Murky complications of commissioning

A can of worms in a hornet’s nest and each of the worms is about to open their very own Pandora’s Box.

This was what I thought when the DfE said it would limit outsourcing opportunities for the delivery of children’s services to not-for-profit providers only.

Since then, it’s become clear that the regulations to effect this may be murkier than some people expected:

[R]egulations will not prevent an otherwise profit-making company from setting up a separate non-profit making subsidiary to enable them to undertake such functions.

On the other side of the coin, Labour are saying they will reserve public service contracts for social enterprises using new EU procurement laws and the principles Social Value Act of 2013.

But both of these scenarios are actually the same: the use (and abuse) of commissioning and procurement to reach a desired outcome. (See Toby Blume’s excellent posts on the Big Society Network and the National Citizen Service to see two recent examples.)

I’m afraid that, as commissioning and procurement currently work, anything that’s done to specify a certain type of provider to provide a service can be used (exploited?) to get exactly the opposite type of provider to provide the same service.

If you want a “not-for-profit” company to deliver a service, it’s perfectly possible for a private company to establish appropriate governance arrangements to appear as a “not-for-profit”. Similarly, it’s perfectly possible for a “not-for-profit” organisation to have governance arrangements such that it has a “for-profit” trading arm. These options don’t even include the extra dimensions social enterprises add, with their “for-profit” / social purpose duality. (And, whilst we’re at it, what, actually, is “profit”?)

Commissioning and procurement is a murky business.

For me, there are two real issues raised by all of this.

The first is that the “public is good, private is bad” dichotomy is truly unhelpful when it comes to debating how best to deliver public services. I mean, Julian Le Grand was exploring knights and knaves (pdf) back in 1995, quite aside from the amount of literature that work was built on and which has been written since

The second is that commissioning and procurement are processes that are driven by humans. As soon as you introduce human agency into a process it doesn’t matter how well the rules are written: the pesky human will find a way of using those rules to suit the ends they desire.

The primary issue, therefore, is understanding what is motivating people to act as they are. Questions of public/private providers and commissioning and procurement rules are secondary.

 

 

 

 

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Preferential treatment for #dpulo (and others) in procurement – good to see

It was great to read this in the Liverpool Echo:

Liverpool council will adopt the pioneering approach when it evaluates bids for contracts.

The aim is to put extra emphasis on using socially responsible contractors and suppliers when procuring the £270m budget for buying in goods and services from third parties.

The council said value for money and the ability of a company to deliver the contract will still be the most important factors.

But additional consideration will now be given to organisations with a smaller gap between the highest and lowest paid staff (pay multiple).

Social enterprises which plough their profits back in to developing the business and firms which can demonstrate clear local benefits will also be favoured.

That is, Liverpool Council has said that it will actively prefer providers that add social value to the city of Liverpool in the way they deliver services.

This is good news. I’ve written a lot about the added value that organisations like DPULOs, mutuals, social enterprises and voluntary sector organisations bring, and it’s great to see a Council formally recognise this in its procurement process.

Way to go, Liverpool. Let’s see lots of your local authority colleagues follow suit!

(If anyone has any other examples of this type of thing, please let me know.)