmbassador.

Question and debate wereinvited from conferencedelegates and are summarisedin the boxes below.

Discussion in this sessionfocused on the:

Financial climate for the publicsector and its impact at locallevel.

Experience of centralgovernment contracting.

Status of the Compactand role of the CompactCommissioner.

Public Service DeliverySetting the Scene

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Stuart Etherington Perspective from theVCS and NCVO

In the two years since NCVO launchedthe Public Service Delivery Networktogether with Futurebuilders England, alot has happened:

there is now a dedicated Office of the

Third Sector (OTS) at the heart ofgovernment in the Cabinet Office;

extensive consultation with the sectorhas informed a very positive reportand strong recommendations from theGovernments third sector review;

the Commission for the Compacthas been established to strengthenand support implementation of theCompact between the statutory andvoluntary and community sectors(VCS).

Growth in Public ServiceDelivery

NCVOs recent Almanac figures showthat the value of government contractsto the sector is increasing, now 6.6billion. However, this growth is notevenly distributed. Larger charitiestend to fare far better than small andmedium sized organisations in this arena.

Under the right conditions and in theright environment, there is potential forvoluntary and community organisations(VCOs) of all sizes to contribute to thedelivery of public services that bettermeet the needs of individuals andcommunities. Investment in capacitybuilding and other support to help VCOsto take on public service contracts whereappropriate has been welcome. However,this in itself will not deliver the reformthat everyone wants to see. Achievinga more sophisticated approach toidentifying needs and designing servicesis taking time. Consequently, involvementof the third sector in public servicecontracting has not been as extensive oras diverse as we might have hoped.

Transformation nottransfer

All the main political parties have voiceda desire to unlock the potential of thevoluntary and community sector (VCS),particularly in relation to public services.They have shown interest in our: skillsand track record of innovation; our abilityto operate free from the constraints

of the public or private sectors; andour flexibility and closeness to users.NCVO believes that effective publicservices must be closely aligned to theneeds of users. And that therefore,simply transferring services from onesector to another will not necessarilyimprove service quality. If we are to seetransformation in services, whoever isto deliver them, user needs must beplaced at the heart of the process. Thismeans building transformational changeinto the processes of service design,commissioning and procurement.


They have shown interest in our:skills and track record of innovation;our ability to operate free from theconstraints of the public or private

sectors; and our flexibility andcloseness to users.4


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The Public ServicesAction Plan

The cross-government public servicesaction plan produced by OTS in 2006demonstrated an understanding ofthe need to transform and not justtransfer public services. The Action Plantakes account of all of the roles thatVCOs potentially have in relation tothis transformation. It also introducesnumerous initiatives (see below) intendedto support the sector and create an

environment where more VCOs caninfluence and shape public service design,and bid to deliver services should theychoose to. The next step is to reach agenuine understanding of the value ofthe sector and the values that we bring towhat we do.

The way ahead

It is very encouraging that the ActionPlan is designed to work with otherGovernment commitments, includingthose in the Local Government WhitePaper and the final report of the ThirdSector Review. However, the sectorpreviously had high hopes of the 2002Treasury Cross Cutting Review of thesectors role in public service delivery,which made a compelling case for theimplementation of full cost recovery,

longer term funding, timely paymentand proportionate application andmonitoring requirements. In manyrespects we are still waiting. NCVOcommends the work that OTS hasdone across government. However,we recognise that there is still muchto be done. It is crucial, this time, thatGovernment delivers.

Campbell Robb Perspectivefrom the Office of the ThirdSector

Government Commitment

This is an opportunity to take stockof where we are at one year on frompublication of the Public Services ActionPlan. Before describing some of the

initiatives being taken forward as partof this plan it is important to make clearthe breadth and depth of Governmentcommitment to the Third Sector agenda.Ministers across the board are now reallydriving this issue and talking with civilservants who are coming to us and askinghow can we do this, we want to makethis work.

Those of you who have had the chanceto read the Third Sector Review reportpublished in July will know that the

delivery of public services is not theonly role Government sees for the thirdsector. The proposals of the Third SectorReview (into the sectors role in social andeconomic regeneration) cover a numberof key areas including: campaigning;strengthening communities; anddeveloping social enterprise. The reviewalso looks at the environment for ahealthy third sector as well as the role thesector can play in transforming publicservices.

There are many areas, in which thesector works, where the emphasisfrom government is now on increasingengagement of local people and serviceusers in decision making (e.g. in relationto individual budgets). Governmentrecognises that there are VCOs notactually interested in delivering a servicethat will still want to ensure a say for theirusers in how that service is designed orrun. Government and the sector needto understand better: how greater

engagement can be achieved, how it willimpact on public services, and what rolethe third sector might have.


Ministers across theboard are now really drivingthis issue and talking with

civil servants who arecoming to us and askinghow can we do this, wewant to make this work.

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Work in progress - the PublicService Action Plan

These are some highlights fromthe work being undertaken byOTS and others to deliver thePublic Services Action Plan:

Innovation Exchange The aim of theExchange is to connect third sector

innovators with those in the public sector.A website provides a place where peoplewith really good ideas can find someoneto buy them. And, where commissionerscan go to look for what they need. OTSis working with the National Endowmentfor Science, Technology and the Arts(NESTA) to develop the Exchange. Asmall amount of money will also beavailable to get some good ideas going.The initial focus is on adult social care andexcluded young people.

National Programme for Third SectorCommissioning This programme isbeing funded by OTS and delivered byIDeA (see Section 8 for a more detaileddescription). It will work with thoseactually doing the commissioning,including procurement officers andelected councillors who are often makingthe critical decisions at local level. Theprogramme will help to identify thechange and the skills that are needed andto help the public sector to understand

the wider picture of commissioningbeyond the narrow procurement part ofthe process.

The Social Clauses project Thisproject is looking at how social clausescan be used in contracts as a way tobuy the extra value achievable throughcontracts, not just with the VCS butother sectors too. Transport for Londonrecently did this, by including a clausein the commissioning process whichencouraged and resourced moreenvironmentally friendly solutions when

commissioning new buses. OTS is aboutto start some pilots with local authoritiesusing social clauses in waste and recyclingcontracts.

Better Regulation - OTS is workingwith the Better Regulation Executive (aunit within a cross-government remitto improve regulation) to look at issuesraised by the VCS in relation to thequantity, consistency and applicability ofreporting requirements and the impactof regulation. Amongst other things, this

is intended to improve understanding ofthe difference between regulation andadministrative burden and to inform thesituation on the ground.

Eight principles of good commissioning Identified in the Action Plan,these principles are ones whichGovernment believes are critical to goodcommissioning and in particular whencommissioning from the third sector.OTS is working with other Governmentdepartments to ensure these principles

are embedded in the way that they work.

Beyond the Public ServicesAction Plan

As well as these actions arisingfrom the Action Plan, OTS is alsoworking to:

extend the range of organisationsable to access grants and loans fromFuturebuilders England for service

development (see examples in Section3);

develop a research programme whichwill improve the sectors capacity toevidence outcomes from its work;especially important when publiclyfunded;

work on skills in both sectors in relationto commissioning and procurement,including work with Capacity Buildersto boost sector skills in this regard; and

put in place a small grants programmeto ensure different sources of fundingare available to give organisationsdifferent sources of funding and asustainable base.


