Tag Archives: procurement and innovation

Report on DWP procurement recommends locality commissioning

5 Sep

Image My recent report on the Work Programme procurement model incentivises large companies at the expense of smaller, local more innovative suppliers, many of whom are suffering cash flow problems. 

The DWP Work Programme Procurement :delivering innovation for efficiencies or for claimants is available on http://www.mbs.ac.uk/cgi/apps/research/working-papers/view/?wld=239 looks at the impact of the procurement model on the capacity of more innovative suppliers to appropriate, response and holistic services to long term claimants. It’s conclusion is that the ‘payment by results’ and two-tier model of prime,large contractors and specialist subcontracors looks neat from a policy maker’s perspective but is not delivering results and is frustrating both large and small companies

Within recession finding a job is difficult even for those with experience and extremely difficult for anyone who is vulnerable and is a long term unemployed claimant. What makes a different to those outside of the labout market is a whole range of services and easy access to new experience and training- such support is best provided by local agencies working together with the third sector(vol orgs) and local training providers and business.

The Work Programme is driven from the top through a vertical supply chain that makes such local integration extremely difficult. Local consortiua in Manchester and Cornwall complain that prime contractors are ignoring the significance of their inter-agency support and innovation. Existing innovative agencies have found that becoming a sub-contractor does not ensure work and many with contracts are suffering cash flow problems because their contribution to a person’s development is not paid for until a clamiant remains in work for  over 12 weeks.

There are many suppliers who remain very committed to the programme and are doing good work but few smaller contractors are able to function in a way that delivers more innovative services. Financial incentives and this type of supply chain are devised to persuade large companies (prime contractors) to carry the risk of lengthy delays – moving the financial risk of the programme from the taxpayer to  large companies with considerable financial assts. The size of their contracts and poor results have resulted in a lot of very negative press publicity.

However, the problem is not just with a few large companies creaming off huge contracts but with the government procurement practices and commissioning frameworks which allow this to happen.

This report analyses the whole system and way that the procurement model is affecting the capacity of smaller, enterprises to delive integrated and holistic personal services. And as such is relevant to the public procurement of personal services generally. The two-tier model which is geared towards contracting with fewer and fewer large companies at the expense of local suppliers in all sectors- the current public procurment model is actually undermining locality innovation and thereby locality resilience among the unemployed and small business and the third sector.

There has to be a better way of supporting people back to work that through a two-tier procurmment model. The report recommends locality commissioning  and the devolvement of DWP funds to locality partnerships which have integrated strategies for enterprise and training and development.