Full cost recovery vital to boosting contracts

The voluntary sector can only be expected to take on more public service delivery contracts if it is guaranteed full cost recovery, according to a body for local authority commissioners.

The Commissioning Joint Committee, hosted by the Chartered Institute of Public Finance and Accountancy, was responding to a consultation on the Department for Communities and Local Government’s discussion paper on third sector delivery.

The committee’s paper also says that if local authorities offer – and sector bodies demand – total reimbursement for work done, that would amount to a contracting arrangement and should be open to competition.

“A contract is a contract, and it makes no difference if the parties agree to call it something else,” the document reads. “There is no such thing as the full reimbursement of grant-aided work. Any expansion in the volume of third sector work will have to be via contracts.”

Improved Compact compliance could theoretically help to boost third sector delivery of public services because it could improve relations between the sectors, encouraging voluntary groups to get involved, the committee suggests. The DCLG paper contains an aspiration to eliminate all Compact breaches by raising awareness, but the CJC paper says that the Compact cannot succeed alone because the sector first needs to know why the aspirations of the Compact have not yet been reached.

The committee’s chair Will Werry described the Compact as “poorly thought through”, and said he expected little progress in increasing involvement of the sector in public service delivery.

The paper also says that that when Government talks about increasing third sector commissioning it fails to distinguish between grants and contracts, or between big and small charities. It says smaller sector organisations will only be successful in tendering if authorities actively make contracts less attractive to big service providers by breaking them up into smaller segments.

“In the real world clients always have to decide whether to package big or small,” the report reads. “It is a pipedream to suppose that many of the resulting options will please all types of prospective tenderers equally.

“The reason why more third sector bodies are not winning more contracts already is not, therefore, because procurement staff need more or different training. We suspect that the reason is that many client authorities are not yet convinced that all the many packaging changes called for are justified.”

It concludes that more specific evidence of the advantage of greater sector involvement in service delivery is required.

A spokesman for the DCLG said the department was currently working through more than 100 written responses to the discussion paper, as well as feedback from an online discussion forum and from 450 delegates at eight regional consultation events. “We are now considering the overall response to the paper and aim to publish our final strategy at the end of the year,” he said.

The CJC document will appear on its website shortly.

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