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Beyond the Office of the ThirdSector

Taking this agenda forward is notjust the responsibility of OTS.Other government departmentsare also getting behind the thirdsector agenda and taking action:

Ministry of Justice recently launched2.2 million National InfrastructureGrants Programme to fund capacitybuilding and voice for the sectorin relation to the reduction of re-offending and engagement with theNational Offender ManagementService (NOMS).

Department Of Health - has launcheda significant pot of money to explorehow social enterprise methods canhelp deliver public services in the health

field. DEFRA is about to introduce a waste

strategy, with a strong emphasis on thethird sector.

Department of Health and Departmentfor Children Schools and Families areboth beginning to do work exploringthe use of template contracts.

The way ahead

It is recognised that, by themselves,these initiatives will not be enough.OTS is also working with colleaguesin the Department for Communitiesand Local Government to identify howbest to work with local authorities toachieve positive change at this level. OTSis working with partners to encouragecultural change across central and localgovernment and the other public sectoragencies which the sector encounters.This kind of change takes time and there

is still a lot to do. OTS is committed tolistening and learning as it continues totake this agenda forward and to influenceothers across the public sector.


How do we bridge the gap in perception betweenwhat is a very encouraging message nationallyand local government which, although willing,feels very squeezed by the ComprehensiveSpending Review (CSR) settlement?

There are a number of things other than the CSR settlement which will impact onlocal government. For example, two of the National Performance Framework 198indicators (the new performance framework for Local Authorities), relate to third

sector activity. These will be linked to the new Comprehensive Area Assessmentwhich will undoubtedly influence behaviour at a local level. OTS is working withLGA and the Audit Commission to explore how Governments commitments onthis can be realised, including the commitment to see three year funding be thenorm rather than the exception.

What can be done about less positive experiencesof government department contracting?For example, where the Department for Workand Pensions (DWP) introduced a prime contractor

model which appears to work against the VCS?In the process of commissioning it is often the case that commissioners planthings and people come forward with good ideas and then lawyers and financepeople see problems. Sometimes this is just institutionalised practice coming intoplay. We used to hear Treasury rules wont let us do that. So Treasury producedguidance to make clear where flexibility and opportunity exist within the rules.Now we hear European Union rules stop us doing that. So we need to go to theEU and get some clarification on these issues. For OTS it is about finding waysto remove barriers. Most of the time unhelpful practices are not intentional.They are just a function of risk aversion and lack of clarity. Legal and financeprofessionals will be amongst those engaged in the new training programme forcommissioners.

On the DWP prime contractor example we are waiting for the conclusion andrecommendations of the review set up by ACEVO to look at this. Lessons mayneed to be learnt from this. One role for OTS is to learn from experience and touse its position at the centre of government to spread good practice across thepiece.

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Martin Kinsella Perspectivefrom a delivery organisation

A glance backwards

We often ask: Is contracting of servicesfrom public bodies changing thenature of charities? Is it transfer ortransformation? Looking back in timewe see that, before free schooling was

introduced, education was all in thevoluntary and community sector, as wereorphanages. Fredrick Rainer was thebenefactor behind the creation of whatbecame the National Probation Service.

We should remember when we talkabout charities going into public servicesthat the cycle used to be the other wayaround. And, that in one way there is littlenew in this. The VCS has always been oneof trailblazers.

The value we bring

It could be argued that the real roleof VCOs is to bring value and valuesinto public service: through betterengagement with service users andcarers; by being flexible and responsive;and by being needs rather than serviceled. Good charity services are outcomefocused in ways that monolithic statutory

services have great difficulty achieving.In the VCS now we have to be very goodat what we do. There is no God givenright for charities to exist, althoughsome appear to have thought so attimes. Outcomes have to be achieved.Even grant funding is now strategicallyaligned to public sector objectives.

Good charities foster and promotea joined up multi agency andmultidisciplinary way of working. Forexample, in mental health where the

default model for the NHS is an acutebed, it is the VCS that has developedinnovative, imaginative, personcentred services that provide peoplewith somewhere to live, something todo, somebody to talk to, and help toget the money they need to live well.This is where we develop the capacityof statutory services to actually beresponsive to individual need. We hear alot about the statutory sector developingthe capacity of the VCS but sometimes itis the other way round.

Independence, innovationand growth

Some argue that the independence ofcharities is threatened through pressureto conform to commissioner and funderdemands. This can be the case. Weoften encounter poor commissioning,unfair contracts and ignored Compactagreements.

But, I think charities can use contractsas Trojan horses to smuggle excellent,person centred services into the fortressof statutory provision. Get your servicesout once you are in there and showhow they can work across statutoryagencies and priorities. There are manyexamples of services which started inthe charitable world which have hada real impact statutory provision. Forexample, assertive outreach and all thethings that went into the National Service

Framework around carers in mentalhealth. None of those things would havebeen picked up had the VCS not beendoing them and showing the statutorysector the way.


Charities can use contracts asTrojan horses to smuggle excellent,

person centred services into thefortress of statutory provision.8


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Of course there are differing views onthe issues of independence. The CharityCommission expressed concern in itsStand and Deliver report that publictrust in charities will be undermined bycontracts. The fact is that the public andthe media do not really understand thediversity of charities. There is a tendencyfor people to think it is just aboutvolunteers, jam making and soup runs.

We need to educate people about thediversity of the sector and what it does.

There are also those who have a verynegative view of the sectors growththrough contracting. A recent Civitasreport railed against the Tesco-isation ofcharities. But an organisation like TurningPoint, with a turnover of 70m and plansto achieve 100m, provides excellentservices. If its about achieving outcomesthen growth is not the issue.

We provide services for the people thatpublic services cannot reach and that theprivate sector cannot profit from VictorAdebowale, Chief Executive of TurningPoint.

P3s Experience

P3s mission is to provide for the peoplewho are serially excluded and failed bypublic services. These people are ofteninvolved in criminal justice and mentalhealth services. In practice they areexcluded at all levels. They will probablyhave been in, out and around services,have experienced rejection and do not go

back or attend appointments. Sometimesthis is by omission and sometimes it ispolicy. Its easy for people with difficult,complex and chaotic needs to beexcluded. If they are a bit stroppy andnon-compliant, it is easy to say they areuntreatable.

P3 works in partnership with anothercharity, the Revolving Doors agency,to run a link worker pilot scheme forchronically excluded people withcomplex and chaotic needs. These

people were not on the radar of localor national government until a fewyears ago. Revolving Doors and P3have 20 years combined experienceof providing support and developingservices in this area. Such work has had asignificant impacted on central and localgovernment understanding. This groupof people are now recognised and thereis funding for them. It is the statutoryagencies who ask the sector how do webest deal with this?.

The way ahead

The real threat to all of us is narrow silobased sector thinking. The public sectoroften says of the VCS can these peoplebe trusted with public money?. If we lookat prison overcrowding and residivismrates or the NHS computer fiasco wemight equally ask the same of them.Part of our job is to offer dysfunctional

statutory services, support to moderniseby working with them and showing themthe way. We should also be developingsocial enterprise wherever we can. Socialenterprise can develop mission focusedservices, do good, make profit andreinvest it to do more good.

There are great opportunities in whatgovernment is offering at the moment.With Ed Milliband being a real advocatefor the sector and having real clout ingovernment, it is possibly best offer we

have ever had. We ought to accept it,grasp the nettle and make a difference.Nobody is saying it is easy, it has beeneasy, it is going to be easy but on behalfof service users, we need to be organised,effective and aspirational. So lets get onwith it.


