It’s a dog’s life for providers

Putting existing services out to competitive tender – a process
known as retendering – has become a hurdle many service providers
have to clear regularly. It provokes immense stress, and those on
the receiving end are often left wondering why local authorities do

The most obvious reason for retendering is because the provider has
failed to meet appropriate standards, is in financial difficulties
or simply wishes to withdraw. But there might be other factors.

First, there is the belief that retendering can deliver Best Value
– and improvements in cost and quality are an entirely legitimate
aim. However, there is a suspicion among some providers that
“testing the market” sometimes occurs without much forethought, as
a sort of commissioning reflex. It may also be motivated by a
desire for social services to show that they are “on top of the
situation”. Yet the most important function of re-tendering is to
bring about improvement. Given this, surely there is a need for
well documented evidence for the effectiveness of re-tendering as a
commissioning tool in social care – evidence which is hard to

Second, there is pressure on commissioners and care managers to be
“seen to be doing something”. Making improvements is hard, and it
is important that any improvements are visible. Social services
staff must convince elected members that they have a grip on cost
and quality. But in many cases encouraging incremental improvement
would be a far more effective improvement tool than simply putting
providers through the expensive and time-consuming retendering

Third, there is the need to avoid complacency and stagnation – and
to drive innovative improvements. However, retendering is a drastic
remedy. There are other, less risky ways to maintain impetus and
create positive change. At the very least, the benefits must
outweigh the disadvantages by a big enough margin to justify the

The reasoning behind a decision to retender is often flawed. I have
found that councils often do not have a clear idea of what they are
trying to achieve. What exactly is the market being tested

Service providers’ concerns about retendering centre on its cost,
the effect on the people who use the service, how quality of
service is affected, and the impact on partnerships.

For a start, retendering is very expensive. It drains the slender
resources of both tendering authority and providers. The more
wide-ranging the exercise, the more it costs. It would be a
salutary exercise for tendering authorities to calculate the real
cost to them of retendering.

The concept of cost savings is the aspect that seems most puzzling.
No matter the provider, the cost of providing social care services
is largely determined by staffing costs, typically amounting to
70-75 per cent of the total. Cutting staff is likely to attract
unwelcome attention from the regulator. A change of provider will
almost certainly cause the Transfer of Undertakings (Protection of
Employment) Regulations 1981 to be invoked in order to safeguard
staff conditions. Given the cost of retendering in the first place,
it is difficult to see how worthwhile savings can accrue over the
term of the average contract.

Above all, it seems likely that any saving achieved through
retendering will not exceed that available through simply sitting
down with the provider and going through the budgets with a fine
tooth comb. Yet this happens infrequently. This may simply be due
to a lack of confidence on the part of council staff that they
understand independent sector finances. But if this is the case,
are they really in a position to make meaningful comparisons
between the benefits and disadvantages of a tender exercise?

The effect on people who use the service is also problematic.
Retendering sometimes forges ahead with little consultation with
service users. Yet even where consultation is undertaken, it can
produce strange effects.

If people express serious dissatisfaction with the service, the way
is clearer. This is arguably the best reason for retendering –
provided that there is a probability that retendering will put
things right. This requires commissioners to make clear from the
start exactly what improvements are being sought. Yet the
experience of providers is that, in practice, this rarely

In other cases, clients and their carers and relatives express
reasonably high levels of satisfaction. It is possible that people
say they are satisfied simply because they are not aware of other,
better approaches. But the anticipated benefits must be weighed
against any possible disadvantages, such as disruption and periods
of uncertainty.

Quality issues are also significant. Re-tendering in the
expectation that an alternative provider will come up with a good
idea is not sound. The onus is on the local authority to spell out
what it is looking for and how that can be achieved. However, most
authorities will admit that they have much work to do in this area.
It is all the more surprising that the decision to retender often
comes before any formal assessment of the quality of the existing

In addition, where a local authority can identify required
improvements, it makes sense to exhaust simple remedies first. If
sitting down with the existing provider and spelling out the
changes required does not work, by all means proceed to

Finally, there is the impact on partnership. Purchasers and
providers are constantly urged to work in partnership. But
retendering puts the partnership approach under strain because it
can make providers reluctant to expose some aspects of their
operations, thus impairing openness. It can also destabilise
provider organisations. Local authorities naturally focus on the
services they commission directly. Doing so can, however, have
negative consequences for the provider’s other services or services
in neighbouring authorities.

Most important of all, it can make collaboration between providers
more difficult. It is not easy to switch from competition to
co-operation. But greater co-operation between providers is
precisely what learning disability partnership boards seek. It is
also vital for councils to encourage providers to work with one
another if reconfiguration of local services is to be

Providers feel time is wasted by these barren exercises, and
because the benefits of partnership working far outweigh the
benefits of competition. Of course, some providers can’t cope with
the heat and are scared that they will be exposed in some way. But
the shared aim of providers and purchasers is to provide services
for vulnerable people. This is not the same thing as supplying a
fixed commodity, the quality of which is easily measured, and it
should not be managed in the same way. For example, a tool for
deciding who gets the contract for environmental services would not
be appropriate for use where social care provision is

Steve Inch is chief executive of New Support Options,
which provides care and supported living for people with learning

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