NAVCA Blog - Commissioning and procurement
The following blogs were posted within the "Commissioning and procurement" category.
Who can argue against the proposition that services should be more tailored to individual needs and aspirations, that control and choice should be in the hands of the person using the service as far as possible? No-one of course, and therein lies one of the tricky aspects of the OPSWP. The argument is beguiling and plays to our consumer culture of buying what we need and want and expecting a certain amount of choice.
But this approach is missing the most important element of our services - namely the 'public'. For all the faults and deficiencies that are part of our current system of public services; as members of the public we feel a sense of ownership. This is because we fund services even if we don't use them, we know that we may need to use them one day even if we don't now, and we see that good public services provide a general benefit to all of us simply as members of the same society. Public services mean that a public body has provided or commissioned them and is accountable for the 'public' in a direct way. Local authorities are locally elected and accountable. Their decisions about services take into account local needs, priorities and the broader context in which the service operates. Those decisions can, to some degree at least, be influenced, challenged and scrutinised by citizens, precisely because the service is funded through taxation. What will happen to that if the majority of services are purchased by individuals, as set out in the Open Public Services White Paper?
One scenario is the loss of opportunity to embed a wider social value into our public services. At the moment public bodies are being encouraged to think about the wider value of their purchasing decisions, not least in local services. For example, when they commission a domiciliary care service for older people they can consider what wider benefit that service can achieve in addition to the basic service. Can it, for example, build social capital, or address isolation or even reduce the local carbon footprint? The public body will consider and prioritise the issues of most importance for a local community.
When a citizen purchases their own individual services they will, quite rightly, make those decisions based on their own requirements and priorities, not what the local community needs. Since there is no real public aspect to this kind of purchasing, the individual approach will leave out the wider social value entirely. Providing or commissioning a truly public service can only be done by a public body. The total sum of decisions made by a large number of individuals does not amount to the same thing, and we must make sure that the public aspect is not lost as a consequence of individual purchasing. We need to be on our guard against the very real danger that opening up public services will see the erosion of the 'public' from our public services. If that happens we may have to start thinking in terms of Closed Private Services.
Richard Caulfield at Voluntary Sector North West has questioned how valid these are in the North West of England.
The results of DWP research are as follows:
An exercise carried out on 12th August 2011 shows that of the 852 total number of organisations from all sectors in the supply chain, just under 50% (423) of these are VCS suppliers. A quarter (108) of these are in the tier 1 supply chain and three quarters (315) in tier 2.
This DWP think that equates to
20% is an estimate of the proportion of initial referrals going to VCS. The 20% figure is likely to be a significant underestimate of the amount of VCS involvement in the Work Programme.
DWP has also released a 49 page (pdf) breakdown of each supply chain's tier 1 and tier 2 suppliers, listing who is public, private and voluntary.
It would be interesting to know how accurate in reality these supply chains are, and how much the accusations of 'bid candy' are true. It is likely that many listed providers only receive minimal or no through flow.
What do you think? Do you agree with Richard? We'd like to hear what your experiences are, leave a comment or get in touch.
Meanwhile the Merlin Standard, which will regulate these relationships, looks like it should grind into life soon as a provider - emqc ltd - has been selected by DWP to run the standard.
How will it work?
The standard will evaluate against supply chain design, commitment, conduct and review.
All 18 Primes will be contractually subject to mandatory Merlin Standard assessment prior to June 2012. The accreditation is mandatory and will be assessed against the Merlin Principles every 2 years.
Merlin Accreditation will also be open on a voluntary basis to Providers that do not currently hold a DWP Prime contract
Will it have teeth?
This is it what we are waiting to find out. DWP and the minister have talked tough about the standard. So teeth yes, but how sharp? In reality, primes will be given time to improve practice. "If your organisation does not achieve a satisfactory result in the first assessment, you will be required to undertake another assessment within 3‐6 months."
Other factors will inevitably come into play too. Will a contract be cancelled if it is hitting targets but not meeting the Merlin standard? Or will it be cancelled if it meets the standard but fails to hit targets?
In the assessment guidance DWP say that "Consecutive unsatisfactory results may result in breach action being instigated and the contract terminated".
History would suggest that government's are reluctant to cancel such large contracts for under performance - think trains, government IT contracts. This seems especially true if multiple primes are underperforming in a stagnant job market, what option will government have?
A side note here is the targets in the contracts. Now that huge swathes of procurement and contract information are freely available via Contracts Finder it is possible to see just what each Prime has signed up for. If the Social Market Foundation thought the DWP's own target's were unachievable, they should see the even larger figures certain primes have committed to.