This isnt mission drift, its missionaccomplished. I actually think weregetting somewhere.Martin Kinsella

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Useful links:

For more on the Public Services ActionPlan and the work of OTS go to: www.cabinetoffice.gov.uk/third_sector/public_services

For details of the Compact and what itcan do for you go to:

www.ncvo-vol.org.uk/compactadvocacy

For more on the work of P3 and theirpartners, the Revolving Doors Agencygo to:www.p3charity.com and www.revolving-doors.org.uk respectively

If you are interested in reading aboutthe social enterprise ambassadors go to:www.socialenterpriseambassadors/org.

For details of the Adults Chronically

Excluded programme which is fundinga range of pilot projects go to: www.cabinetoffice.gov.uk/social_exclusion_task_force

For more on the Innovation Exchangego to: www.innovation-exchange.org where there is space for debate,discussion and comment.


How do we ensure that the Compact isfollowed locally, not just by local authoritiesbut also by Primary Care Trusts (PCTs) andother partners?

We now have a Compact Commission to help with implementation of theCompact. We want this to be robust and we want it to be working with otheragencies. OTS is funding a meeting between third sector Chief Executives andACE, the Association of Chief Executives from Non-Departmental Public Bodies

and other public agencies, to begin to get people together and get them thinkingabout the Compact. OTS is also doing work centrally with the NHS on its newcommissioning framework and where the Compact fits with this.

Isnt it time we had new measures to enhanceCompact compliance?

The Compact is meant to be a partnership agreement. Bringing two sidestogether to create better understanding. If we made it statutory it wouldbecome more narrow. Lawyers would get involved and both sides would tend toagree to less. When the Compact was created 10 years ago people were alwayscomplaining about lack of consultation and lack of time to respond. The threemonths minimum consultation period went in the Compact and now this isalmost standard practice, nationally at least. If anything people now complain oftoo much consultation. In all this, we should remember that we have seen positivechange. We should continue to review the issue of Compact compliance andMinisters have already said they will review the issue of statutory powers for theCompact Commissioner within two years.

It is also important to remember that the Compact was devised in a verysympathetic environment, it was about wanting to work more closely togetherand changing cultures. We are now seeing attitudes to the Compact reflecting themore stressed environment we are operating in, both financially and politically.People are starting to think of the Compact as a potential stick to beat each otherwith. Some want to see the Compact placed on a statutory footing.

The difficulty with this is that if you argue for a stick to beat Government , you willfind that it is an extraordinarily small stick you end up with Stuart Etherington.

If we maintain the Compact intact with all its complexities it contains many morepossibilities. There may be a case for the Compact Commissioner to have someform of statutory power to investigate and report where there are cases likethat of the DWP. If public authorities, and indeed the VCS, were embarrassed byhaving to confront their shortcomings, this would give people more confidencethat the issues were being taken seriously.

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This panel session focussedaround two importantquestions:

QUESTION 1: Is the focuson cost-savings crowding outsmaller organisations withlocal, specialist knowledge?

QUESTION 2: Do we havean environment in whichinnovative approaches topublic service delivery areencouraged and can thrive?

The panel members were:

Sir Simon Milton, Leader ofWestminster Council andChair of the Local GovernmentAssociation, speaking from alocal government perspective.

Lin OHara, Outreach and

Development Manager forFuturebuilders England,speaking from her experienceas a funder of working withagencies on both sides of thecommissioning relationship.

Questions raised as part of thedebate focused on the:

Importance of quality overquantity

Sector capacity and risk

Support for small nicheorganisations

Importance of core sectorvalues

The Big DebateThe Changing Environment

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QUESTION 1:Is the focus on cost-savingscrowding out smallerorganisations with local,specialist knowledge?

Sir Simon Milton

The continual drive for cost savingsand efficiency in public services is an

issue affecting us all. Local governmenthas to cope with a net reduction offunding in many service areas as publicexpectations continue to rise. Therecent Comprehensive Spending Reviewsettlement for local government will givea 1% increase in real terms over the next3 years. This is the toughest settlementin a decade. It presents a real challengewhich will impact on the voluntary andcommunity sector (VCS) and otherpartners as well as on local government

itself.Obviously those organisations mostdependent on local government grantsto deliver their services, are the onesmost at risk. Councils are rarely, if ever,in a position to shield the third sectorentirely from financial pressures. Someargue that councils expect voluntaryand community organisations (VCOs)to take a disproportionately largeshare of any cuts because they arenot council services. This may not be

because councils are targeting the thirdsector or politically favouring theirown services, but because of the loweroverall cost of cuts to external services(e.g. in redundancy payments, pensionand other hidden costs). In the face offinancial pressure Councils have to makedifficult decisions.

However, I think it would be enormouslyshort sighted for councils to simplylook to the third sector to absorb thesepressures. The smallest neighbourhoodlevel VCOs that tend to be most atrisk are the very ones that councilsvalue so highly because of their abilityto reach parts of the community thatother services do not or can not. Inareas such as building community

cohesion, promoting tolerance andtackling extremism, these organisationsare absolutely crucial. It would be anenormous shame if these groups gounder, just at a time when we need themmost.

Because the finances of third sectororganisations tend to be complex,consisting of many funding streams, theremoval of one or two key elements ofthis funding, even for larger organisations,can have a disastrous impact. For all

these reasons, there may be a case forestablishing a central funding pot to helpVCOs through temporary difficultieswhere they encounter gaps betweenfunding streams. If central governmentis committed to giving the sector thesupport it needs, then this could be arole for them. Councils, of course, alsohave a responsibility to develop a betterunderstanding of the fragility of VCOs(particularly the smaller ones) and totake this into account in their actions.

For example, where money has to bewithdrawn for legitimate reasons, itis only fair that the council should beopen and transparent in its decisions,communicate them well and give asmuch notice as possible.

Lin OHara

There is no getting away from thefact that there is real pressure for costsaving. The VCS, as every other sector,is having to find ways to survive inthis environment. It is interesting toreflect though how Peter Gershon, theman responsible for the public sectorefficiency review, did not intend for

efficiency to be interpreted solely asdriving down costs. It was also aboutachieving efficiency in back officefunctions and in new modes of servicedelivery, in order to release moreresources to the front line. The focuson cost savings is sometimes be usedas an excuse for not commissioning asintelligently as is possible.

That said, there are plenty of examples ofsmall organisations being paid to providereally cost effective, specialised services.


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These are examples of two very smallorganisations who, with help fromFuturebuilders, are punching above theirweight and beginning to demonstratethat they can provide the services thatare needed even in a very cost tightenvironment.

Futurebuilders, like others, are alsolooking at the potential for consortiumdelivery. There are pros and cons to thisof course. Public sector commissionersare increasingly interested in contractingwith consortia because letting a singlecontract simplifies the relationship andpotentially achieves economies of scale.There can be opportunities here for smallspecialist providers. However, it is notnecessarily an easy option and certainlywill not be right for everyone.


