This briefing paper is one in a series developed by IPC for the National Market Development Forum. In light of the government commitment to press ahead with the choice and personalisation agenda in public services, as well as its determination to extend the range and number of social care services delivered through social enterprises, this paper examines the likely impact of those trends on local authority tendering processes. It focuses on problems with existing competitive tendering procedures, new approaches that might be adopted, and the implications of those new approaches for commissioners, providers and users of social care services, and the relationships between them.
The paper begins by setting out some of the perceived limitations of current tendering in a new social care market, such as a failure to adapt to an outcomes focus, the high cost of the bidding process –especially prohibitive to smaller providers – and a formality and rigidity unsuited to modern, innovative service provision.
Having assessed the different priorities of commissioners, providers and users, and the changing relationships between them in the context of the personalisation agenda, the paper looks at some of the outstanding issues facing providers in the changing market, such as higher transaction costs in moving from a single to a large number of purchasers, the potential for market destabilisation if block contracts disappear entirely, and further disadvantages to smaller providers if there is a greater emphasis on marketing direct to the user.
The paper then sets out some of the alternative contractual arrangements local authorities are already exploring to reflect this changing landscape, including:
- Guarantee contracts
- Fixed-price procurement
- Aggregated contracts
- Outcomes-based contracts
- Framework agreements
- Approved provider lists
It concludes with a survey of outstanding issues that future tendering arrangements must resolve, based on expert input from National Market Development Forum members.
