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Contract procedures for care often prevent parties reaching satisfactory results. Home care director Nigel Walker proposes a six-staged approach that is open to scrutiny and meets the requirements of Best Value.

Current contracting developed in an era when cost was king and the principle use of contracts was to buy products rather than services.

Most contracting processes have been driven by lawyers and accountants, while in the provision of care, commissioners and service users have been somewhat peripheral to the process. Commissioning policies usually reflect a process driven by timescales and hierarchy with little emphasis on quality. Many commissioners have not priced contract requirements and so have little idea of what to expect by way of responses. Nor, if prices are significantly different, have they always tried to find out why, budgetary needs often being a key reason for commissioning services in the first place.

Equally, providers of services have not often challenged procedures, preferring to be compliant in order to have a better chance of winning contracts. They have assumed that commissioners know what they are looking for and understand pricing structures and methods of service delivery. But commissioners' understanding is often based on internal markets.

Small providers are sometimes content to quote low prices to secure work and trim the margins of service delivery, training and staff conditions to stay in business. Where this has not been the case providers have had no desire to be transparent if they feel profit margins are significant.

The secrecy of the process on both sides has not led to user-driven or quality services, although some local authorities and providers are using more informed methods now as a result of past mistakes.

The creation of the National Care Standards Commission changes the basis upon which service provision is made. The bottom line for both providers and commissioners is that it is easier to arrive at prices for services where the quality standards are set and can be relatively easily priced by either or both parties.

An earlier article in Community Care ("Contracting for care", 22 November 2001) suggested that new national standards could be taken further with the introduction of core specifications, contracts and pricing mechanisms.

There is no reason why new commissioning processes that better reflect the Best Value and social care agendas could not follow. With the increase in joint commissioning between health, social services and housing departments and the likelihood of far less local political involvement, now is the time to consider the options. Here is a model of such a new system of contracting.

The new process should have six stages. The first would entail a written specification of the sort of provider commissioners would want to award a contract to. This could include details of the size, stability, experience, financial viability, health and safety record, employment record and the legal standing of the company. Although this information is commonly sought in tenders it is not prepared as a specification.

The specification should contain a statement about what the commissioners hoped to achieve by the contract and may contain preferences such as whether the providers would be not-for-profit, local or national, already operating in the area and so on. This gives a reasonable amount of information to help providers consider whether to enter the tender - usually a costly process. The writing of a specification in this way has the benefit of enabling consultation with service users and carers too.

The second stage allows a pre-tender assessment against the specification. Providers will, in making their pre-tender submissions have an opportunity to show how they meet the criteria and their record in delivery in service areas. Pre-tender documentation can be transparently marked against the set criteria in the same way job applications are. This would give a short list of suitable providers for commissioners to take to the next stage but has the benefit of cutting non-compliant providers out of a more complex third stage.

The third stage aims to give commissioners a chance to understand the quality of the provider. This is achieved through a series of interviews and site visits, more detailed examination of strategic, policy and other supporting documentation and administrative aspects of service delivery, consideration of quality assurance and audit measures and aspects of current staff and user views of the provision made. The commissioners will decide the level of quality, though it will affect price.

At the end of this process the providers that are in the full tender stage should be evaluated using a scoring system that is transparent. Potential users and carers of services could also be involved as a matter of good practice.

As part of this third stage providers should be asked to complete a spreadsheet showing the financial assumptions and pricing of the contract. However, the pricing should take no part in the initial prioritising that results from stage three. Instead the examination of the pricing mechanism should form a separate exercise - stage four.

This involves an intimate examination of the costings and assumptions made by the listed providers. The provider who tops the prioritisation list is considered first. During this stage the provider has to discuss all their assumptions in arriving at the price and be prepared to agree new assumptions with the commissioner if agreement can be reached. This should be an open and honest exercise on both sides and would lead into annual open book accounting that re-examined those assumptions.

The assumptions would cover costs based on local conditions, registration and administrative matters, staffing issues and quality and management measures as well as surpluses or profits and agreements about how they are used. This leaves significant control with commissioners to detail quality as well as cost, and ties providers to the result. If the most preferred provider and the commissioner cannot agree, the process continues with the next most preferred provider.

This fourth stage gives both transparency and a statement of expectation. If assumptions are agreed the price drops out at the bottom of the spreadsheet and no-one can disagree as to how it was arrived at. This is a powerful weapon for government-funded organisations needing to show the costs of care and a good comparator of commissioning across the country for the Audit Commission.

The fifth stage sees the final contractual negotiation and the signing of the contract, and includes the implementation plan.

The sixth involves the implementation and monitoring of the contract, including an annual examination of the accounts and original assumptions. If a provider has been paid to train 30 staff to NVQ Level 2 and failed to do this they would have to account for this failure and may face penalties. Equally, if local labour conditions altered significantly and the provider was justified in seeking an increase to meet higher staff costs this would be addressed, although the case would have to be made.

This process to deliver Best Value also leads to a better assessment of the "soft" parts of a care product. Although the focus is not initially on finance it becomes so once quality is assured and assumptions agreed. Open-book accounting will lead to a more open and honest approach to funding issues with true partnership and ownership. The results, geared to quality and flexibility, would be contractual agreements that give full control to the commissioner while reassuring providers of a fair, shared vision for service delivery.

Nigel Walker is director of home care at Housing 21.