Case Study 1

Esk Moors Caring is a very small group in North Yorkshire providing individualservices to older people in rural areas; enabling them to live in a dignified way intheir own homes rather than going into residential care. In 2004 the service wasentirely volunteer led, largely by the retired people who had set the organisationup. North Yorkshire County Council began to realise that this was an organisationdelivering an extremely high quality service which was able, because of the wayit operated, to do so very economically. Esk Moors Caring now has a seven yearcontract to provide its service. The contract meets, and even slightly exceeds, the

full cost of delivery. The County Council recognise that funding Esk More Caringproperly to deliver their service is still cheaper than trying to provide it themselves.

Case Study 2

Bayis Sheli is an orthodox Jewish organisation providing culturally appropriatecare for children with disabilities in areas of London with a high Jewish population.Three London Boroughs are currently interested in contracting with BayisSheli because they are aware that other providers simple could not deliverappropriately to this community.

Futurebuilders, like others, are

also looking at the potential forconsortium delivery.13


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QUESTION 2:Do we have an environment inwhich innovative approachesto public service delivery areencouraged and can thrive?

Sir Simon Milton

There are several factors underlyingthis question including attitudes to risk,

levels of engagement and the impact ofgovernment targets. The fact that weare moving towards an outcome basedapproach to commissioning shouldsupport greater innovation amongstproviders. Good commissioning shouldadopt a tight/loose strategy i.e. tight inthe specification of the outcomes thatthe provider is to achieve and loose withregard to how they achieve them. This issomething that Westminster Council triesto do but there are legitimate question

about how widespread such practice is.Private as well as third sector providersoften complain about overly complexcontracts that are disproportionate tothe scale of the task or that leave verylittle room or opportunity to try outnew approaches. If this is the case, theneveryone is losing out.

Stability of funding is another factor.It is much easier to experiment as anorganisation if you are financially secure.This in itself is an argument for longer

contracts with regular opportunities forreview and appropriate sanctions forfailure to perform. But in prescribinglonger term contracts we need to besure that we do not stifle competition ordiscriminate against new entrants to themarket.

Of course the capacity of councils to offerlonger term contracts is itself, dependenton the funding they receive. Althoughnow in receipt of funding from centralgovernment on a 3 year cycle, it remains

difficult for councils to make financialcommitments beyond that period.Central government tends to makeadditional demands on councils towards

the end of a 3 year public spending cycle,therefore forcing councils to reassesstheir priorities at this stage. Whetherthis is going to continue in the bravenew world of Local area agreementsand fewer targets we will need to waitand see, but I would be surprised if itstopped entirely. Ultimately, the bestway in which councils can help is probablyto ensure that they have good, robust

commissioning processes in place,carried out by appropriately skilled andexperienced people. It is possible, withthe new wave of Local Area Agreements,that more creative approaches tocommissioning may emerge. I think theprogramme being set up by IDeA todevelop training and support in relation tothird sector commissioning should makea real difference (see Section 8 for moreinformation).

Lin OHara

It is too soon to say we have anenvironment where innovativeapproaches are encouraged. Butthere are many examples where suchapproaches have been adopted and arethriving.


Case Study 3The Bridge Project in Bradford provides support to drug users. Over the last 10years they have developed different ways of providing this support to varioushard to reach groups. A lot of the organisations current clients are female sexworkers. The Project identified the need to provide a holistic family service, whichwould help the women themselves and also their children. The Bridge Projectworked with their commissioners when developing the service, which resulted incommissioners financing the project. When the organisation later experiencedsome internal difficulties which threatened its survival, the commissioners heldfast and, in partnership with Futurebuilders, were able to keep the organisationgoing while the issues were resolved. The project is now moving forward with its

innovative scheme which is improving all the time.

Case Study 4

An organisation in Portsmouth working in very innovative ways with youngoffenders had a 20,000 local authority grant in support of its work. At the endof the funding period they wanted to seek further funding. It was clear that theirwork with young people had helped to raise their self esteem, confidence, anda sense of engagement. These kinds of outcomes are difficult to quantify. So,when the organisation went back to the local authority they concentrated onthe fact that the 20,000 had created a real spike in school attendance figures.This was a number that the local authority could relate to its targets. As a result

of understanding what the commissioner was looking for and being able todemonstrate it, the organisation is able to continue its very innovative work andnow has a decent contract to do so.

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These examples demonstrate howimportant it is to work with potentialcommissioners by involving them fromthe start, keeping them informed anddemonstrating how the work you domeets their priorities. It is essentialto evaluate and produce evidence ofoutcomes from what you do. Figuresreally can open doors for you and allowsome of the more innovative work of

the sector to be properly resourcedthrough public sector contracts. Theonus is definitely on providers themselvesto demonstrate the really long-termeconomic benefits of what they do.

The social benefits we know we deliverusually translate into economic benefitsand that is a point we dont makeemphatically or often enough.Lin OHara


15

The social benefits we know we deliverusually translate into economic benefits

and that is a point we dont makeemphatically or often enough.

Discussion Questions

There seems to be an assumption that bigger is better which is ratherdismissive of those organisations that just carry on doing good work on asmall scale. Shouldnt we be thinking about better rather than bigger?Bigger does not necessarily mean better. Some of those small organisations reallyare the ones that can reach the people that others cannot. It is important that wedo not lose them but there are clearly factors both within the sector and withinthe environment which are driving growth. Also some newer organisations cominginto the sector are very good at being small, unbureaucratic and sharp in their

operations.The third sector needs to continue to get people to give time and money. Isour shift to becoming delivery agents for the public sector jeopardising this?There are certainly risks here but it is something the sector has to be pragmaticabout. The VCS is going to be competing for less and less grant funding. Thereis less lottery money, European funding is more thinly spread, many trusts andfoundations are feeling the squeeze. There will always be a need for parts of thesector that do not take contracts or engage in public service delivery but we haveto be honest that there is less grant funding to go round between them.

There is a real need for VCOs to use their expertise to make sure the services theyprovide are good, responsive services. And, that where they can sell these to the

public sector and potentially improve public services as a consequence, they do soin a way that enables them to remain true to their ethos and mission.

Does commissioning really offer us a more level playing field or do localpoliticians still want to see services delivered by the local authority?The assumption that councils or councillors just want to deliver everythingthemselves is an old fashioned view. Councils cannot survive if they think their roleis simply to deliver. Most councils, unless they are particularly ideologically driven,have moved some way from this view. Discussion within local government and theLocal Government Association is now much more about the place shaping rolerather than in-house service delivery. This means engaging with lots of differentstakeholders, including critically the VCS, to identify and articulate what the placeneeds and then go out to ensure that it is delivered, whoever the providers may be.

Future opportunities will lie in good local commissioning practice.


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Useful links

For more on Futurebuilders and thesupport they provide go to: www.futurebuilders-england.org.uk

For more on Westminster Counciland its approach to the thirdsector go to: www.westminster.gov.uk/communityandliving/communitygrants/

From more on the work of VoluntaryAction Westminster go to: www.vawcvs.org

For more on the work of the LocalGovernment Association go to the OurWork section of the site at: www.lga.gov.uk


The sector has always thrived

on engaging people, beingdemocratic and valuing difference.16

Discussion Questions

Small organisations are being expected to take huge risks (e.g. investing timeand money engaging with commissioners and partnerships or developingconsortia) with no guarantee of funding at the end. What can the publicsector do to help small organisations to overcome their capacity issues?Anyone who works in the VCS knows that, even in small organisations, a lot oftime and resources can be wasted in the process of fundraising. Some of this timemight be more productively used in future engaging with potential commissioners.However, a lot of Futurebuilders investees report that they are often torn between

engagement on various partnerships and advisory groups and the day to dayrunning of their organisation. If you are not careful this can topple an organisationover. Government is perhaps coming to realise this and things may improve in thefuture. There is no doubt that the sector benefits from the presence of strong andeffective local infrastructure support. For example, Voluntary Action Westminsterdoes a lot of capacity building work with smaller organisations and helps to brokerthe relationship between the sector and the council to ensure that it works inways that are helpful and effective. Essentially, in Westminsters case, the capacitybuilding work with small organisations is outsourced to local infrastructure.

