Service Reviews – Outline Business Case - Somerset County Council

(Cabinet – 2 May 2012)
3.3.6 Recommendation
To reject this option at the Outline Business Case stage and develop a full
business case to outsource the LDPS.
3.4 Option D: Outsourcing 25
3.4.1 Overview
Outsourcing refers to initiating a tender process leading to a transfer of the whole
of the LDPS to independent provision. This could include bids from the
independent sector, a social enterprise, existing third sector providers, consortia,
or the current LDPS management team.
3.4.2 Benefits
• At initial feedback meetings, a number of service users expressed a desire to
direct their own care thorough a direct payment, which an outsourced
organisation would be free to provide.
• Consortium bids could be encouraged that would facilitate the participation of
small providers that might otherwise be “crowded out” by Option C,
externalisation. In addition, multiple service providers in a consortium could
reduce the risks associated with a single provider failure.
• We would expect to favour bids that include opportunities for external capital
investment.
• Outsourcing the LDPS as a whole would provide opportunities to reduce/share
operational overheads as bidders would be likely to already have resources
that could be extended, allowing the overheads to be shared across a broader
range of services, rather than newly established.
• The entire service can be evaluated against current market rates, potentially
resulting in the service being outsourced at a lower cost than the current LDPS
budget. While the LDPS is in the process of reducing costs, this is expected to
take two years without incurring potentially significant one-off costs, while a
transfer to a different organisational model has the potential to release them
more quickly, under the right conditions. However, it should be noted that
some of the costs associated with being part of SCC will not be releasable.
• There is a reduced risk of service failure subject to adopting a robust and wellmanaged
tender process, eliminating any “weak” providers at the outset.
• The full outsourcing option would be achieved through a single-step approach.
• This would allow the service to rapidly adopt best practice from the successful
bidder
• While the tender process for a large outsourcing exercise is complex and time
consuming SCC would avoid potential on-going complications relating to the
Teckal exemption.
• A competitive tendering process should encourage cost efficient bids that drive
out savings. The tender and evaluation process would ensure that these were
sustainable.
25 Further consideration would need to be given to the model for employment support services as part of the
development of a full business case should this option be taken forward
A - 27