What is commissioning and procurement?

Commissioning is a series of interlinked processes that include a robust analysis of need, development of policy and creation of service models and delivery capability to meet these identified needs. This is intended to enable the purchasing of services in a timely, efficient and acceptable way that meet the requirements of quality and cost effectiveness. Once they are purchased, it involves managing performance and seeking service improvement through relationships with providers and other commissioning partners.

Procurement is the process involved in identifying and selecting a provider of goods or services within the context of this broader commissioning process. Public sector procurement is governed by he UK regulations that implement the EU procurement directives although in the case of most services commissioned within the homelessness sector it is EU principles that apply. These are the requirements for non-discriminatory specifications and contract award notices.

You can think of commissioning as shopping around (the process of deciding what is needed) and procurement as buying (the process of purchasing what is needed and you have getting value for money).

Full descriptions of the policy context and procurement processes are laid out in:

• The Sitra Procurement Guide funded by the Department for Communities and Local Government

The Office of Government and Commerce’s Policy and Standards Framework is an on-line portal to guide you through the key principles and processes of public procurement, helping you understand "what to do" and "how to do it". A good starting point is ‘An Introduction to Public Procurement.’

The problems and issues

The introduction of the Supporting People (SP) Programme shifted funding for most homelessness services from the former Housing Benefits/grants-based package to commissioning at a local level. Initially the focus was on stabilising existing provision, raising quality and demonstrating strategic relevance. Over the last two years a range of supported housing services have been under review and re-commissioned.

Commissioning is very important issue for Homeless Link member organisations, as a significant part of their income is gained from providing commissioned services. Some of the concerns are that:

• Commissioners will decide that its easier to commission fewer larger services that appear to offer economies of scale and make contracting easier, leading to a reduction in diversity in service delivery, impacting especially on smaller organisations.
• That the focus on value for money (VFM ) in the commissioning of Supporting People (SP) services is placing pressures on service quality.
• There are issues with the complexity of the commissioning process
• There are often short procurement timescales and criteria that exclude smaller organisations
• Decommissioning and shorter term contracts will impact on service delivery
• There is an increased focus on outcomes in the commissioning process
• There are issues with the expertise of commissioners
• There is a need to look to develop consortium models

In response to these concerns about the commissioning process, Homeless Link has responded by running a member survey to understand the main issues and collect evidence.

Overall the results show that respondents’ experiences of many of the aspects related to the commissioning process are mixed. Experiences of forming consortium bids and the increased focus on outcomes were both mainly positive. Conversely, experiences relating to application timescales, the knowledge and expertise of commissioners in public bodies, and the increased focus on price rather than quality, were all mainly negative.

The London Housing Foundation commissioned Supporting People and small homelessness organisations reporting in early 2008 in response to similar concerns. The report found that commissioning was yet to have a major impact due to the first wave concentrating on floating support, but found there was concern about future developments. It reports fears that smaller providers will be at a competitive disadvantage due to a lack of expert bidding capability, a perceived lack of capacity and issues over the value of the tender in relation to their turnover.

Commissioning, when undertaken with expertise and based on a robust analysis of need and understanding of market, is intended to build services around the needs of the service user and to deliver outcomes in the most efficient and effective way. Although, the question has been raised around whether procurement is the best method of providing homelessness services, there is no obvious alternative. The contracting/tendering process can work for homelessness organisations that position themselves to take advantage of it.

To adapt, organisations providing homelessness services need to learn new skills and there are resources that can support them to do this. Organisations need to be able to provide services that are understood by others and demonstrate the outcomes of their activities, develop negotiating skills and work with other partners.

Area-Based Grants

Under Government proposals, Area-based Grants (ABGs) will bring together all local authority and some health budgets into a single pot, including SP, but joint budget partnerships will take some time to develop locally. It is likely that services will be increasingly commissioned from pooled resources and it will be vital that housing and homelessness services can demonstrate that they offer quality services, demonstrate impact and outcomes and are responsive, efficient and cost-effective.

Further reading

• Acevo's Full Cost Recovery website provides information and support around implementing full cost recovery, including a full cost recovery toolkit.

• Improving Support brings together resources, evidence and good practice to strengthen support services available to third sector organisations.

• The Social Enterprise Coalition has produced a free guide: More for your money - a guide to procuring from social enterprises explains why you should consider procuring goods and services from a social enterprise, and what you can do to encourage social enterprises to successfully compete for contracts.

If you would like to discuss any of the issues or if you have suggestions for additions to this page then please contact lisa.reed@homelesslink.org.uk

See the next section on How organisations can prepare for the commissioning process