DPULOs and Commissioning

Commissioning and the public sector

Commissioning and the public sector

• Government controls the state. The public sector administrates the state i.e. carries out governments wishes.

• Three functions of the state:– legislation [from policy making to law making]– Taxation [e.g. of individuals, of transactions]– Redistribution [e.g. benefits, tax breaks, public services]

Key fact: Commissioning relates to redistribution; to the provision of public services

A brief history of commissioning

A brief history of commissioning

• 1940s: Welfare State– State funds and state provides– Pro: public money stays in the public purse– Con: public services offer poor value for money

• 1970s: New Public Management– Thatcherism / New Labour– State funds and private sector provides– Pro: public services offer good value for money– Con: public money, ‘profits’, flow out of the public purse

• 1970s: The Social Enterprise– ‘Capacity Builders’ / ‘Big Society’– State funds and third sector provides– Pro: public money stays in the public purse– Pro: public services offer good value for money

Key facts: 1. From the 1970s there is a split between the funders and the providers. 2. Commissioning is this relationship between the funder and provider

The commissioning cycle

The commissioning cycle• Needs analysis• Development of service specifications• Tender process• Contract agreement• Service delivery

Key facts: 1. The difference between procurement and

commissioning is the needs analysis2. Commissioned organisations are typically supply chain

orgs not ‘new product’ orgs

Contracts and commissioning

Contracts and commissioning

Key fact: The contract is the legal relationship between the funder and the provider

• There are many different types of contracts:– Grant giving – Service level agreements (SLA)– Block contracts – Pay as you go – Payment by results

• There is a current trend toward Payment By Results contracts as they transfer risk from the funder to the provider

Grant funding V Commissioning

Grant funded

• Provider decides the needs

• Provider designs the service to meet these needs

• Pro: control

• Con: unsustainable

Commissioned

• Funder decides the needs

• Funder designs the service to meet these needs

• Con: loss of control

• Pro: sustainable

Commissioning: what’s in it for DPULOs

• Functions of DPULOs:– To represent– To provide services [essential services, added value services]

• The Risk:– Insufficient public money to fund non-essential services – DPULOs cannot find funding for and so can’t provide represeting pr added value services

• The Theory:– DPULOs are commissioned to provide services– They generate profit / surplus by providing services– They use this profit / surplus to fund their representing services– They use this profit / surplus to fund added value services

• Bottom Line: being commissioned to provide essential services can enable DPULOS to fund and provide representing and added value services

DPULO Structure

DPULO

DPULO Finances

Challenges for DPULOs1. Giving up control

- DPULO tenders to provide a service that meets the needs they have identified rather than those identified by the commissioner.

- If you think the commissioners have not identified the right needs then you need to address this at the needs analysis stage.

- DPULO tenders to provide a service of their own designed rather than the design specified by the commissioner

- If you think the service design specified by commissioners could be improved then you need to address this at the service specification stage or in partnership boards. This may be less of a problem as commissioners transition to payment by results.

- Bottom line: being commissioned to provide services involves giving up some control. That doesn’t mean you can’t influence, you just need to play the right game on the playing field.

Challenges for DPULOs

Challenges for DPULOs2. Taking on Risk

• Commissioners have a duty to safeguard the public purse.• Outsourcing services generates risk for the commissioner that they’ll

fund services which aren’t delivered• Commissioners can’t safeguard the public purse and hold this risk:

“privatise the gains socialise the losses”• Outsourcing services involves outsourcing the risk: “privatise the gains

privatise the losses”– Make arrangements so you are able to take on risk. E.g. consider pooling

resources through consortia arrangements to generate sufficient capital to take on risk

Bottom line: No risk, no reward. If you can’t take the risk then you can’t be commissioned

Challenges for DPULOs

Challenges for DPULOs3. Providing quality data

• Data matters to Commissioners. • Politicians now make evidence based policy so impact data has an

important political value.• Monitoring and impact data are the tools commissioners use to

safeguard the public purse.• Collecting and sharing quality data is resource intensive

– Prioritize data– Treat collecting and sharing quality data as an integral part of service

delivery.

Bottom line: if you don’t provide quality data you won’t win contracts or have contracts renewed.

Challenges for DPULOs

Challenges for DPULOs4. Demonstrating added value

• Different people value different things– Describe the value you add in terms of things you know the evaluation panel

(or the public sector more generally) value and prioritize.

• Tender panels are blinkered. Panel members can only consider the information in front of them.– Specify and quantify any value you add in your tenders– If you’re planning to use your profits / surplus to fund represnting activities

specify this in your tender submission and quantify the impact it will have.– If you’re planning to use your profits / surplus to fund added value activities or

services to meet additional needs specify this in your tender submission and quantify the impact they will have.

Bottom line: If you don’t tell me I won’t know and if you talk to me in a language I can’t speak then I won’t understand.

Challenges for DPULOs

Challenges for DPULOs

5. Representer / Provider split

• Being pulled in opposing directions e.g. advocating against the very services you are tendering to provide

• ‘Biting the hand that feeds you’ e.g. being commissioned by one part of an organization while criticizing another part.

– Clearly separate and distinguish your different functions and communicate this to others

Bottom Line: Manage the tensions /conflicts between your different functions rather than trying to resolve or avoid them. These tensions are and integral part of the DPULO model.

Commissioning and the cutsThe impact of the cuts on commissioning:

• Less funding available for non-statutory / value added services

• Less funding available to meet additional needs• Reduced ability to absorb risk means more risk

transferred to providers• Fewer commissioners means a smaller number of large

contracts• Fewer commissioners places more of an onus on

providers to undertake monitoring / data gathering activities

• Fewer commissioners means less market development