Saturday, 10 December 2011
Procurement: Obstacle or opportunity?
Anyone who has argued the case for an increase in independent service delivery by those that prioritise social impact in public services knows procurement is the big game. Much of the debate in this space has focused on access to finance, with government initiatives lining up to potentially lend to new services. But how will that be possible if they don't survive the procurement process, don't win contracts?
Central Surrey Health is the most public example of the failure of that process to date and while much of what happened there is not a matter of public record, I can tell you that in no way did CSH fail to score with its purchasers in its ability to deliver a quality service. So what went wrong?
Simply put, the ability to access capital was considered significantly more important than the ability to deliver. This is becoming a common theme and so while access to capital or bonds will make a difference, and therefore helping new providers find such products is part of the current game, I am left asking why is this necessary? If we want community-based organisations to have a bigger role in delivering public services and make the most of their place on the front lines of community, why are we making their ability to be underwritten by capital bonds a deal breaker? I can't answer that question because I think it's the wrong one and as a direction of travel it is sure to stifle growth of these innovative and otherwise potentially successful entities.
Interestingly enough, the Cabinet Office itself found that the bond required of the £500 million contract CSH most recently tried to bid for was unnecessary, and yet it stayed in place.
Thursday saw the latest meeting of the board of the Transition Institute, which I chair. We started to tease out the debate on this and other issues related to spin-outs and while I cannot share with you the detail of what was a great conversation, I can tell you that the views of purchaser and provider were shared and a consensus achieved that while capital bonds made sense, to some extent, in the setting up of foundation trusts for instance, and there is an undoubted lack of investment capital in the public sector, looking for it via community-based service providers was looking for it in the wrong place.
Now, what is to be done about that? Discuss. The TI certainly will, and look to a series of recommendations for procurers who want to purchase services from social spin-outs.