3 simple lessons when relying on reports

The Kids Co demise has been well documented and some of the lessons for procurement have already been drawn out by Peter Smith, for example, the need for contract management and sufficient reserves. However, today we have learnt that two separate  'independent' reports were cited as evidence of the good work of Kids Co which we can also learn from.

The reports were cited by Kids Co and probably swayed some funders decision making. I would suggest that perhaps funders may well have been naive and that those who based decisions on 'evaluations' need to look much more deeply before being influenced.

The first question worth asking was 'who funded the report'? Well one of the reports was funded by Kids Co and the other appears to have had Kids Co covering the costs. It's not unreasonable to see the potential conflict of interests.

Next, 'what was the purpose of the report'? Neither of these reports appear to have been outcome evaluation reports or indeed value for money reports. One was written by a Professor and leading psychologist who benefited from studying "the language of love". The second focused on the children who used the services of Kids Co.  The reports may well have been fit for purpose but that purpose was not one of commercial due diligence.

Thirdly, 'what was the approach to ensuring rigour'? I could be wrong, but neither of these reports seem to have been subjected to peer review which would have considered the research approach, reliability and validity.

Those three simple tests may have shone the spotlight on the weaknesses of relying on the reports. While it is easy to see the weaknesses we also need to reflect on those same points within a procurement environment, for example, when commissioning reports, when drawing on reports as part of a bid evaluation process, when taking the advice of 'independent' experts particularly in preparation of specifications. Caveat emptor as they say.

Can public procurement harm society?

Yet again we hear claims that public procurement processes are having a detrimental impact on society. The problem appears to be a trend towards contracts as opposed to grants. It strikes me that there is a misunderstanding in the minds of some procurers that grants are perceived as bad, while contracts are perceived as good. That just isn't true, both are options and the procurement professional needs to be able to help funders in that option appraisal and select the right choice.

Julia Unwin’s ‘The Grant Making Tango’ probably provides the best guidance for procurers but there are other sources. To me it is a must read for any procurement professional in setting out the options appraisal for the procurement decision of Grant V Contract.

The guide basically refers to purchasing as ‘Shopping’ (what we prefer to call procurement and contracting) and then differentiates grants as being either ‘investing’ or ‘giving’.

You ‘give’ when you want to be associated with a good cause and don’t expect anything in return; a bit like the Christmas ideal. It may be that the ‘giving’ organisation will be more than satisfied if it is given credit in say the local theatre’s advertising as a sponsor.

‘Investing’ is different.  You invest when you want something to take place which wouldn’t otherwise take place.  For example, there are no providers in the market and you want to ensure some service provision takes place or alternatively you want to ‘market make’.  In such a situation you would expect there to be performance management in place to ensure the funder obtains the intended outcomes for the funder's investment - a form of contract management.

It is selecting the wrong option which is causing the harm, yet at the same time there is a need to help previous grant recipients navigate the change if contracts are now deemed most appropriate. 

Aside from this there are the commitments of the Compact (and in local government Local Compacts and the Small Business Friendly Concordat) which should be understood by procurers.

This isn't easy stuff but it is not complicated, nevertheless it causing trouble in the market and difficulties for those whose primary intention is to 'do good'? 

The Probation's Dilemma

I'm sure many of you are familiar with the Prisoner's Dilemma - perhaps through the scene in one of my favourite films, The Beautiful Mind, when Nash outlines how his college friends can all 'get the girl' through collaborating together. I think today we saw a new iteration, The Probation's Dilemma.

Previously we have discussed problems with the potential outsourcing of prison services, now we've learnt of plans to outsource the probation service. Personally I think this creates a real dilemma.

