Back in April we revealed that voluntary sector income from government fell by £1.3bn between 2010/11 and 2011/12. A significant drop, made all the more remarkable because overall government spending fell at a considerably lower rate during the same period.
NCVO recognises that the voluntary sector shouldn’t be exempt from efforts to cut costs, but more could have been done to avoid our sector having to shoulder a disproportionate share of these cuts.
Partially open public services?
Poor commissioning and procurement practice persists. The Government’s open public services agenda has failed to create the level playing field that was first envisaged. This is preventing many organisations wanting to deliver high quality public services from entering the market, or winning the contracts that have replaced grant funding arrangements.
Later this year a suite of new EU procurement reforms will become law, which if implemented correctly, have the potential to help buck this trend.
The reforms
- A new ‘light touch’ regime for ‘services to the person’ with a new financial threshold of €750k. Public bodies commissioning services below this amount will not have to follow EU procurement rules, thereby providing greater scope to integrate wider policy objectives into procurement.
- Public bodies may decide to split larger contracts into smaller lots, and explain their reasons for not doing so. This could help smaller charities take on a greater role as service providers.
- An increased emphasis on consultation before and during the tender process to assess user need, help gain a better understanding of the feasibility of delivery, and understand the capacity providers to deliver, and develop, where necessary the market.
- The introduction of a new ‘innovation partnership’ procedure which allows public bodies to engage with suppliers to procure innovative services that are not already available on the market place.
- A ‘turnover cap’ preventing local bodies from demanding an organisation’s turnover is more than twice a contract’s value.
- Certain ‘services to the person’ can be reserved for organisations that have a public service mission; who reinvest profits to achieve their objective; and whose structure is based on participatory principles.
New rules, need new training and guidance
These developments are definitely a step in the right direction. However, the reforms by themselves are only one small slice of the commissioning pie. Many of the problems associated with public procurement relate to poor decision-making. Consequently commissioning will only ever be as good as the officials applying the rules and making choices.
In partnership with NAVCA, SEUK, Locality, Children England, Co-operatives UK, Compact Voice, Clinks, Big Society Capital and Drugscope we have urged the Government to ensure local bodies understand and apply the new rules correctly. Simply creating new rules and leaving commissioners to get on with the job will not result in a more efficient and effective process. High quality guidance and a comprehensive training offer to accompany the reforms will be essential. This should make clear that:
- Commissioners are aware of the advantages of procuring smaller contracts and their obligations to explain their reasoning when they fail to do so.
- Contracts below the new threshold of €750k are not subject to EU procurement rules, while highlighting the advantages of other funding mechanisms such as grants, particularly where specialist, niche or innovative services are required.
- All commissioning activity should seek to achieve wider economic, social and environmental benefits to help deliver better value for the public pound.
- Commissioners must consult with providers and users to ensure services are responsive to local needs, and to inform providers of their plans and requirements.
- Local bodies must ensure a proportionate approach which reflects the complexity of the contract and the time required for writing tenders.
If the Government is to realise its ambitions for a truly open public services market, then getting these new reforms right is not an option, it is a necessity. We’ll let you know how things progress. In the meantime, let us know your views on the reforms and what they might mean for your organisation.
Paul joined NCVO over seven years ago after working for a leading public affairs agency. Since then he’s led our policy work on a variety of issues, including welfare-to-work reforms, volunteering, the Compact, public service commissioning and procurement regulations. He now leads our work on funding and finance with a particular focus on charity tax relief and safeguarding EU funding post-Brexit. 
