National commissioners increasingly want to commission services that are more tailored to local requirements and better integrated with existing local services. Devolved commissioning by other countries in the UK and within England by local and combined authorities is part of the same trend.
This growing emphasis on localism makes an already challenging landscape even more complex. Consumers have got used to a personalised customer experience when they buy goods and services, and to accessing them as easily as booking an Uber. They now expect public services that flex to their unique demands in the same way.
And of course, this is all in the context of public services under pressure to keep costs down but to deliver more for citizens with increasingly complex needs. Ten years ago the Department for Work and Pensions (DWP) was spending about £1 billion per year on welfare to work services. The new Work and Health Service will cost just £550 million over four years.
Calling time on the prime contractor model
In recent years, outsourcing to a prime contractor has been the preferred model for commissioning public services. Probation (Transforming Rehabilitation), the Work Programme and the National Citizen Service have all been outsourced in this way. But commissioners and providers are finding it harder and harder to make the model work.
The prime contractor model distances the commissioner from frontline delivery and the customer. This is made worse by the way government departments manage providers’ contracts. Contractual compliance tends to take priority over quality of service and outcomes delivered.
The many layers between policy and service delivery dilute the often well-thought-through and evidence-based policy. This weakens the link between what policy makers intended and what the service actually achieves. The commissioner is stuck in the middle, unable to regulate service quality and not involved enough to make sure quality outcomes are achieved.
And there’s another problem. Because there’s little integration between commissioners, providers and services, service delivery is often generic and disconnected from customer and place.
It’s true this model has driven down costs through competition. But much of the value gained is lost in service fees charged by the prime contractor. Inefficient management, excessive overheads and replicated investment amplify this. Nationally, there are multiple prime contractors delivering the same service in different parts of the UK. They’re all investing in developing IT systems and other infrastructure. That means less investment in frontline delivery.
For providers, squeezed funding and a tendency to commission complex public services in smaller, multiple lots is making government contracts unattractive. The focus on cost over quality and high transfer of risk is driving good providers from the market.
Developing a new network-based approach
So how can commissioners and providers deliver a new generation of large-scale public services that feel more local and more personalised? We’ve been working with commissioners to design collaborative, network-based models that bring the commissioner closer to the customer, improve local service integration and achieve better outcomes – all at a reduced cost-to-serve. Here’s how it works.
Understand your customer
Delivery networks put customers at the heart. So the first step is to map the customer’s universe. Who and what influences them? Are these influences positive or negative? And how will the service interact to leverage or mitigate them? These are the types of questions we're encouraging organisations of all sizes and stripes to ask.
This mapping task was the starting point when we helped the National Citizen Service Trust shape their commissioning strategy. Our early planning identified the organisations that needed to be involved in the delivery network to maximise engagement with young people and deliver the best experience and outcomes for them.
Build from the inside out
Every delivery network should be designed for and with a specific locality. That means commissioners need to know the area and its needs, how existing services work, and how different local organisations can work together to deliver shared outcomes. The best way to do this is to get commissioners working out of the locality so they can build the network from the inside out. They’ll need to get everyone involved in the network signed up to common objectives, clear about what groups of service-users they have in common and agreed on how they’ll work together.
Good data and analytics are critical to understanding local challenges. In recent work with the National Citizen Service Trust, we used various social metrics, including the Social Mobility Index, to understand how to add real value in each locality and sustain the impact of the service.
Follow a process
Delivery networks don’t just form spontaneously. They need to be designed using a structured process. That starts with identifying the services to deliver, figuring out what it will take to make it happen, and assigning responsibility for actually delivering the service.
This rigorous approach to design is really important for strengthening the link between what commissioners intend a service to deliver and what it actually does. Since 2010, an overall shift towards value-for-money as a basis for commissioning has inadvertently driven quality issues. Focusing tightly on capabilities and linking them to outcomes can help redress that imbalance.
It’s always been hard to get commissioners and prime- and sub-contractors collaborating effectively. Achieving collaboration between complementary services in a particular locality is even tougher. There are some great examples of where this is being done well, including the Working Well programme in Greater Manchester. But this – and a few others – are exceptions and rely heavily on strong local political will.
Designing collaboration into procurement from the start establishes the tone for the relationship between the commissioner and suppliers, and among suppliers. This is the model that Innovation Partnerships, designed to enable commissioners and suppliers to co-create new services and products use. The process starts with the commissioner and suppliers agreeing a shared vision and goals. Then they agree on KPIs, Minimum Service Levels and accountabilities, and on how all parties will share resources to deliver the service efficiently. This approach gets the best from the network of providers and reduces duplicate costs. When the network is collaborative and focused on shared goals, it’s in everyone’s interest to deliver the best possible outcomes.
Time for a rethink on commissioning
Fantastic public services improve communities and the lives of people living in them. It makes sense for them to be delivered by networks of like-minded organisations who have a stake in success, facilitated by commissioners who understand the locality and the people they are commissioning for. The prime contractor model is struggling to deliver this. It’s time for a new network-based model for public service delivery.