The community organisation membership body Locality has called on local authorities to impose a maximum value on the contracts they put out to tender in order to make them more accessible to smaller organisations.
The call comes as part of a report, How to Keep It Local: five-step guide for councillors and commissioners, published today, which Locality says is designed to support better commissioning.
The report argues that keeping services local will create better services that are more able to tackle complex needs and will save money by making targeted investments in early-intervention services, ensuring fewer people reach crisis point.
Imposing a maximum contract value would ensure contracts for services are not out of reach for smaller local organisations, the guide says.
"Put simply, if local authorities set contracts at too high a level, they guarantee that local providers will be shut out and ensure that money flows out of the local area," the report says.
"So, when setting a contract size, commissioners need to ask themselves: how many local organisations could bid at this level? If the answer is zero, then commissioning is excluding organisations with a proven track record of supporting local people and it is failing to grow the local economy."
Many councils are reacting to financial pressures by moving towards large contracts in the belief that scaling up services will save money, the report says. But it adds that large contracts can be inefficient, taking up more resources to manage than smaller ones and increasing the risk involved if a larger provider goes bust.
The guide does not suggest what the maximum contract value should be, but does recommend that they are not funded through payment by results, which it says can exclude local organisations by creating cash-flow problems, and calls for grants rather than contracts to be used.
Among the other four recommendations in the guide is that councils should take a place-based approach, which it says means focusing on local people and their interconnected needs and developing services around them, rather than focusing on services in isolation.
It also calls for councils to demonstrate social value in their commissioning by following or going beyond the requirements of the social value act, which obliges councils to consider what social impact commissioning will have for contracts worth more than £172,514.
Another recommendation is that councils should commit to building community capacity with a commissioning strategy that explicitly aims to support local organisations.
Councils should also involve local people in the co-design of their services, the guide says, asking them what services they need and treating them as partners in the development process.
The report says: "We are rapidly heading towards a ‘one-size-fits-all’ world, where community organisations are crowded out and public services are increasingly delivered from a distance by giant corporations and big national charities. None of this is inevitable. Commissioners and councillors can choose a different path.
"By implementing Locality’s keep it local principles and practical actions, we can create a better commissioning environment that supports local communities, maximises the value of limited resources and inspires excellence in public service provision."