Procurement
A key element of the commissioning cycle is the procurement phase, which includes an options appraisal and decisions on the most appropriate funding approach for the services required. While this can be a complex technical area, there are essentially three ways of funding local services which are of relevance in commissioning services from VCS organisations:
Grant funding - a 'giving' approach, where the commissioner provides general support or a contribution to the service provider - the latter deciding on the best use of the funds. The public sector has been grant funding VCS organisations for many years, supporting the notion of a strong civil society which can grow and develop independently of any form of government. However, it is now apparent that most funding for VCS organisations is coming from commissioners that have a greater interest in the activities of VCS organisations rather than survival of the organisations themselves.
- Investing or capacity building - an 'investment', approach where the commissioner seeks to develop a long-term outcome from the spending, such as a policy change or an improvement in the capacity of the organisation or sector to deliver what is required.
- Procuring - a 'shopping' approach, where the commissioner seeks a provider who can deliver a specified service under some form of contract. With this approach, the commissioner is concerned with the cost and quality of service delivery and may use a competitive tendering process involving a range of relevant organisations (public, private or VCS) to secure the best service provider.
Given the demands on them, councils are now placing more emphasis on 'shopping' approaches to procurement rather than the informal ‘giving' mode of grant funding. In this context VCS organisations need to become as efficient and outcome-focused as the authorities that fund them are required to be. However, it will still be important for councils to maintain a mix of funding regimes, e.g. if 'giving' is withdrawn completely, some of the most disadvantaged communities and citizens, new initiatives and entrepreneurial solutions may be stifled or lost and, equally, without some 'investment' funding, VCS organisations will not achieve the required capacity to deliver high-class services and make a serious contribution to policy planning and implementation.
A consistent challenge within any procurement process is the way that local authorities encourage a diverse and competitive supply market which includes sufficient involvement from VCS organisations. Nationally, councils currently spend over £3billion each year contracting with the VCS to run public services and the statutory sector has become the largest source of income for many VCS organisations. Despite this, there is a significant body of research which suggests that much more needs to be done to make public sector procurement practices a competitive 'level playing field' for the VCS.
