John Tizard gives some essential guidance on how authorities should weigh up the best route to a strategic service-delivery partnership
The Audit Commission’s study on local government strategic service-delivery partnerships, For better or for worse, which was published in January, is a welcome contribution to the learning process for both local government and the business sector.
All too often, there is little examination of the successes and challenges of these partnerships, especially by those embarking on this route to service procurement and those bidding to the delivery partner.
There is too little learning from the experience of other sectors – for example, business alliances.
There has to be an opportunity to explore the transferable lessons and experiences from and between all forms of public service partnerships and collaborative arrangements.
Strategic service delivery-partnerships are one form – usually a procured contracted partnership – of partnership that the public sector is engaged with. They can both offer solutions for other forms of partnership, and learn from these.
Successful strategic service-delivery partnerships require strong ownership of the proposition from the political and managerial leadership of the authority – and that the partnership is integral to the authority’s overall objectives for its locality, with clarity of the contribution to the service transformation or improvement programme; to the authority’s financial strategy; and to the wider local community well-being goals.
Success is usually based on recognition that the partnership is unlikely to be a panacea. Success is also dependent on ensuring there are long-term wins across the lifetime of the partnership. And like many relationships, there has to be some new sparkle from time to time, and not just in the first few months.
An authority considering a strategic service-delivery partnership should make effective strategic commissioning decisions based on research of other authorities’ experiences; analysis of the market; dialogue with potential suppliers; consultation with service-users; engagement of employees and trade unions; and the involvement of other local strategic partners.
There must be a rigorous business case analysis and political debate prior to the ‘make or buy’ decision.
Deciding not to pursue a strategic service-delivery partnership is as bold a move as deciding to do so. Such an arrangement should only be pursued when it will add public value for the community.
The local authority should decide on a sensible package of services to be included in the procurement. There was a period when authorities appeared to be out-bidding each other to have ever-wider and larger partnership deals without regard to the supply market capacity or their own service needs.
During the procurement process it is advisable to undertake regular ‘gateway’ reviews involving stakeholders, including user and employee representatives.
There should also be regular business case reviews and, if necessary, revisions and further reviews of business cases. If the specification changes, the original business case may no longer be appropriate. Selection of the preferred bidder should be based on the values and track record of the provider, including its understanding of the political environment and commitment to transparency.
These factors are as important as the provider’s solutions, delivery proposals and price, where value for money should be the objective, rather than cheapness. The bidder company should be examined to test its operational and financial capacity, as should its approach to workforce management and engagement. While the local authority client needs to understand the commercial drivers of its partner companies, those partner companies should also be willing to develop their practices and demonstrate appropriate attributes and behaviours.
It would seem bizarre to select a company as a strategic partner if that company could not demonstrate a commitment to local government, with senior operational and relationship executives experienced in local government. There also needs ‘buy-in’ at board level.
Experience and evidence suggest the more successful service delivery-strategic partnerships are those where there are realistic but challenging targets for service standards, and for improvement and transformation – and for the contribution to wider political, social and economic outcomes.
There are agreed baselines and assessment processes to measure these.
There will be realistic and agreed commitments to financial investment and their related returns, cost savings/productivity gains and risk management. The commercial terms of a long-term contract must provide ‘win-win’ positions for client and provider. Effective governance, which is integral to each partner’s governance systems, is another element of the successful partnership. The answerability and accountability of such partnerships, and of both the client and provider, are essential.
There is a need for a defined role for scrutiny and overview committees – the sharing of accessible information with all councillors, stakeholders, and the wider community.
Many service-delivery partnerships – both straight outsourcing and joint-venture partnerships – will include profit-sharing, and ‘open book’ accounting and performance monitoring.
The basis for these needs to be agreed as part of the contract, and they should be subject to external, independent audit.
While For better or for worse identified success in terms of service improvement and, where appropriate, cost reduction arising directly from local authority strategic service-delivery partnerships. It also found some failure and under-achievement. Lessons need to be learned.
Some of challenging issues remain to be addressed, including the means to assess value for money in the long term, complex, multi-service partnerships holistically, as well as for individual service elements; and the means to quantify the value of the wider social, environmental and economic contributions across five to possibly fifteen years.
Other challenges include introducing processes to assess the effectiveness and costs of the ‘partnership relationship’ – is it disproportionate to the gains? – and ensuring that partnership relationships do not conflict with fiduciary and probity obligations.
Those authorities which decide to pursue strategic service-delivery partnerships will require models which reflect changes to local public services, including the personalisation of services, and greater devolution to neighbourhoods.
This will require more flexible change control and variation of standards and volumes in contracts. Providers will have to consider moving from ‘wholesale’ to ‘retail’ provision, and be willing to collaborate with other providers and service integrators.
There will be a range of business models, procurement approaches and delivery vehicles including joint equity ventures; private–public–third sector partnerships; employee-owned delivery companies; social enterprises; and transformation partnership arrangements, which draw on business sector expertise in the form of long-term consultancy while the services remain managed by the local authority; and new forms of public sector trading companies.
As local government focuses on ‘leadership of place’, the new generation of strategic service-delivery partnerships could be commissioned and procured by a local strategic partnership or any one of the members of the LSP on behalf of the other members.
