The role of procurement in (not) reshaping public services

Below is a paper I used as an intro to a working group looking at issues around procurement and its role in holding back service improvement. We’ll be writing up some conclusions or ideas next, so all thoughts gratefully received.

Put yourself in the place of a Director of Adults or Children’s Services in a Local Authority in the UK. In both areas you have rising demand for services. In adults services an ageing population and more disabled children surviving to adulthood are long term trends adding to the numbers. In children’s services the Southwark Judgement and the recent increase to the fostering age to 21 are creating upward pressures on demand without significant funding to support them. Each awful childcare case we read about, whether Baby Peter or Victoria Climbie, puts further pressure on the service, as social workers seek placements for more children who are cause for concern.

Into this context you have demands for cash savings of 20% or more over the next few years. So what can you do?

Traditional belt tightening

You can tighten access to services and ensure that significant cost decisions, to take a child into care for example, are not taken by individual social workers but go through resource panels that look at the case in comparison with others.

You can cut any non-essential or non-statutory services, those that you don’t have a legal obligation to provide. These are often the “softer” services, those that may prevent cases from occurring in the future. Their effectiveness is often uncertain, in part because the cases they have supported are not effectively monitored for long periods afterwards so the data on what happens next is not available. So the services are vulnerable.

Both of these have already been done in many places.

Wider reshaping

Or you could try something more radical. You could invest more, not less, in prevention or “demand management”. By providing more support for families earlier, you could keep more of them together, providing children with a home to go to in the long term. Or you could develop new models of care, such as the shared lives model in adult services, or supported living in the community rather than institutional care. These types of changes have the potential to create a more sustainable, lower cost model with better outcomes for everybody.

So how would you go about it? As an example here are some of the challenges in putting in place a preventative programme in children’s services:

• Finance departments are wary of “invest to save” arguments. They know they will see the “invest”, but will they receive the “save”? They will need some convincing.
• How would you target your potential families to support? How many families are in trouble, in comparison to how many end up in such trouble that children need to come into care? If you don’t get your referral criteria right, you’ll be supporting a bunch of families who may benefit, but who wouldn’t have cost you money down the line. You’d just be spending money.
• What support programmes or interventions would you use? Which ones work? What evidence do you have that they do?
• Who would provide the support? Should you build an in house team, or find a charity, social or commercial enterprise to fill the role?
• If you do free up placements, will worried social workers start referring other children, knowing there are now other places available?
• How would you know if you were being successful? Can you monitor those you have worked with for long enough to know what happened? Do you need to not work with some, to see what happened to them, and determine what might have been, and therefore whether you are working with the right families or not
• Having established what services would make a difference, you find that they aren’t available locally. How do you enable the internal or external investment required to set them up?
• How do you set up your new system flexibly enough that you can learn and adapt as you go, shifting resources to where the work seems most effective?

Most of the issues outlined above are soluble. Effective analysis of the population, intervention evidence and available market of providers will provide a strong starting point for version one of the change programme. Monitoring systems can be set up to provide the feedback loops needed, and outcome oriented contracts can enable the flexibility to end up with a system that can adapt and learn.

One of the trickiest issues left is procurement. To build a new system as outlined above requires partnership between government, private and civil society sectors, use of feedback, adaptation and learning in order to get to the right answer over time. Procurement models therefore start with a set of implicit assumptions that reliably get in the way of developing the right answer. Here are some of them:

• We can with enough thought, plan out a complete answer at the beginning and then procure it.
• The commissioner knows enough about what it needs to specify it in the procurement process
• We can effectively split the design phase and the implementation phase
• There is an effective market of provision available for whatever I want to procure
• Service providers will be willing to contribute all their ideas, and invest considerably in the process, before we run an exercise where we may have to exclude them if they have any perceived advantage from the investment they put into the design phase.
• Contracts should specify exactly what is to be done and for how much, and can’t be adapted based on the learning thereafter, particularly if that adaptation may mean that in retrospect another provider should have won the competition for the service.

In other words procurement is stuck in a world of linear strategic planning, while services exist in a complex environment with a variety of interdependencies and unexpected shocks. Redesign needs reasonably rapid iteration, feedback, and adaptation in order to be effective. If one of the reasons for government to outsource is to enable innovation and wider development of the provider market, then it seems a pity if the method for doing so leads to a rigid, unadaptable supply chain which has little ability or incentive to innovate in order to generate social outcomes more effectively.

There may be good news. New European procurement directives may help. As I said at the top, we’re writing on this over the next few weeks so should be back soon.