Including charities in a reformed local procurement environment

Charities have always played a big role in providing social care. And it is not just some of the best known, “household name” charities. Throughout the UK a myriad of charities and voluntary organisations support their local communities through involvement in the provision of a wide range of services related to the social care agenda. Some are local branches of national organisations, but these are only the tip of the iceberg. Smaller organisations, either funded or volunteer led, and faith organisations are often the linchpins of local social care provision.

Such groups are increasingly important to the health and wellbeing of our communities and the spectrum of what they offer is wide. Their work is funded in a range of different ways and any one organisation may take advantage of a mix of sources. For some, local authority and health commissioning is a crucial part of the mix.

Skewed against charities

Yet we have a procurement system which seems to discourage charities from bidding to provide services. Indeed, to hammer that point home, a 2017 House of Lords Select Committee report, Stronger Charities for a Stronger Society, pointed out in no uncertain terms that “the commissioning landscape is skewed against smaller charities”.

Government has set targets of spending £1 in every £3 with SMEs by 2022. It goes without saying, of course, that not all charities are SMEs, but many are, and in that context it is worth noting that last year the Federation of Small Businesses published a report, Unstacking the Deck: Balancing the Public Procurement Odds, which pointed out that just 23% of SMEs had worked for the public sector over the last 12 months – down 2 percentage points from 2014. Is it really possible that current procurement strategies mitigate against charities, and if so, what can be done about it?

It’s a bizarre situation. On the one hand we have a multiplicity of charities which are ready, willing and able to provide services in their own local context. Many of these are small charities, often volunteer-involving organisations, which might specialise in very specific areas of provision that can match perfectly to individual needs. On the other hand, we have a procurement system that desperately needs localised services to meet the growing demand for social care but, to reference again that House of Lords report, appears to be skewed against them.

The problem with frameworks

So how do commissioning authorities tap into the charity providers that we know are out there and are wanting to be health and social care providers? The FSB report argues that local authorities should be required to publish all contracts over £10,000 on Contract Finder, a central database.

This would indeed allow charities to see and bid for a wider range of contracts, and it would be a positive move. But there is something even more fundamental which needs to be fixed. The real spanner in the works is a procurement system which is arguably no longer fit for purpose and which is ready for reform. What needs to happen is significant root and branch reworking of framework agreements, in favour of digital commissioning implemented in the context of an open framework.

The framework model that’s used most frequently to purchase services is quite simply outdated. Frameworks can only be joined at certain times, and outside those times they are closed so that no new providers can join. Entry points might only occur every four or five years. Moreover, to become part of a framework a potential supplier needs to go through a range of bureaucratic, time-consuming, form filling type processes. And that’s not form filling to bid for a contract or meet a need, but form filling just to be in with a chance of it.

Smaller organisations, and in particular charities, which operate with very restricted funds, may think twice about going through this process, which can be difficult, complex and time consuming. If a charity is fully stretched providing services when the time-limited framework entry process is under way, there might simply not be the time to consider an application to join.

Commissioning authorities tend to like frameworks because they make repeat procurements easier, and because they are a source of known, vetted, validated suppliers. Despite this, we all know frameworks are often circumvented by commissioning staff ringing round providers. We know, for example, this can happen when there is a need for an immediate residential care placement. Commissioners use their own networks to contact providers and find out if they have any availability in a process that’s called “spot purchasing”.

This process is problematic on many fronts. There is often a lack of an audit trail. Some providers will be left out of the process because they aren’t part of the informal networks being used. Providers might uplift their costs because they know there is a pressing and immediate need. Worryingly, there may well be capacity which is simply not found because it is not known about – which means the system prevents some people from accessing services that exist.

Digital benefits all parties

By contrast, an open framework used within digital commissioning technology is a much more accessible and inclusive approach that works better for the commissioning authority, for the providers and, very importantly, also for the recipients of services. There is of course still a process to go through.

Providers need to meet a set of criteria and go through the equivalent of a vetting process. But an open framework can accept providers at any time, which means new and innovative ways of providing services are immediately available to commissioners, and new providers can apply for access to the framework when they are ready.

Importantly, spot purchasing no longer needs to happen. Because digital commissioning takes place in real time on an online platform, commissioning authorities can publish their requirements to it, complete with a deadline for bid submissions. It is possible to identify a care need in the morning, say for an adult needing a care home placement that evening, and have it fulfilled, without the need for time consuming and potentially fruitless ringing round known service providers.

To take another scenario, it might be necessary to find regular transport services for a new day centre activity that a volunteer-involving, small local charity might love to take on. Digital commissioning allows the commissioning authority to review and compare bids, check compliance with safeguarding and regulatory requirements, and make a selection that’s fair for the provider and right for the client. And there is a full audit trail.

There is plenty of evidence that digital commissioning opens up provider markets. For example, at Cardiff City Council it has helped the provider base for domiciliary care increase by 51%, resulting in 59 unique providers being given the opportunity to provide services. This has generated an average of 3.2 offers for each unique care requirement.

Cost efficiency and quality

All of this discussion so far has taken place without any mention of a huge elephant in the room: falling local authority budgets. In terms of the latter, those old-fashioned frameworks can be bad news for budget management. Because they have four or five-year lifespans they can mitigate against new approaches to service provision becoming available for procurement, and because they contain a fixed number of providers they can reduce competition, leading to price rises.

A digital framework, in contrast, because it is always open to new entrants, is always able to take advantage of cost efficiencies as pricing regimes change.

In this context, it is absolutely crucial to note that the move away from frameworks and towards digital commissioning with an open framework is not about driving down costs. This is not an argument for a race to the bottom, in which providers are forced to cut profit, employees are badly paid and quality of service suffers.

Quite the opposite, in fact. For example, NHS Midlands and Lancashire Commissioning Support Unit (MLCSU) sets a 60% quality /40% cost weighting to help select a provider. And, since starting to use dynamic purchasing, MCLSU has grown its pool of providers, improved the quality of its management information and raised the quality rating on its placements.

Relic of a past age

In the end, the old frameworks with their infrequent entry periods, which are circumvented by the use of informal networks for spot purchasing, and which are skewed against charities, are a relic of a past age. There is evidence that using digital commissioning with open frameworks in place provides a more stable solution than their fixed framework counterparts.

All we really need is for commissioning authorities to encourage their peers to take the same path as those that have succeeded around them. Doing so will remove the barriers that prevent many charities from supporting the country’s most vulnerable people.

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