Understanding the Public Services Industy

Public Services Industry Review
4. Inflexibility during the contract delivery phase
4.32 Essentially a commissioning process has two main phases of interaction between
the contractor and provider: pre- and post-contract. The pre-contract phase includes
discussions around the details of the contract specification and the costs of delivery,
leading to the selection of preferred bidder and contract signing. This phase is
inherently and rightly competitive both among bidders and between the bidders and
the commissioning authority. The second and much longer phase is post-contract
delivery which involves ongoing project monitoring. During this phase the two parties
need to work together to respond appropriately to any unforeseen changes that impact
on the delivery.
4.33 Private and third sector stakeholders have commented that the working relationship is
often better before contract signing than after. Once contract monitoring commences
the attitude of the public sector commissioners is often inflexible towards dealing with
changing conditions. This stifles innovation over the course of the contract and, in the
worst cases, may jeopardise its overall success.
4.34 As discussed in Section 2 there is significant empirical evidence that a collaborative or
partnership model of working achieves good outcomes as both parties have incentives
to be pragmatic in responding to changing conditions. This view was echoed both
by stakeholders in the private and third sectors and those on the commissioning
side, with the proviso that relationships need to be managed so as to ensure that
competitive neutrality is not compromised.
4.35 The term partnering is used widely within government and the private sector,
but has no commonly agreed definition. It is an umbrella term to cover a variety
of collaborative arrangements, behaviours and working practices. When used in
this context it does not refer to formal commercial partnerships as defined by the
Partnership Act 1890. Partnering arrangements can vary widely in scope, from
loose working arrangements operating under agreed principles, to a formal PFI
contract. The term PPP (Public Private Partnership) covers the broad range of more
formal contractual partnering arrangements. A summary of the range of partnering
approaches is provided in Figure 4.3, ranging from the most to least flexible
arrangements.
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