Commissioning - 'just hopeless'

In the second of two articles on the findings of his interviews with more than 100 third sector leaders, Richard Gutch examines their deep disillusion about government commissioning and their ideas for improving it.

Home-Start Worcester
Home-Start Worcester

When the chief executives of top charities such as Barnardo's, Catch22 and Tomorrow's People variously describe their experience of commissioning as "appalling", "just hopeless" and "a joke", it is clear there is a long way to go if the Government's ambition of world-class commissioning is to be fulfilled.

Many of the third sector leaders I interviewed felt the fundamental problem was a lack of understanding of the difference between commissioning and procurement. Too many officials seem to believe their role is simply to purchase a service at the lowest price possible. They think they are not allowed to discuss service specifications with potential providers and do not recognise that you can have an iterative, creative commissioning process, involving proper consultation, then draw a line and embark on a formal procurement exercise.

The emphasis on localism poses particular challenges for national organisations. It used to be possible to negotiate contracts with government departments or agencies such as the Learning and Skills Council, but in future the third sector will be negotiating with individual local authorities. Richard Williams, the chief executive of youth charity Rathbone, estimates that the charity will have to develop new relationships with 80 different local authorities in the next two years.

There has also been a move towards incorporating services for different client groups into one generic contract in the expectation that the prime contractor will subcontract to specialist providers. For example, the RNIB provides a specialist employment advice service for blind and partially sighted people under a Department for Work and Pensions contract in Manchester. The charity feels a specialist national contract would have been a more effective way of meeting the needs of its clients.

Debbie Scott, chief executive of employment charity Tomorrow's People, says the lead contractor will typically take a 10 per cent cut of the contract to meet its own transaction costs and the subcontractor will get paid mainly in arrears, creating a cash flow problem.

National networks such as Citizens Advice and families charity Home-Start face particular challenges. For example, the Legal Services Commission's desire to pool its funding with local authorities to establish community legal advice centres and networks has led to a loss of funding for Hull Citizens Advice Bureau, where a commercial partnership between private sector training business A4E and a firm of solicitors won the tender. The specification for the service was narrow and did not include any concept of community benefit. If such developments continue, the benefits of having a national network of local organisations such as Citizens Advice and Home-Start will be lost.

Local infrastructure organisations such as Cambridge House in Southwark and Voluntary Action Sheffield see it as part of their role to help local groups form consortia or partnerships so they can compete effectively. However, Alex Whinnom of the Greater Manchester Centre for Voluntary Organisation said he had not been able to find any evidence so far of a national organisation forming an equal partnership with a local organisation from the outset.

For chief executives who have experience of public sector procurement, the story is too often one of a poorly managed process.

- Richard Gutch is an associate at third sector recruitment agency ProspectUs


Richard Gutch interviewed more than 100 third sector chief executives earlier this year. The organisations involved covered areas ranging from health, social care and disability to children, funding and infrastructure. The interviewees were not representative of the sector as a whole, but their opinions were considered to give an important snapshot of chief executives' priorities.

Procurement problems
Interviewees came up with criticisms of several different aspects of
- Unreasonable and changing timescales
- Poor service specifications
- Focus on outputs, not outcomes
- 12-month contracts
- Standardised pricing
- No recognition of costs of difficult clients
- No allowance for inflation
- No allowance for Tupe costs
- No recognition of working capital costs
- No sharing of risk
- Late decisions

Lord Victor Adebowale, chief executive of Turning Point and former co-chair of the Department of Health's third sector commissioning task force, says many of the problems stem from poor leadership at a local level. "Commissioning is in the last-chance saloon," he says. "Unless commissioners get their act together quickly, their function will be contracted out to the private sector. Some fear that this might be like putting Dracula in charge of the blood bank."

Making commissioning work

Although commissioning was high on the list of most chief executives' worries, a lot of effort is going into improving it. Simon Gillespie, chief executive of the MS Society, is working with the Parkinson's Disease Society and the Motor Neurone Disease Association on three pilots to show what user involvement in commissioning can achieve. The pilots are developing menus of the services users want and are beginning to change commissioners' behaviour.

The Stroke Association has succeeded in influencing the commissioning environment for its services. Having played a leading role in getting the Department of Health to develop a Stroke Strategy, it worked with the department on a guide for commissioners. Every NHS document now refers to the association's role in service provision.

Some interesting new partnerships are being formed. For example, the private sector management company Serco is teaming up with a number of third sector organisations: Tact, for work with children in care in Stoke-on-Trent; Contact a Family, to help local authorities develop arrangements for short breaks and parent participation for families with disabled children; and Catch22 and Turning Point, to help rehabilitate offenders as part of its prison management contracts.

At a local level, councils for voluntary service, including Birmingham Voluntary Service Council and Voluntary Action Leicester, are working with local authorities to develop joint commissioning strategies for the third sector. The 'Birmingham model', which invites third sector organisations to say how they can help achieve particular outcomes within particular price bands, is gaining popularity as an alternative to standardised procurement approaches.

Joint work is also taking place in particular service areas; for example, London Youth is aiming to establish a development worker in every London borough to work with council officers and local youth clubs to develop quality services for young people.

Developing the relationship

The secret of success in contracting is undoubtedly to develop a good relationship with your commissioners. Thames Reach takes prospective commissioners to see some of the projects it runs. The homelessness charity is open about the need to keep learning and improving and gets a third party to phone up commissioners on a regular basis and ask them questions about Thames Reach's performance, focusing on the areas where the commissioner feels it could do better.

Martin Narey, chief executive of Barnardo's, was delighted to be able to agree a 20-year contract with the London Borough of Brent to provide a family centre - a welcome change from the 12-month contracts offered by so many other authorities.

Su Sayer, chief executive of United Response, believes the key to effective commissioning is having a joint approach in which both parties are willing to discuss problems, share risk and work out innovative solutions together.


One of the most hopeful signs that things are going to improve is the emphasis on training commissioners and third sector providers alike. The training programme for commissioners, funded by Office of the Third Sector, has now begun and should help address some of the poor practice reported by the sector.

But third sector chief executives also spoke of the need to train and develop their own middle managers, who are having to prepare tenders, present bids and negotiate and manage contracts. Mark Lever, chief executive of the National Autistic Society, feels a culture change is required for many third sector staff, who are having to operate in a much more businesslike way. This is often different from the charity world they are used to, where the emphasis was more on securing grants to meet costs, rather than managing costs as tightly as possible to deliver a viable and sustainable service.

Although the reports from the commissioning front line make depressing reading, there is a definite feeling amongst the chief executives I spoke to that things can only get better.

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