1. The first problem is that already there is speculation one of those potentially in the frame for delivery are G4S.  Rather than revisit old ground and boring you, all I will say is: Olympics security delivery, black-listing, and Home Affairs Select Committee.
2. Second, there is the potential power some of the providers may gain in service delivery, namely, providers of tagging, prisoner transport, prison management and, now possibly, probation services. That's a lot of eggs in one basket and a lot of risk with a very small supply base who could start to have so much power they could hold the MoJ to ransom. 
3. Third, there's the problem with making Payment by Results work - specifying outcomes and contract management. Yes, Chris Grayling was one of the architects of the DWP Welfare to Work Programme, but to me that should still be treated as prototyping and an opportunity to learn. 
4. Fourth, there's the not insignificant problem of very unhelpful impact the austerity strategy has had on the third sector who have a good track record in supporting ex-offenders. The third sector are frustrated with their perception of the Work Programme and many have suffered considerable pain as a result of the austerity measures; many are struggling to survive and have been forced to make redundancies. It's all very well offering the carrot of £500k to help them prepare to bid but could this just be a little bit too late?  Have we already lost some of their innovation and creativity in service delivery by being 'penny wise and pound foolish' in short-term procurement strategy? If you were a third sector organisation would you have enough confidence that the probability of success will justify the costs of bidding?
5. Fifth, we have the lethal mix of third sector cashflow and payments by results - will potential third sector providers be able to cross subsidise an unproven government 'good idea'?
6. Sixth, is the readiness to change - it certainly doesn't look as if those who already work in delivering probation services have welcomed this initiative with a fanfare of endorsement!    

So, as I see it, that's The Probation's Dilemma: the need to blend that difficult mix into a success for all the stakeholders so that they each perceive a 'win' - given questions about the MoJ procurement capability and the risks involved: Beautiful Mind or Beautiful Dream?

On Social Impact Bonds

Social Impact Bonds are quite an innovative 'payment by results' approach which includes up front investment - you can find good explanations of SIB on the Social Finance and  Young Foundation websites

However, you could paraphrase SIBs as: 'PFI meets Big Society'. Similarities being the drawing in of investment to drive an outcome-based delivery which, had the public sector not been starved of cash, would normally have been public sector funded and managed. They should encourage innovation and be user focused in design (something which we have discussed over the last few days).  Of course investors expect a return, which they are due if the designed intervention works. That return can be a long way away.  Some big issues must be that:

Third sector health warning for addicts

There’s a touch of irony in today’s reports that Cabinet Office enforcers will punish mandarins who opt not to implement government policy, while on the same day we learn that third sector organisations, providing specialist support to NHS patients addicted to prescription drugs, believe they are the victim of a badly designed procurement process that could force them to close.  What happened to Third Sector Commissioning and the Big Society?  This is one example of policy failing to be implemented in  the procurement practice.

To cut a long story short, it appears a new tender approach is underway that requires a comprehensive service in which only bidders which provide support to alcoholics and those addicted to illegal drugs, AND those addicted to legal drugs are eligible to compete.

While I am an advocate of category management, category management needs to be pragmatic.  It has to include understanding the market and how the market works.  It also has to ensure that any bidding which takes place does not stand in the way of making the market work.

However, the approach strategic commissioning is even more baffling. Government and NHS approach to commissioning is to include dialogue with both users and the market as early as possible in order to shape the service.  Third sector criticism of this tender would suggest that dialogue did not take place – can we also assume that specifying outcomes may also have been set aside?

Bizarrely the change in tender approach is being blamed on NHS cuts, yet,

Commissioning on a wing and a prayer

We have been inundated with discussions around the Work Programme and the associated  communications debacle.  For example, the coincidental removal of what appeared to be inconsistent guidance from the DWP website and my own comments on the due diligence associated with the appointment the 'Tsar of Contract Manipulation'.  However, I now want to draw on some insights from an  excellent academic paper which strikes me as pertinent, namely Don Harradine's paper published in Public Money and Management.

Don explored a different DWP initiative, 'LinkAge Plus', and interviewed staff from DWP, a local authority and the third sector. His findings are intriguing and resonate with some of my previous blogs:

• Proposals were developed in haste for political expediency while funding was available and it is was therefore accepted they would be flawed;
• Pilots were agreed and funded partly to justify a political agenda;
• DWP were reluctant to probe potential third sector providers' quotation costs: "if they say they can do it for that cost, that will do me"; 
• Third sector providers though lacked sufficient financial expertise to understand the relative costs associated with service delivery;
• There was a lack of agreed definitions on some aspects of contract delivery, for example, what constituted 'a contact';
• Third sector providers acquiesced on agreement of targets just to obtain the funding, even though the targets were not understood.

We need to be wary of reading across too much from Harradine's research to other DWP programmes, but