Is there a danger, in all this discussion of public service delivery, whichencourages us to cost out the value of everything we do, that we lose sightof what the sector creates in terms of public good in its broadest sense (e.g.

building social capital and community cohesion)?Part of our value is in the ability to mobilise voluntary effort. For example, how canwe quantify the value of an elderly holocaust survivor going to speak at a Muslimgirls school about his experience of genocide and the importance of tolerance?The activity is free because he is a volunteer and someone else gives him a lift butwe should not underestimate the value of this to our society. The sector has alwaysthrived on engaging people, being democratic and valuing difference. We shouldperhaps be more resistant to a culture which makes us all the same, all competitorsand results in a survival of the fittest. We should remember where we came fromand be more supportive of each other.


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This section is based on twoworkshops run by DerekSmith, Partner in LeapfrogConsultancy.

Leapfrog are specialist trainersand consultants. Amongst theirservices Leapfrog provide bidsupport and bespoke trainingcourses to help organisationswin, implement and managenew contracts whilst retainingexternal funding.

The workshop addressed:

The changing governmentagenda

Implications for organisations

The tendering process

Tips for winning public sector

contracts

Bidding for ContractsSome Top Tips

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The changing governmentagenda

The government agenda around publicservice delivery is changing in a numberof ways:

Power is being devolved from centralto local government with the intentionthat this should result in moreresponsive services that better meet

local needs.

Local government is now subject toa new duty to ensure communityparticipation and involvement indecisions about services.

There is more partnership designed toimprove delivery at the sub-regionallevel.

Local public sector organisations,including local government andPCTs, have an increasing role ascommissioners of services.

The public sector is being requiredto make efficiency savings of 3% perannum.

Sustainable Community Strategies andLocal Area Agreements, developedby Local Strategic Partnerships, will bethe key documents setting out localpriorities to which commissioningactivity will respond.

The implications of this are likely to be:

a continued shift from grant aid tocontracts;

funding concentrated in fewer hands;

increased competition fromCommunity Interest Companies (CICs),private and statutory sector; and

increasing integration as efficiency gainscontinue to drive funding.

What are the implications forvoluntary and communityorganisations?

Voluntary and community organisationsthat want to deliver public serviceswill need to respond to this evolvingenvironment. This will mean thinkingand doing some things differently. Somesuggestions for VCOs wishing to thrive in

this changing environment: Think how you might contribute to

efficiency gains.

Talk to commissioners and get to knowthem on first name terms.

Be proactive and ask them what is goingon in their service area.

Consider who your competitors/potential partners might be. Privatesector organisations, CICs and in-house

public sector teams will be able to bidagainst you.

Be aware that funders will wantreasonably sized, financially stableorganisations with sound localknowledge. This may mean capacitybuilding or improving local knowledgeby teaming up with anotherorganisation to enhance stabilityor improve reach into parts of thecommunity.

When you win a contract, immediately

set up an internal working group to lookat how to win the contract next time.This is what your competitors will bedoing.

Consider hiring a contract manager.They need very specific skills.

Ensure your contracts are underpinnedby systems and support that candeliver consistency, high standards andinnovation.

Streamline fundraising to complete bidsquicker and to a higher standard.

Be aware that the demand for anevidence based approach will grow.

There are four important areas youwill need to attend to if you are to bidsuccessfully:

Product - To win contracts you needto be clear about what your product isand be able to describe this to potentialpurchasers. This might mean, forexample, developing a leaflet which setsout who you are and what you do.

Quality Often the quality of voluntaryand community sector bids is poor.To date, VCOs have been able to wincontracts on the basis of poor bids butas competition increases this will notcontinue to happen. Even if you win acontract , ask for feedback which willhelp you to be competitive for the nexttime.

Evidence Bids need to be basedon evidence not opinion. Make sureyou use a sentence and paragraph

structure which provides evidence ofyour outcomes, your activities and youroutputs. You should never write weaim in a bid because it will sound like anunproved claim.

Track record Being able todemonstrate a track record is one of themost important elements of tendering.Once you have delivered somethingit makes it easier to win other fundingbids and contracts in future. If you wantto establish a new service you might

approach a funder (eg. Big LotteryFund) to fund a pilot which will giveyou a track record. Some organisationshave been even bolder. For example,Crime Reduction Initiatives (CRI)approached a public sector organisationwith a proposal for a service. Whenthe organisation did not want to payfor the service, CRI offered to run it forfree for a number of months. This gaveCRI a track record and when the HomeOffice conducted a review, they were

so impressed with the services that theypaid for it to be rolled out nationwide.


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The Bidding Process



Tender Advertised

Pre Qualification

Invitation to Tender

Tender Presentation

Post TenderNegotiation and Award

Evaluation of Tender

Search Systems Intelligence networks

Strategic fit Write Expression ofInterest

Receive Confirmationand Tender Documents

Read Submissionrequirements &contract

Delegate tasks/setdeadlines

Co-ordinate tendersubmission

Receive Documents /Timetable / Instructions

Prepare Organisationresponses

Check Policies Choose References Financial Statements Operations overview

Notified of Decision

Assemble PresentationTeam

Consider unique sellingpoints

Take finance with you

Diagram reproduced courtesy of Derek Smith, leapfrogconsultancy.co.uk

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The Bidding Process: indetail Pre qualification at this stage the

commissioner will be looking for a trackrecord and evidence of organisationalstability. If you are being asked foranything you are unsure about, ask andnegotiate. Dont just submit what youthink they are/or should be asking for.

Scoring Framework Scoringframeworks are often used in theevaluation of bids. There may be scoresand/or weighting for each criteria andsometimes an explanation of what willprovide a high score. Make sure youare aware of criteria and the scoringframework before you start writing yourbid. Be aware that bids will sometimesbe scored on a met or exceeded basis ie.instead of scoring 10/10 if you meet aspecific criteria this might only give you

7/10 with additional points attributedonly where you exceed the criteria.

Evaluation of bidsThis will vary but may include:

Bids marked by a scoring panel whichmakes recommendations

Moderation, internal or external

Executive decision making

You may be required to give apresentation of your bid at any time

Final DecisionsWill be made in a variety of ways but it isworth considering that:

Decision making panels will rely on yourshort project description.

Only bids exceeding scoring criteria willproceed

Political and other factors may becritical.

All bids will be subject to a reality check

Useful links

www.leapfrogconsultancy.co.uk fordetails of Leapfrogs work and trainingcourses.

www.charitycommission.gov.uk formore on the legal position regardingcontacts see Charity Commissionguidance CC37 Charities and PublicService Delivery: An introduction and

overview. www.ogc.gov.uk for more information

on government procurement andmanagement resources.


Tips for winning public sector contracts

Convince the commissioner, by demonstrating in your bid, that you understandand can meet their aims and outputs and address their concerns.

