There has been much talk in recent years about the need for public sector procurement of services (in particular) to focus more on outcomes rather than specifying in detail the activities that the supplier will carry out.
That principle can be applied to many services, from cleaning to professional services, but it is perhaps most relevant when we consider complex services that are delivered to the citizen rather than to the public sector itself. So, in the UK (and some other countries), that classification might include;
- Health services
- Social care – help for elderly people in their homes, for example
- Public health services – such as smoking cessation, drugs treatment, or health education
- Employment services – training, help for people to get into or back into work
- Probation and prisoner-related services – e.g. working with offenders
In all these cases, it is conceptually easy to see how and why it is outcomes that are important. In the case of elderly home care, the desired outcomes are that the person feels safe and happy, is enabled to live at home longer (rather than going into full time care or hospital) and has a better quality of life. For probation services, the key outcomes are around fewer people re-offending, less often.
However, there are still many case studies where the buyers (commissioners) have struggled to move to an outcome based approach. Even where there has been some payment based on outcomes in UK programmes, often the supplier still has to carry out specified tasks and is largely paid or monitored based on those.
That’s why a presentation we saw this week at the eWorld Procurement and Supply event in London was so interesting, even inspiring. Craig Brewin, Head of Commissioning at Slough Council, talked about his authority’s experience of true contracting for outcomes. We will have more detail on the “how” they go about it at a later date, but while their track record is impressive, his session also made it clear why some organisations have struggled to implement this approach, even it if appeals conceptually.
The first barrier is psychological – real contracting for outcomes means there is no detailed specification for the work to be delivered. In the examples Brewin described (all contracts which have been awarded), the specification is purely defined in terms of outcomes (which do range from quite specific to much higher level). So, there is no instruction around “you will provide x people for y hours to do these tasks, using this type of system, then report to us like this” – the sort of “spec” many of us are familiar with from many years of traditional procurement.
Rather, the potential suppliers focus on the desired outcomes and they determine (and explain in their bid) what they will do to achieve those, what resources they will use and how they will show success.
The second big issue to face is the role of price in the bidding process. When multiple suppliers are all bidding to provide a very similar service (or similar goods) then of course the price comparison is and should be a key part of the selection process. But if very different approaches are being proposed, and perhaps varying outcomes, it is hard to look at the whole and select the “best” offer if prices vary widely too.
So, Slough again have done something that is brave and goes against much of our usual procurement training – they tell the bidders what the budget is. Now that is also useful in many of these spend areas because the budget is in effect capped or fixed anyway. But the beauty of doing that is it takes away that whole element of evaluating and scoring price and meshing that together with the non-price factors. The suppliers can then be assessed purely on how their proposal will deliver those outcomes.
Another issue then is the need for real expertise in evaluating the proposals. Because you may get some very different offers, not just five slightly different variants on a theme, it is essential to have real expertise in the evaluation team – people who can understand the probability of each proposal really delivering the outcomes, and can examine the credibility of the offers.
These are we suspect just some of the aspects around contracting for outcomes that make delivering that approach harder than it might first seem. But the benefits in terms of innovative solutions, delivery of desired outcomes and value for money achieved can be considerable and make this approach well worth pursuing.
#Articles and Perspectives
#Public Procurement Measurement