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The arrogance of presumption

Monday May 13th, 2013

If a senior executive or senior sales/business development representative from any organisation, be they in the business or social sector, were to claim that they should have more and more public service contracts awarded to them by an ever-grateful public sector simply because they exist, then I imagine that most rational people might be surprised and think this stance somewhat presumptuous – if not bizarre. Sadly and unfortunately, such behaviour is far from rare.

John Tizard

John Tizard

Business sector claims can be very over-stated
Business sector leaders responsible for bidding for and delivering public services contracts frequently claim that their companies (and approaches based on their business models) will deliver the change, service improvements and cost reduction that the public sector so desperately needs. Typically, they make these claims even though the evidence is mixed in respect of the benefits of traditional public service outsourcing; and this at a time when the model may be increasingly inappropriate to a public sector looking for flexibility and immediate as well as longer-term benefits, and to avoid the costs and disruption of a major procurement in a period of immediate budget pressures and long-term uncertainty.

Some business leaders from the larger corporates are even seeking to persuade the public sector to ignore the policy commitment to working with the social, voluntary, co-operative and SME sectors because this will impede the path to ‘transformation’ and ‘big savings’. In other words, it will dent their profit opportunities.

Others are suggesting that the only way (or at least the best way) in which the public sector should deploy social and voluntary sector organisations in public service delivery is via these large companies’ supply chains based on the prime/sub-contractor model of the Work Programme – and possibly, in future, the Probation Service. This cajoling (if not downright bullying) by the business sector completely fails to recognise or acknowledge that not all social and voluntary sector organisations wish to cede their independence to large-scale corporates, especially if the latter do not intend to treat them as partners but rather as a cheap delivery option onto whom disproportionate risk can be offloaded. For this model to work there has to be genuine collaboration and mutual control and benefit.

Social and voluntary sector – be on guard and alert
There are some leaders in the social and voluntary sectors who appear to believe that simply because their organisations exist and have the right values (whether they practise them or not is a whole other debate) they should win any tender that they submit; and ideally (because of who they are) should not have to submit to a competitive tendering process. Regrettably, and far too often, such organisations are incapable of demonstrating their impact and/or the value that they offer to the public sector and to their beneficiaries. This may come as a surprise to some people, but simply being ‘registered’ as a charity or a social enterprise does not automatically equate to being an excellent service provider, or having the right values, or having an ‘entitlement’ to public service contracts and/or public funding. Of course many – the majority – in the sector delivering public services do live its values, deliver quality and innovative services and can measure their impact. Many are member and user led. They add social value in addition and as an integral part of their services.

Personally, I do think that there is a role for the social and voluntary sectors to design and deliver public services. I also believe that this role can and should expand. This might be through direct contracts with the public sector; through grant aid funded activities; through directly selling services to service users; through the use of their charitable finances; and, sometimes, through collaboration between the business and social and voluntary sectors.

So, lots of potential permutations; but whatever the model, when public money is being used to procure and deliver public services, the public sector and/or service users will determine who will provide and how.

Above all, strategic commissioning should drive decision-making through leading a series of processes that start with identifying needs, options for meeting those needs and the allocation of scarce resources to address the needs. Within this, procurement is merely one of many means of implementing commissioning decisions.

Effective public sector commissioning and procurement are critical  
I firmly believe that public procurement should aim to deliver social outcomes as much as value for money. It should be aligned with the wider political, social, environmental and economic goals of the procuring public body and wider community. And if there is a desire for greater service delivery by local SMEs or the social and voluntary sector, then procurement and contracting approaches must enable and not prevent this from happening.

Under no circumstances should public sector commissioning and/or procurement processes be used to ‘control or impede’ an independent social and voluntary sector or innovation by any provider (including the business sector). Rather, the imperative must be to seek to secure the right outcomes for communities and service users. And these processes must be focused on securing these outcomes – not pandering to provider interests. Of course, it is in no one’s interest to let contracts that are unsustainable, that ultimately bankrupt the supplier, or do not allow the supplier to make sufficient financial return. It is in the interests of service users, taxpayers and the wider community that public sector commissioners and procurers do not design their specifications and contracts principally to satisfy the interests of providers. Accordingly, they must not be seduced or pressurised by those claiming that they have a ‘right’ to contracts on their terms simply because they exist.

The public sector has to become ever more sophisticated as a strategic commissioner and procurer, recognising that these are very different roles. They must have the confidence and create the time/space to explore opportunities, options and models with potential providers from all sectors, including their own ‘in-house’ staff. And they must understand how to contract to secure the right sustainable social, operational and financial outcomes – recognising that this may mean ignoring every passing or recurring contracting fashion (including always buying the cheapest or adopting payment by results for every contract) and that it will most certainly require understanding alternative business models and risk management.

The public sector also has to recognise that competition for all forms of service provision is not desirable or feasible for a variety of reasons. Public service provision and collaborative arrangements between public agencies and with the other sectors can often be equally, if not more, effective.

A little perspective helps a lot
“We are – so we should have contracts” is a rather too arrogant sales strategy for the business, social and voluntary sectors. Equally “We will use competition in the market and consequently respond to what providers tell us they want” or “We will use competition in the market but assume to know what terms will attract the best providers” are flawed and ridiculous positions for Government and the wider public sector.

There is a real risk that ideology and arrogance might combine to lead public services in completely the wrong direction. All sectors have an absolute responsibility to avoid this. However, the principal responsibility rests with our political leaders, nationally and locally. They must be clear about strategy and what is required; and set the right tone and direction of travel.

John Tizard
Twitter: @johntizard
Linked In: John Tizard

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