Developing a project to fit a bid will make it much more likely to be funded than

trying to fit an existing project into the funding. Use an evidence based approach when answering questions; rely on your track

record and evidence framework.

Ensure that technical answers are underpinned by good practice.

Follow instructions exactly and always provide what is asked for (up to 1 in 5 bidsare rejected because of bad photocopying etc).

Lead with the need emphasise how you meet the needs, not just of thebeneficiary but of the wider community and the funder.

Remember that Statutory Fundraising is about margins not turnover.

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This section is based on twoworkshops on the subject ofconsortium delivery.

The three workshopspeakers were:

Kate Aldous, Project Managerof NCVOs CollaborativeWorking Unit.

Neil Coulson, an IndependentConsultant involved in setting

up VC Train (South Yorkshirethird sector consortium ofthird sector post-16 learningproviders).

Ian Baker, DevelopmentExecutive at the School forSocial Entrepreneurs.

The workshop covered:

Key issues in collaboration forpublic service delivery

Two case examples offeringlearning from experience

Tips for success

Advice for potential consortia

Consortium DeliveryJoining forces to deliver publicservices at a local level

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Key issues in collaboration forpublic service delivery

NCVO defines collaborative working aspartnership working within the voluntaryand community sector. This includes awide spectrum of collaboration, fromnetworking, through joint delivery ofprojects, to full merger. All these modelsinvolve some sort of exchange for

mutual advantage and ultimate benefitto end users. Consortium delivery ofpublic services is at the formal end of thisscale because it involves contracts andpotentially significant amounts of money.There is a lot of discussion and energygoing into partnership working and thescoping of consortia opportunities at themoment. The drivers for this include:

Government interest as policy makerand funder.

Public sector and other funders lookingto maximise return on investment.

The sector itself looking for ways toimprove efficiency and effectiveness.

The questions we need to ask beforeembarking on this journey are: Will itimprove outcomes for our beneficiaries?What do we need to do to ensure that thepartnership is a positive one?

One of the things that makes consortiumdelivery attractive to the sector is that itcan be a way of keeping service deliverylocal; ensuring that existing small localorganisations, often delivering to nichegroups within the community, cancontinue to operate rather than losingout to larger competitive bidders fromoutside the area.

Collaboration also has the potentialto offer collaborative advantage (i.e.better co-ordinated, user-focussedservices that are greater than the sumof the organisations parts). However,collaboration is not always easy andwill not be right for every organisation.Organisations should take the decisioncarefully. Amongst other things, it isimportant to consider the culturalcompatibility of any organisation youplan to work with and the personalitiesinvolved. Trustees should ensure theirorganisation takes the necessary legaland professional advice, particularly withregard to:

Legal structure there are threemain options: a new legal entity forcontract delivery; a lead body withinthe consortium responsible for thecontract; an external lead body thatmanages contract but is not one of theactive delivery partners.

VAT there may be issues in relation tocontracts and grants with Service LevelAgreements.

TUPE Regulations which can havepensions implications where contractingactivity results in the transfer of stafffrom one organisation to another.

Consortium DeliveryJoining forces to deliver public services at a local level

Tips for success - What can help?

A written agreement between partners.

An independent facilitator to help broker the relationship.

Prior relationships or experience of working together.

Undertaking a small project together before taking on a larger contract.

Information from the Collaborative Working Unit (see links below).

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Case study 1 VC Train

VC Train is a consortium of 100 thirdsector post-16 learning providers in SouthYorkshire, established in 2000 in responsethe 1999 Learning to Succeed WhitePaper . This White Paper placed thirdsector organisations on the same footingas colleges and other providers of post-16learning, provided they could meet the

necessary quality and accountabilitythresholds. The consortium was set up ona formal basis as a charitable company andoperates on a hub and spoke model. Allthe service providers are members of thecompany. The central infrastructure, orhub, of the consortium provides a singlepoint for contracting and is resourcedby top slicing a percentage from thefunding of consortium activities. Memberorganisations control the consortiumthrough its governance arrangements.

There are three clusters of providerswithin the consortium made up of thosedelivering to BME communities, loneparents and people with disabilities. Theseclusters encourage diversification withinthe consortium and help it to focus oninnovation.

The steps taken in establishing theconsortium were to:

set up a steering group and seek seed/set up funding

publish a membership prospectus torecruit members

incorporate as a company

develop a 3-year Strategic Plan

secure investment finance for the hub

A number of issues arose in the setup phase, these included: movingorganisations from a culture ofentitlement and grant dependency toone of social enterprise; and balancingthe achievement of inclusivity withpragmatism (i.e. reaching criticalmass and getting things started). Theconsortium now has 65 sub-contracts, anannual turnover of 5million, an annual

throughput of 4500 learners and anoutstanding inspection record.

Challenges raised in the delivery phasehave included:

getting the balance of power rightbetween the hub and the members;

ensuring member engagement in thegovernance of the company;

ensuring the hub does not become anew object of dependency; and

some issues of internal competition andconflicts of interest.


Tips for success - Critical success factors

Strong leadership in set-up phase.

Detailed planning.

Strong governance.

Robust risk management systems.

Central hub/management unit as business instrument, not key stakeholder.

These clusters encourage

diversification within the consortiumand help it to focus on innovation.

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Case study 2 - School forSocial Entrepreneurs

The School for Social Entrepreneurs (SSE)worked in collaboration to deliver a 2-yearLearning & Skills Council (LSC) contract.The service specification for the contractwas very similar to SSEs existing work butwith lower unit costs. SSE recognised thatit would need partners in order to deliver.

The two partners that SSE worked with(Partner A and Partner B) had differentroles. Partner As role and paymentswere dependent on Partner B recruitingbeneficiaries. SSE was responsible formanaging the contract. Partner A wasknown to SSE, although they had notworked together in this way before.

Partner B was unknown but introducedvia Partner A. When problems arosedue to unrealistic targets and difficultiesin recruiting eligible beneficiaries,Partner A decided to withdraw. Thisincreased difficulty in working with, andgetting information from, Partner B andeventually lawyers were consulted.

In order to rescue the project, two newpartners were brought on board, withwhom SSE had sound prior workingrelationships. By the end of the 2 years,the project was rescued, but wasfinancially unsuccessful for SSE. From thisexperience SSE would have reservationsabout leading such a project again.They recognise that it can be hard for acommissioner to say no to a coalition

of key players. But also that it can behard to balance the achievement of FullCost Recovery and realistic targets withsubmitting a competitive bid.


Tips for success Lessons from SSEs experience:

Recruit partners you know and trust (wherever possible).

Work with partners who add value, and with whom youre not competing.

If necessary, build opt-out clauses into your partnership agreement.

Be realistic about your capabilities - if you dont have the capacity, partner with alarger organisation that does.

Try to shape the service specification and targets at the outset ie. before you aresigned up to deliver the contract.

They recognise that it can be hard for acommissioner to say no to a coalitionof key players. But also that it can behard to balance the achievement of FullCost Recovery and realistic targets with

submitting a competitive bid.

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Advice for potential consortia:

Playing to strengths - Every partnershould be playing to their strengths. Forexample, in the hub and spoke model,the hubs purpose is to co-ordinate theconsortium of delivery organisationsso that they can focus on what they dobest.

