Understanding the Public Services Industy

Public Services Industry Review
2. Poorly specified contracts
4.19 A lack of clarity by commissioners over the outcomes desired from a project results
in poorly specified contracts. This problem is well recognised and over the past few
years there has been a move towards more sophisticated commissioning techniques
which seek to contract for outcomes (or at least outputs). An example of this is the
Department of Health’s programme of ‘World Class commissioning’ which aims to
‘deliver a more strategic and long term approach to commissioning services, with a
clear focus on healthcare outcomes’ 40 .
4.20 This focus on outcomes, although sometimes difficult to specify and monitor, is
important as it means that providers do not have skewed incentives to meet process
targets and that they have room to innovate. However, despite much progress in this
area, most commissioners and providers consulted during this Review felt that there is
still considerable room for improvement.
‘Particular issues for the private sector are...Public sector lack of understanding/
definition of required outcomes which can result in abortive work during the bid phase,
and may escalate as a consequence of the EU Competitive Dialogue procurement
process’ (VT Group)
‘Where commissioners have a clear vision of desired outcomes the appropriate
providers from across the public, third and private sectors are more likely to be
optimally engaged’ (Aveco)
4.21 If objectives are not made clear, bidders may submit unsuitable responses to tender.
This may reduce the competitive pressure, require bids to be re-submitted or
ultimately call into question the fundamental decision to consider private and third
sector providers to deliver the service. Such consequences are costly for all parties
involved.
4.22 In practice, specifying the essential outputs and outcomes sought from the
procurement of public services is not always easy. Public services required to meet the
needs of individuals or groups of individuals are often complex. The outcomes to be
achieved will usually include a range of desired outcomes for service recipients. These
need to be captured in the service requirement specification.
4.23 For this reason it is important that those involved in the commissioning process have
sufficient knowledge of the market and users’ requirements. Providers themselves
are often the best source of this information as highlighted in an OTS report 41 which
states that commissioners should ‘Develop an understanding of the needs and
communities by ensuring that, alongside other consultees, they engage with third
sector organisations as advocates to assess their specialist knowledge’.
40 www.dh.gov.uk/en/Mangaingyourorganisation/Commisioning/Wordclasscommissioning/index.htm.
41 Partnerships in Public services: An Action Plan for Third Sector Involvement, OTS (2006).
44