There are many options. Every local authority has to decide what is right for its communities. n
John Tizard is director of the Centre for Public Service Partnerships, University of Birmingham.
All too often, there is little examination of the successes and challenges of these partnerships, especially by those embarking on this route to service procurement and those bidding to the delivery partner.
There is too little learning from the experience of other sectors – for example, business alliances.
There has to be an opportunity to explore the transferable lessons and experiences from and between all forms of public service partnerships and collaborative arrangements.
Strategic service delivery-partnerships are one form – usually a procured contracted partnership – of partnership that the public sector is engaged with. They can both offer solutions for other forms of partnership, and learn from these.
Successful strategic service-delivery partnerships require strong ownership of the proposition from the political and managerial leadership of the authority – and that the partnership is integral to the authority’s overall objectives for its locality, with clarity of the contribution to the service transformation or improvement programme; to the authority’s financial strategy; and to the wider local community well-being goals.
Success is usually based on recognition that the partnership is unlikely to be a panacea. Success is also dependent on ensuring there are long-term wins across the lifetime of the partnership. And like many relationships, there has to be some new sparkle from time to time, and not just in the first few months.
An authority considering a strategic service-delivery partnership should make effective strategic commissioning decisions based on research of other authorities’ experiences; analysis of the market; dialogue with potential suppliers; consultation with service-users; engagement of employees and trade unions; and the involvement of other local strategic partners.
There must be a rigorous business case analysis and political debate prior to the ‘make or buy’ decision.
Deciding not to pursue a strategic service-delivery partnership is as bold a move as deciding to do so. Such an arrangement should only be pursued when it will add public value for the community.
The local authority should decide on a sensible package of services to be included in the procurement. There was a period when authorities appeared to be out-bidding each other to have ever-wider and larger partnership deals without regard to the supply market capacity or their own service needs.
During the procurement process it is advisable to undertake regular ‘gateway’ reviews involving stakeholders, including user and employee representatives.
There should also be regular business case reviews and, if necessary, revisions and further reviews of business cases. If the specification changes, the original business case may no longer be appropriate. Selection of the preferred bidder should be based on the values and track record of the provider, including its understanding of the political environment and commitment to transparency.
These factors are as important as the provider’s solutions, delivery proposals and price, where value for money should be the objective, rather than cheapness. The bidder company should be examined to test its operational and financial capacity, as should its approach to workforce management and engagement. While the local authority client needs to understand the commercial drivers of its partner companies, those partner companies should also be willing to develop their practices and demonstrate appropriate attributes and behaviours.
It would seem bizarre to select a company as a strategic partner if that company could not demonstrate a commitment to local government, with senior operational and relationship executives experienced in local government. There also needs ‘buy-in’ at board level.
Experience and evidence suggest the more successful service delivery-strategic partnerships are those where there are realistic but challenging targets for service standards, and for improvement and transformation – and for the contribution to wider political, social and economic outcomes.
There are agreed baselines and assessment processes to measure these.
There will be realistic and agreed commitments to financial investment and their related returns, cost savings/productivity gains and risk management. The commercial terms of a long-term contract must provide ‘win-win’ positions for client and provider. Effective governance, which is integral to each partner’s governance systems, is another element of the successful partnership. The answerability and accountability of such partnerships, and of both the client and provider, are essential.
There is a need for a defined role for scrutiny and overview committees – the sharing of accessible information with all councillors, stakeholders, and the wider community.
Many service-delivery partnerships – both straight outsourcing and joint-venture partnerships – will include profit-sharing, and ‘open book’ accounting and performance monitoring.
The basis for these needs to be agreed as part of the contract, and they should be subject to external, independent audit.
While For better or for worse identified success in terms of service improvement and, where appropriate, cost reduction arising directly from local authority strategic service-delivery partnerships. It also found some failure and under-achievement. Lessons need to be learned.
Some of challenging issues remain to be addressed, including the means to assess value for money in the long term, complex, multi-service partnerships holistically, as well as for individual service elements; and the means to quantify the value of the wider social, environmental and economic contributions across five to possibly fifteen years.
Other challenges include introducing processes to assess the effectiveness and costs of the ‘partnership relationship’ – is it disproportionate to the gains? – and ensuring that partnership relationships do not conflict with fiduciary and probity obligations.
Those authorities which decide to pursue strategic service-delivery partnerships will require models which reflect changes to local public services, including the personalisation of services, and greater devolution to neighbourhoods.
This will require more flexible change control and variation of standards and volumes in contracts. Providers will have to consider moving from ‘wholesale’ to ‘retail’ provision, and be willing to collaborate with other providers and service integrators.
There will be a range of business models, procurement approaches and delivery vehicles including joint equity ventures; private–public–third sector partnerships; employee-owned delivery companies; social enterprises; and transformation partnership arrangements, which draw on business sector expertise in the form of long-term consultancy while the services remain managed by the local authority; and new forms of public sector trading companies.
As local government focuses on ‘leadership of place’, the new generation of strategic service-delivery partnerships could be commissioned and procured by a local strategic partnership or any one of the members of the LSP on behalf of the other members.
There are many options. Every local authority has to decide what is right for its communities. n
John Tizard is director of the Centre for Public Service Partnerships, University of Birmingham.