Division of roles Be clear about who

delivers what. Preferably through jointdelivery planning. Where this is notpossible (eg. in a large consortium) theremight need to be a decision-makingpanel of independent and non-tendering members.

Knowing true value Consortia need toevidence their unique selling points anddemonstrate competitive advantagei.e. demonstrate the cost-effectivenessof the consortium model and the socialreturn on investment.

Pricing Where there are limitedresources any service you want to bidto deliver will have to be competitivelypriced. It is very important to knowthe full cost of delivery in order to seta realistic price at which you and yourpartners can deliver.

Quality assurance - Membership of aconsortium may require a certain levelof quality. In the VC Train example, theminimum quality requirements were

set out in the membership prospectus.VC Train has developed two tiers ofmembership with those working towardthe necessary quality assurance asassociates.

Reputational risk There can be risksin partnerships and involvement inconsortia, especially to reputation, if youpartner with an organisation that fails todeliver.

Public sector as driver Public sectorcommissioners are increasinglylooking to simplify their contractingrelationships e.g. by contractingwith fewer providers. Whilst this is astrong incentive for collaboration andconsortium delivery you still need tobe sure it is the right time and the rightrelationship for your organisation.

Short timescales Often the timescalesfor bidding are too short to allow forconsortium development. It makessense to pre-empt this by buildingalliances with potential partners as amatter of course rather than in responseto a specific tender.

Advantage to service users Local orregional consortia can help offer serviceusers locally accessible quality servicesthrough known organisations. This localangle may become more importantwhere individual budgets are beingintroduced.

The public sector is entering a muchtighter financial environment whichmeans less government funding. Asa consequence public bodies areseeking to drive down transactioncosts. Collaborative working offersopportunities for VCOs to share

resources and skills, and meet multipleneeds in a co-ordinated way. This willbe attractive to commissioners in thecurrent climate. The VCS needs to ownand lead the process of collaborationboth engaging with and influencingcommissioners along the way.

Useful links:

The Collaborative Working Unit offersa range of information and tools forcollaboration including a publicationon Joint Working for Public ServiceDelivery. All these resources areavailable to download at www.ncvo-vol.org.uk/collaborate.

For more on VC Train go to www.

vctrain.org. For more on the School for Social

Entrepreneurs go to www.sse.org.uk.

For the Workforce Hubs factsheeton the Transfer of Undertakings(Protection of Employees) Regulations(TUPE) go to www.ukworkforcehub.org.uk.

For more on the information,support and funding availablefrom Futurebuilders go to www.

futurebuilders-england.org.uk


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This section is based on twoworkshops looking at thepracticalities of developingcommissioning frameworks. Itwas facilitated by Hilda Stearn,AVE partners, who were projectpartners on the Buying a BetterLondon regeneration through

procurement initiative, andhad local authority and thirdsector representatives fromtwo areas, each of which isundergoing transition in the waythey commission from the thirdsector.

The workshop speakers were:

Pauline Roche, BeaconProgramme Manager,Corporate Third Sector Team,Birmingham City Council.

Theresa Gillard, Headof External Relations,

Birmingham VoluntaryServices Council.

Martin Johnson, ServiceManager, Partnerships, Isle ofWight Council (also speakingon behalf of partners at Isleof Wight, Rural CommunityCouncil (RCC)

The workshop covered:

Two stories from the frontline:- Birminghams Third SectorCommissioning Strategy- Isle of WightsCommissioning Framework

Discussions include:- How to manage a transitionfrom core grants to contracts?- Where is the dividing linebetween commissioning andprocurement?- How do you ensure localknowledge is valued?

Intelligent CommissioningExperience from the Frontline

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Birminghams Third SectorCommissioning Strategy

Background

Birmingham is the largest local authorityin Europe with a population of over onemillion. There are between 4-10,000 thirdsector organisations operating in the city;employing the time and skills of 30,000

staff and volunteers. The Compact, whichwas signed in 2004, was the starting pointfor deciding how local government andthe third would work together better infuture. What Compact consultation andnegotiations identified was:

A history of mistrust.

Historical reasons for funding.

A culture of dependency on localauthority grants.

Problems of access to funding for new

organisations.

Developing the Third SectorCommissioning Strategy

Birmingham recognised a role for thesector in both the planning and deliveryof services. It also identified the needfor change within the local authority(including amongst Councillors andlegal and finance staff). A decision wasmade to create a more transparent

partnership between the sectors andto develop an overarching frameworkfor commissioning. This framework wasto be directly linked to BirminghamsSustainable Community Strategy andLocal Area Agreement (LAA).

Key players in the development of theThird Sector Commissioning Strategywere:

A Corporate Third Sector Partnershipgiving senior level staff from bothsectors an equal say in identifyingconcerns and developing a forwardstrategy.

An operational group of people fromboth sectors, including local authoritygrant officers, with direct knowledgethat could be built on.

Compact Champions at manager levelwithin six Council directorates.

A Cabinet member who trulychampions the third sector agenda.

A Third Sector Assembly which ensuresrepresentation of the sector on variousfora.

Work on the commissioning strategyand Compact, which have both involvedextensive consultation, has resulted in abetter shared understanding (e.g. of theimportance of social capital both withincommunities and as a driver for improvingrelationships between the two sectors).Involvement in the IDeAs PartnershipImprovement Programme also helpedBirmingham partners develop a shared

view of the third sectors potential AddedValue.

The Regeneration Directorate wasthe first to produce a commissioningprospectus and pilot the newCommissioning Strategy. Evaluation ofthe process identified that some barriersstill remained for the sector. A projectgroup of third sector representativeswas brought together to feed into areview of documentation and to makerecommendations which were subject to

consultation within the sector and councildirectorates. Amongst other things, thisresulted in a checklist of criteria beingincluded in commissioning prospectuseswhich sets out the essential requirementsorganisations need to fulfil in order to besuccessful in bidding for funding. Thoseunable to do so are advised to go back tothe commissioning manager for advicebefore making a bid.


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Results

Commissioning under the revisedCommissioning Strategy has now beenrolled out in three of Birminghams localauthority directorates, with more tofollow. As a result most of the relevantService Level Agreements are Compactcompliant, for three years and on a fullcost recovery basis. Social capital has

been included as part of the servicespecifications as a way to make surethat new services add value. More timeis being allowed for bids to encourageconsortium development where this canincrease efficiency.

Of course there have been someinevitable complaints where organisationshave failed to receive funding. In somecases this was because they failed tofollow the procedure or fill in formsproperly. Historical grant relationships

had created a level of expectationfor some groups which the newCommissioning Strategy does notaccommodate. The Cabinet Championhas been particularly helpful in taking themessage back to Councillors that sectorfunding is now strategically aligned withLAA priorities and best value principlesrather than historical relationships. Asa result of developing the third sectorcommissioning strategy Birmingham nowhas the foundation for the sector to takean increased delivery role in the LAA and

joint commissioning processes in future.

Remaining challenges include:

finding better ways to define anddescribe outcomes.

enhancing understanding of respectiveresponsibilities in achieving theseoutcomes.

improving shared understanding of fullcost recovery, including training on whatit is and why it is important.

capacity building activities to helppeople understand the new process.

ensuring elected members ownershipand engagement in new way of working.

extending the new approach beyondcorporate grants to wider potsof funding across the Local AreaAgreement.

