Preferred Provider Frameworks: dodgy recession-time procurement?

Fiona Sheil was responsible for co-ordinating NCVO’s programme of seminars, training and advice work on public service commissioning and procurement. Fiona left NCVO in October 2013 but we have retained her blog posts for reference.

We’re seeing a rapid growth in the use of preferred provider framework structures – those waiting rooms for pre-qualified providers – across public procurement. Yet policy and research on the efficiency and efficacy of these frameworks remains scant; learning is siloed within separate welfare programmes; and Government is yet raise a co-ordinated debate on their usage.

So how do they work, and what effect are they having on procurement? How is the sector experiencing these frameworks? Early this year a range of commissioners and voluntary and community organisations (VCOs) met to tell us their experiences. Here are their thoughts.

First up: what are frameworks?

Rearing up under a variety of different titles – Preferred Provider Lists; Frameworks; Call-Off Frameworks – frameworks provide an intermediary shortlist along the procurement process. Providers enter the frameworks on passing pre-qualification, and here they sit, awaiting potential contracts or referrals to be ‘let’ (released) at the commissioner’s discretion.

Criteria for entry, and the numbers who make the grade, are equally discretionary (although, in line with procurement law, both selection process and criteria must be proportionate, transparent and relevant to any future contracts).  Frameworks typically run for 2-5 years. Some are very tight on numbers of entrants (3-10), while others are simply open to all organisations who pass standard Pre Qualification Questionnaires.

Why are they so recession friendly?

The advantage of having this ready qualified store of providers is the immediacy of being able to put them to work. In these years of fast-cuts and rapid policy shifts (back-pedal? fast-forward? both?) commissioners don’t have the easy foresight of yore. When social needs are in recession-induced flux and resources (either in the market or in the bank) are liable to excitement and change, the luxury of being able to plan ahead for procurement is all but lost.

Frameworks allow commissioners to have a store of providers ready for contracts and referrals at short notice, yet don’t commit commissioners to letting any contracts until they’re ready and affordable. So maximum market readiness, a nicely controlled pool of providers, and no financial commitment.

But by capitulating to the current pressures and using frameworks to enable ad-hoc and last minute procurement rather than using a planned procurement strategy with longer lead-in periods, what are the impacts?

But if you’re not at the party…

The first downside then is potentially far less planning by commissioners. And that’s not only around procurement, but around developing market capacity as well. By having at hand a ready pool of qualified provider, will commissioners take their eye on developing new providers, and using the diversity of the market to develop effective competition and collaboration.

In operating a closed framework of providers, how do new ideas and new providers break in? And once resources have been spent on the framework qualification process, will commissioners feel it must be their main tool, at the cost of other procurement methods (developing consortia (PDF 508); grant funding)?

Theory into Practice

As always, the answer to these depends on the quality of the commissioner, and the resources and skills at their disposal to balance short-term ease with longer-term market development. Having seen frameworks operating in a variety of welfare markets across the country, our VCO and commissioner advisors raised the following (a) concerns and (b) recommendations.

Concerns for VCOs

• There can be substantial costs for VCOs to get on to a framework or to establish a framework, and potentially no call offs;
• Information on framework procurement timeframes, advertising, and call-off periods are not always well communicated (but that can apply in any instance when procurement isn’t well managed);
• Frameworks may be so fluid that entry to them is not a useful spending of a VCOs time;
• When run as prime provider frameworks (as with the DWP Work Programme), costs are reproduced down the sub-contracting chain (but again, this is a wider issue of poor procurement and risk shunting);
• If organisations commit to certain cost structures on entry to the framework, these may become fixed and therefore unfair if costs to the provider change over the lifetime of the framework;
• Frameworks can act as an unfair price controller. Experience of many organisations entering frameworks for personalised services is that they are price capped, therefore commissioners are creating artificial controls over the market, and reducing scope for innovation or quality improvements.

Concerns for commissioners

• Commissioners reported that frameworks don’t often have the functional advantages for which they are initially intended, and called for more training and advice is needed to improve their usage;
• Frequently reported that staff who begin frameworks move on, and their original clarity of purpose is lost in staff transfer. This is in part because frameworks – as with other contracts – are often developed by single staff members, so there isn’t a shared clarity across commissioning teams;
• Frameworks can skew commissioner focus to the small band of providers on it, to the neglect of the rest of the market. This could miss all the richness of engaging with emerging organisations and with VCOs who were unable to enter the framework for business reasons (eg scale). With this distance public bodies lose access to those additional resources in non-provider VCOs, as well as their understanding of local needs, causes, and solutions;
• The comparative costs and appropriate use of different terms and structures for frameworks isn’t understood, making it difficult for commissioners to take informed decisions on when and why to use them.