Do you calculate how much time, and what cost, it takes to complete tenders? A recent European Commission paper puts the figure at over £3,000 per tender, and over £4,500 for the public body to administer a tender process.
The figures are deep in the 207 page impact assessment of the European Commission’s proposed changes to EU wide procurement legislation. The proposals themselves offer some positive changes but they also reveal some interesting figures on the costs of tendering as spotted by eagled eyed tweeter @berneeclarke.
The document cites research putting the total cost of a typical (above threshold) procurement procedure to be nearly € 28,000. This figure is made up of costs to public bodies - € 5,500 per tender launched – and costs to bidders – around € 3,800 per offer submitted. They notice that “While larger contracts are generally associated with higher costs, there appears to be a substantial element of fixed costs”. Given the paperwork and processes used are often similar for smaller and larger contracts this will be no surprise.
The cost effectiveness of a burdensome procurement process for lower value contracts is questioned -
“For the low value contracts close to the threshold of €125,000 this means total costs can amount to between 18-29% of the contract value”.
Given the Commission’s focus on SME’s we hope this will lead to less burdensome processes for smaller value contracts, rather than an excuse to bundle contracts together.
These are the first substantive figures we’ve seen on the costs of tendering and could be useful for local discussions on improving procurement. The figures really emphasise the importance of using a proportionate process relative to the value and nature of the service being tendered.
The paper also notes that “Despite nearly 40 years of public procurement legislation one of the key objectives – the creation of a single market – has yet to be achieved”, putting the figures for cross border procurement at 1.6% of awards or roughly 3.5% of the total value of contract awards published in OJEU. The paper also reveals that “50% of contracts above EU thresholds are awarded within the distance of 100km”.
‘Cross-border interest’ is often cited as a reason why a tender needs to be advertised under the full regulations.
These figures question the reality of these arguments in practice, regardless of the Commission’s desire to make cross border trade easier.
Indeed the figures on cross-border awards relate to all types of contracts where some cross border interest might be expected. When it comes to the types of services NAVCA members and the wider voluntary sector delivers, we believe there is far less likelihood of cross border interest and the figures for cross border awards is likely be far lower than 1.6%.
This is why NAVCA generally supports the EC’s proposals to form a separate regime for certain social, health and education services. However, we will be lobbying to make sure the most appropriate services are included.
We will be publishing a briefing on the implications of these proposals soon and letting you know how you can get involved. Are these figures a surprise to you or do they sound too low?
Submitting a Tender: Back to Basics
As invitations to tender for Healthwatch start to trickle out, I thought I’d have a look at a few of the basics needed to submit a good bid and highlight some of the areas where mistakes are often made:
Show you’re a safe bet
At the PQQ stage the contracting authority needs convincing that your organisation has the capacity, systems and experience to be able to deliver the contract. Your job is to show you are a ‘safe bet’. Therefore if you cannot answer some of the questions as required, you need to provide extra information to explain your response or provide an alternative. Give them something to show you are capable of delivering that contract.
For example, if professional liability insurance is required and you don’t have it, don’t just tick the ‘no’ box. Get quotes and state in the PQQ that you will have the insurance in place before the start of the contract, provide the details as per the quote and don’t forget to cost this into your bid.
Focus on the stated needs/outcomes
A tender submission should:
- Show that you understand what the contracting authority requires (the outcomes)
- Propose solutions to meet/exceed those requirements
- Clearly state the evidence or experience that enables you to know your solution will work
One of the most common mistakes bidders continue to make is to propose solutions to different needs (outcomes) than those that are required. You have to provide a solution to what they want, not to what you want to achieve or what your services currently offer.
Structure and language
All too often the central idea or proposal the bidder is trying to get across is hidden. Write an executive summary, encapsulating your offer and key messages. Include it in the bid if you can. If not, refer to it as you write the tender.
Use language that is concrete and specific. Your bid needs to be about what you know, through evidence and experience, and what you will do, rather than what you believe or what you will aim to do.
Be aware of using generic language; statements like flexible opening hours and a variety of locations don’t provide enough detail. Be specific.
If you have to do a presentation, don’t lose focus at this stage. You still need to concentrate on how your offer meets the buyer’s needs. Don’t make changes to your offer at this stage and don’t lapse into general marketing. If it is not clear, ask the contracting authority the purpose of a presentation and how it will be evaluated.
NAVCA is extending our tender review service to members bidding for Healthwatch contracts. This offer provides up to two days of free support that would normally be charged at £980. For more details, see the link above.