Isle of Wights CommissioningFramework

Background

The Isle of Wight has a population of150,000 growing by 40,000 in the heightof summer. There are estimated to be1800 VCOs operating on the Island.The council and the PCT between them

spend over 550m per annum. TheCouncil alone delivers over 250 servicesthrough commissioning or grant fundingof more than 170 different third sectororganisations.

In 2006 the Council recognised a legacyof mutual misunderstanding and mistrustbetween third sector organisationsand the public sector. Investment ingovernance, capacity building and sectordevelopment had been poor on the partof commissioners and the sector itself.

Despite many successful relationships, thebig picture was seen to lack sustainabilityand confidence. In response, the Councilagreed to overhaul its commissioningarrangements. The two sectors on theIsland are now working together todevelop a mode of partnership that willlead to the delivery of quality services andnew models of community engagement.


More time is being allowed for bids to

encourage consortium developmentwhere this can increase efficiency28


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The CommissioningFramework

The Isle of Wights new framework forinvesting and commissioning in the thirdsector adopts a three tier approach:

1st Tier - Partnership Agreements (PA)- For high value and/or high profileservices, possibly based on consortiaor consolidation of a range of services.

Appropriate where there is: a mix ofbroader social outcomes and specificdelivery targets.

2nd Tier Service Level Agreementsand Contracts - with specific deliverytargets and outcomes.

3rd Tier Grant Funding - intendedto cover aid in-kind, small shorterterm funding, piloting innovation andpromoting capacity.

There are few initial partnershipagreements, however this fundingvehicle may be used more in future.Grant funding is expected to diminishas a percentage of spend. ServiceLevel Agreements and contracts areintended to be the most commonapproach. Commissioning partnersintend to improve sector access tofull range of tendering opportunitiesalongside private providers in future.They have also made a commitmentto ensuring the independence of third

sector organisations in providing voicefor communities and as a means ofengagement with them.

Challenges

Clarity of Understanding-Commissioners and the sector arenot always clear about their differentroles. Commissioners fund to deliverpolicy priorities not to support sectorinterests. There will be little or no publicsubsidy in future and the sector needsto understand this. Commissioners will

only recognise added value if is relevantto what they are seeking to deliver e.g.community engagement.

Vision- The third sector is notalways clear about its markets andcommissioners have tended to seeopen tendering to the private sectoras safer. Commissioners need todevelop a collective vision that cutsacross markets. Third sector Boardsand Trustees, intending to seek publicsector funding, need to make sure their

mission and governance arrangementsfully reflect what they are trying toachieve.

Value for Money andProcurement - Risk aversion onthe part of commissioners andprocurement frameworks intended tooffer fairness can result in complexityand legality. Procurement processesneed to be adapted to a wider rangeof organisations and monitoring andreporting requirements need to be

proportionate and flexible for differentrelationships and circumstances.

Capacity Building- The tendencyto focus on efficiency and deliveryfrom day one have tended to overlookthe need for capacity building. Thispotentially creates barriers to entry,particularly for new communityorganisations. Commissioners need tofactor in time and support for capacitybuilding.

Independence- The shift tocommissioning may risk third sectorindependence. There is a challenge herefor commissioners to understand thesector better.

Skills, Knowledge and Experience- There is a need for skills developmentand active political support for bothcommissioners and third sectororganisations.

Risk management- There is on-goingconcern amongst commissioners about

responsibilities and liabilities in relationto third sector organisations if thingsgo wrong. There needs to be betterrisk assessment and negotiation andunderstanding on both sides about riskand the transfer of risk.

Good governance Manycommissioners fear that the sectoris badly governed and unsustainable.Whilst some organisations do needtraining and support to improvegovernance, others are very good. This

remains a hearts and minds issue forcommissioners who will need to beconvinced.


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Discussion

How did the council deal withcircumstances where core costs hadpreviously been paid with grants?In Birmingham pre-existing ServiceLevel Agreements (SLAs) with coregrant funding will be honoured to theirconclusion. There will be 12 monthsnotice that future SLAs and contracts

will be for service delivery on a full costrecovery basis. There is a potentialproblem with organisations not beingable to secure all their core costs. In somecases this funding will need to be soughtfrom elsewhere.

How well are you working with otherpublic sector commissioners on thisagenda?In Birmingham commissioners are comingtogether from the local authority andthree PCTs in a Health and Well Being

partnership as part of the LAA. Thereis now also a member of staff from theCouncils Corporate Third Sector Teamon secondment to the Learning and SkillsCouncil.

Is there any focus on the redesign ofservices with the introduction of thenew framework?Partnership Agreements have an elementof service redesign to them. The Isle ofWights current Partnership Agreementwith Age Concern includes a package of

service delivery contracts and an elementof grant funding for the organisationscore work. The organisation is on noticethat this grant element will cease infuture and that services may need to bereconfigured to fit with future servicespecifications.

Where is the dividing line betweencommissioning and procurement?This is being viewed differently indifferent areas and a number ofdifferent approaches are emerging.Some commissioners are being toldthat everything must be competitivelytendered. Which must raise questionsabout efficiency in the commissioningprocess. Concern over EU procurement

rules is also creating a lot of risk aversion.In 2006/7 the Isle of Wight wentthrough a major investigation into anengineering procurement which exposedweaknesses in the Councils procurementarrangements. This has lead to absolutecompliance with accounting, contractingand value for money requirements attheir most fundamental level. However,there are concerns that some of the rulesaround procurement are more geared tothe purchase of IT, back office functionsand construction than they are to areaslike social care where the third sectortends to be more involved. Advice varieson the extent to which EU procurementrules apply and, in particular, whatchanges will be introduced in 2009. InBirmingham the focus has so far been ongrant based commissioning exclusivelyfrom the third sector rather than on widerprocurement processes. The work doneto date will provide a firm foundation forfuture development in this area.

What about small organisations thatcant compete?There are concerns that changes tolocal authority funding are starting tofavour larger organisations includingnational organisations who are takinglocal contracts. This is potentially puttingsmall local organisations in jeopardy.Birmingham is very conscious of thedangers for small organisations and inresponse its Communities Directorate isworking on capacity building with smallerorganisations. Birmingham is also looking

at what local organisations are especiallywell placed to deliver due to knowledgeof very local neighbourhoods and nichecommunities.

At the end of the day it comes down tothe specifications that commissionersdevelop and the way sub-contracting ismanaged.

What about services beingcommissioned across localboundaries?There is a gradual move toward morelocal authorities working together tocommission across boundaries throughMulti Area Agreements and jointcommissioning. This definitely increasesthe case for consortium delivery withinthe third sector. There are alreadyorganisations that only survive by workingacross geographical boundaries.

Useful Links:

For a more in-depth look at

Birminghams approach to third sectorcommissioning see the SustainableFunding Projects case study at www.ncvo-vol.org.uk/psdnetwork

For more information go to theCommunity and Living section ofBirmingham City Councils websitewhere you can see all the associateddocuments at www.birmingham.gov.ukor www.bvsc.org

For more on the Isle of Wightsapproach to the VCS go to: www.iwight.com/OneIsland/value/voluntary or goto www.iwrcc.org.uk

For more on the Compact asa catalyst for change go towww.thecompact.org.uk

For a copy of Do you know how thevoluntary and community sector can helptransform public services?an introductoryresource for purchasers andcommissioners go to www.ncvo-vol.org.uk/psdnetwork


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